One useful tool used in investing circles is known as Dollar Cost Averaging. As the name implies, it is a plan for accumulating an investment in steps over a period of time rather than buying your entire position at one time. In my opinion the two most important things to understand before using it are:

1. It is a long term strategy and does not employ short term trading in and out of the asset. Long term means buying, or accumulating, an asset which is undervalued and holding it, usually for several years waiting for the market to recognize its value and bid the price up to full value or greater.

2. It can be very useful when you find you have missed the early part of a secular bull market in a particular asset but realize (from reliable research or counsel) that the bull market still has a long way to go and has shown no signs of entering the final or “bubble” stage when it rises the fastest in the shortest length of time. You want to participate in that phase.

Assuming these two conditions are met, you are ready to consider dollar cost averaging. There are no hard and fast rules to follow. You must decide on the parameters. Here are some points to consider.

1. You can’t invest capital unless you have capital. Many who don’t have free capital (cash or other investments free and clear of debt) borrow the money or buy on margin. I strongly recommend against this approach. It involves presuming on the future and most often ends in tears (see Chapter 6, Biblical Economics). If you find you don’t have the capital to make the next investment in your dollar cost averaging plan, your emotions will usually defeat you and scare you out of your investment at the worst time.

2. If you do have free capital which you can commit for a period of years, then decide what percent of your portfolio you want to commit to the asset and the date in the future on which you wish to reach that percentage allocation. Divide the time between your first purchase, and that date in the future, into equal time periods. Example: You decide you would like to accumulate a 40% position in 5 years using quarterly time intervals, i.e. a total of 20 time intervals. Then, every three months buy a 2% position (40%/20) regardless of the price. Of course, you can make your overall accumulation period longer or shorter, and your time intervals monthly or any other length.

3. IMPORTANT EXCEPTION: Any time the market value of silver falls as much as 5% from its most recent high, immediately accelerate the next purchase. If it falls an additional 5% below that point, make the next purchase, etc. If it goes to a new high, wait for the next time interval and buy at the market price. Following this rule should shorten the overall accumulation period and it follows one of the most important principles of investing, BUY WEAKNESS. (See summary below)

4. Commit to not selling any of your silver until there are clear signs the bull market is entering the final or “bubble” phase. I use my experts to guide me on that.