Note that I currently don’t invest in commodity such as gold or silver. However, the Consult the Expert section in Personal Money Oct 2012 issue may contain a complete set of answers for potential silver investors. FYI, Maybank is offering silver investment account. Check out the below if these are some of your queries.
- I am worried about investing in silver because its price is more volatile than gold. So how?
- Sit and wait for silver price to go down?
- Should hold silver for long term or trade it?
- What indicator to use to predict future price?
- Any industry benchmark?
- Is this paper silver investment the best way to invest in silver?
- If not, are silver bars the better alternative?
- What allocation of portfolio should be invested in gold and silver?
Here are the answers from Chris Gan, VP of portfolio management and research, CIMB Bank, in no particular order. (I wonder why it is not from Maybank?)
- Reasons of price volatility – silver is predominantly used commercially as industrial metal (up to 60 percent of total demand), while gold is mainly for jewellery-making only.
- Trading is not advisable – he doesn’t see why long term value investing principle shouldn’t be applied here.
- Price indicator for silver is known as spot price and is available at www.kitco.com, and is quoted in US$ per troy ounce.
- Investing in paper silver is one option, yes but for physical silver investment, it is in the form of bars, coins and rounds. You may also check more information on this aspect – click here.
- No definitive percentage of portfolio allocation. But generally, even for gold, quoting World’s Gold Council Research, Chris recommends no more than 6 percent of overall portfolio.
Previously, I interviewed the author of Practical Guide For Investing Silver Investment In Malaysia. You can check out his opinion here.
Now, if silver investment is your cup of tea, you may want to review 4 more reasons, according to the author, Daniel, why he thinks it is an attractive opportunity
*Disclaimer: The view below are not of LCF of Personal Finance. The information provided on or within this website or in documents available herein is for assistance only and is not intended to be and must not be taken alone as the basis for an investment decision. Always do your due diligence before putting your money into any investment vehicle available.*
1. You deserve real Money, not paper Currency
In case you do not know, what we are keeping in our wallet, our bank saving account are not real money. Those are merely paper currencies. Paper currencies that can be manipulate by the central banks (such as Bank Negara for Malaysia and Federal Reserve for America). Silver offers the opportunity to move into true money, an actual store of value. Physical silver is real money that central banks has no authority nor power to manipulate. Mike Maloney stated in his book: “Gold and silver have revalued themselves throughout the centuries and called on fiat paper to account for itself.” Whether you still prefer to keep your hard-earned money in currency, waiting to be manipulated by central banks or convert it into real money such as silver, the choice is yours.
2. Silver Is The Average man’s gold
The acquisition of silver is much more attainable for global populations compared to gold. In today’s price, it takes around RM100 to buy 1oz of silver; while for gold, it takes more than RM5000 to buy 1oz of gold. It is easier and more affordable for the average man to start investing in silver than gold. As silver prices continue to rise, investor’s will further shift away from real estate, stocks, and bonds. The affordability of silver is poised to make it “average man’s gold” as it begins to make news and involvement becomes widespread. One day, silver will become more popular, more expensive, more rare and have more demand compare to gold.
3. Silver Has Industrial & Medical Applications
Unlike gold, silver has hundreds of industrial and medical applications and its usage is on the rise. Silver’s molecular arrangement and chemical properties make distinctly unique among earth’s elements. “Of all the elements, silver is the indispensable metal. It is the most electronically conducive, thermally conductive, and reflective. Modern life, as we know it, would not exist without silver“, taken from Guide to Investing in Gold and Silver. In the last two decades alone, usage has increased substantially to include an array of electronic and digital products, medical appliances due to its anti-microbial properties, and even clothing. Product such as cellphones, cameras, laptops, mirrors, monitors, etc. all contain trace amounts of silver which is never replenished or returned to stockpiles. As our information age progresses and silver’s chemical uniqueness is more fully understood, demand for this irreplaceable metal will only continue to rise.
4. Increasing World Demand For Silver
China and India represent two behemoth markets where populations have shown a tremendous appetite for gold and silver. An awakening of emerging market investment demand will contribute to a new demand dynamic for physical silver bullion. Supportive of the monetary aspects are some of the largest untapped markets for consumer electronic and industrial usages. Within the next decades, demand for appliances and technologies which require silver from developing nations is set to rise.
5. Paper Silver Manipulation Are Exposed & Are Ending
The most evident form of pricing manipulation on the silver front occurs through the derivative futures contracts traded at the COMEX. The amount of ounces traded on an average day typically exceeds the ounces of investment grade silver available. While futures pricing manipulation gives institutional banks a means for price suppression, the ETFs and other paper derivatives have now involved the public in these mechanisms. These instruments force demand away from what would be geared as deliverable silver and into non-redeemable paper in the form of a prospectus or stock certificate. As you are reading this right now, more and more people globally are having more awareness about the silver price manipulation. When there are enough people woke up to the reality, silver price will shoot up like a rocket and it might be too expensive for you to start investing.
[comment from LCF: I know this article could be too much to digest at once especially after lunch time 🙂 , so you might want to bookmark this and come back later. Anyway, hope all these helps! Happy investing]