"Panic selling" is easy to understand and recognize: Investors rush to sell from the fear of loss. No more explanation necessary.
On the other hand, "panic buying" is not easy to see for what it is. The phrase seems to clash with itself. People commonly assume that "buying" involves rational choices by investors, who assess risk, calculate entry points, establish stops, etc.
None of that happens in a panic. So how can you have "panic buying"?
For starters, you have it when fear actually motivates investors to buy. Whereas fear of loss motivates panic selling, investors get in a buying panic when they're afraid of missing out on the profits they see everyone else making.
Such as, for example, panic buying in the silver market from late January through late April of this year. Buyers drove prices from $26.40 per oz. (Jan. 28) to $49.80 (April 25), a gain of more than 80 percent in under three months.
Now, if you followed the financial news last week, you have a good idea of what happened: more than half those gains vanished in four trading sessions. The direction changed, but the emotion did not. Fear inflated and deflated the same bubble.
Yet here's the terrible irony: This story is very old, but it's very rarely told accurately. During the buying panic media stories say things like "silver is strong because the dollar is weak." And when the selling panic suddenly erupts they blame "new margin requirements" or even "George Soros."
On the other hand, when you know the real story -- the market's history, context, and patterns -- you'll get it right when you tell it.
All this explains why Elliott Wave Financial Forecast subscribers were NOT surprised by what unfolded in the silver market this week. The April issue reminded them that sentiment toward silver had reached dangerous extremes; it also pointed out what happened the previous time silver was near $50 (an 11-year decline down to $3.50).
And in the just-published May issue, The Financial Forecast more than picks up where it left off: It begins with a Special Section on silver, titled "A Silver Bullet Sets Things in Motion."