In Jim Cook's Archive


Humphrey Neill (1891-1977) became famous in the last century writing about contrary opinion investing. He wrote, “The public is attracted by activity and the movement of prices. It is especially attracted by rising prices.” That’s why money is funneling into the stock market and not precious metals. When an asset is not moving, Neill explained, “The crowd will remain indifferent when prices are low and fluctuating but little.”

However Mr. Neill did not believe the public was wrong most of the time. “The public is perhaps right more of the time than not. The public is right during the trends but wrong at both ends.” Said another way, “Yes the public is always wrong when it pays to be right – but it is far from wrong in the meantime.”

In today’s market the case can be made that stocks have had a good ride and stock investors have been right. Yet, the tipoff that we are approaching the termination of the bull market may be seen in the record price and the rush of new investors. The public is terribly wrong at the end, whenever that may be.

Another contrarian, Timothy Lutts, wrote, “Contrary opinion is not only good for identifying dangerous tops, it’s also good for identifying opportunities at bottoms.”

Silver fits this description. Silver is now the epitome of a contrary opinion asset. Even more contrary is owning actual physical silver rather than paper. Many silver investors own silver stocks, funds, futures, options and pool accounts, but very few own the real thing. The ultimate silver contrarian owns the silver in his or her physical possession or has to be stored in their name.  Contrary opinion investing has proven to be successful and the most contrary of silver investors, those who own it outright, should therefore, make the most money. One warning from Humphrey Neill, “Above all, what makes it practically impossible to beat the game is the trait of impatience.”

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