Thursday, August 18, 2011

AUGUST 17, 2011

Risk aversion is one of the greatest drivers in human action and with the recent downgrade of US bonds from AAA to AA+ coupled with global stock market plunges, financial markets have been, per usual, flocking to gold as a safe haven.

Humans are programmed to seek gold in times of uncertainty. Gold is uniquely thought of as the monetary metal of kings, and although silver has more history of being used as money by human beings, silver is still seen today as a risk trade and an industrial metal (although we believe this will be changing shortly).

How many times have we seen in movies or documentaries, where people find treasure and shout "We are rich! We have struck silver!". This does not happen. It is always gold.

People today still do not fully understand the monetary value of silver, and at critical moments they relate to it as a risky industrial product dependent upon demand and economic growth potential. Over time, this "programming", of gold being the only true safe haven money, will dissipate but it will take time for the world to relearn why silver, like gold, is also safe haven money.

As the fiat currency monetary system breakdown continues, silver will reassert itself as the monetary metal of intelligent safe haven investors. The key is to understand the long-term trend, acquire physical gold and silver bullion, and sit patiently as your wealth not only is sustained but increases as dollars, euros, pounds, yen, pesos, etc. fail in preserving investor's purchasing power.

Three factors that will cause the value of silver to skyrocket in the years ahead:

- Silver is a smaller market than gold and there is currently less investment grade silver bullion available for investors than investment grade gold bullion.

- Silver is still seen as a factor in industry and not as the safe haven, tangible, and affordable money that it truly is. Like gold, silver answers to no one for it is inherently without counter-party risk and cannot go broke.

- Silver tends to exponentially rise when there is true evidence of price inflation. With current central bank fiat currency debasing around the world, it is but a matter of time until we witness steeply rising prices for real goods (food, precious monetary metals, energy, etc.).

Due to overbearing demand, 100 oz silver bars are no longer struck with serial numbers

Mike Maloney has allocated 90% of his wealth into silver American Eagle coins and 10% into gold American Eagle coins. GoldSilver Insiders are currently converting 70% of their capital into silver bullion versus 30% into gold bullion.

We are confident that in the long term, silver will outperform gold as the gold/silver ratio tightens back to it's historical average of 12 or lower.

Although the ride in silver will be more wild, we believe it is the patient investor who understands the long-term trend, they will greatly benefit by having exposure to physical silver bullion.

In Summation

If we invest in gold because of fear, all right.

If we invest in silver because we believe it to be a better investment long-term, fine, but we must be composed and settle in for the inherent volatility of the smaller silver market.

If we invest in both silver and gold, stability will be found in our portfolio's "golden anchor" while increased performance will surely come in time as the world relearns that silver is mankind's most undervalued monetary metal.

Original source

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