Is Gold and Silver Still a Buy?

Earlier in February this year, I wrote a short post on whether it was the end of the gold bull run.  Of course, I couldn't say for certain that the bull run in gold was going to end.  After all, there are renowned investors out there who were still bullish in gold for the long term.  I wrote a more balanced post on some reasons to buy gold or silver.  After all, investing in gold is something that most serious investors will consider doing as part of their asset allocation.

For those who have been monitoring the gold and silver spot prices, you should be aware that gold and silver prices dropped drastically in yesterday's trading.  Gold ETFs like SPDR Gold (Ticker: GLD) fell by almost 10% in a single day with hedge funds rumoured to have started the huge sell off.  Well, a correction was more or less expected since billionaire Jim Rogers (who now lives in Singapore) said that a correction was due. In fact, Jim Rogers believes that gold prices will head towards US$1200/oz. He will probably start buying at that level.

But is this more than a correction?  Because it seems that we are now in a bear market for gold and silver.  Worries about inflation in the United States with all the money printing through the quantitative easing programs seems to be unfounded.  Inflation remains low to this day.  And besides, the stock market has been roaring on for quite a few months.  So investors in gold and silver have probably missed out on the bull run in the stock market and are taking the opportunity to liquidate their holdings since the supposed dollar crisis/crash has failed to occur.  Many traders probably closed their positions too especially if they bought at the highs of US$1800-$1900/oz.

Is gold and silver still a buy?  It probably is.  But one will probably have to wait for the right price.  And also be reminded that unlike stocks, gold and silver do not provide any form of cash flow or dividends.  It is almost simply a store of value and a hedge against hyperinflation or "catastrophic" events.  Could this be the reason why Warren Buffet is negative on gold?

Reasons to Buy Gold or Silver

Gold and silver seem to be back to their 2011 levels. iShare Silver Trust (SLV) is trading at $28.41 while SPDR Gold Trust (GLD) is trading at $156.22.  Well, gold and silver spot price are also trading around $1600/oz and $29/oz respectively.  The talking heads at Bloomberg and CNBC are all now suggesting that it might be the end of the gold bull run.  After writing the earlier posting yesterday, I thought about it and decided that perhaps a more balanced view ought to be presented.

So in this posting, I will throw up some of the reasons to continue buying gold or silver.

Firstly, the world's central banks are now net buyers of gold, purchasing gold like never seen before.  According to the World Gold Council, central banks accounted for 12% of total demand for gold in 2012.  The demand for silver also seems to be rising and the supply does not seem to be able to keep up (at least that is what the silver bugs' charts are telling us).

Secondly, with all the money printing by the Feds, inflation is almost certain.  Gold and silver are thus a good hedge against inflation since many view them as the true store of value.  Many of these proponents are also predicting that the dollar will soon crash and that somehow, someday, the entire world will go back to the gold standard.

Thirdly,  while the prices of gold and silver might have corrected a fair bit for this year, the global outlook still looks uncertain.  The US debt is reaching alarming levels, Europe crisis, etc.  So it is not surprising that people are bullish on these 2 metals since they seem to have a negative correlation to the overall stock market/economy.

In any case, the people who argue for investing in gold or silver are still sticking to their guns that another bull run is in the making.  Will they be correct?

Investing in Silver

Silver is a metal that has been known and used since the beginning of the civilization. Its use increased remarkably for the past 200 years in various fields that had contributed to the development of our society. The reason for its vast use is because it is the best conductor of electricity and heat, smooth reflector of light and has various health benefits. Silver is an important industrial material combined with both strength and softness and the ability to get stretched. It is wear resistant, has a high tensile strength, reflects light and reduces friction. It has great unique properties.

This strategic metal has infinite uses. The silver alloys are used to manufacture the disposable and rechargeable batteries. More than millions of silver zinc oxide batteries are manufactured worldwide annually, that include very small batteries for cameras, watches and other electronic devices. The high purity silver for electroplating steel bearings have great load carrying strength and capacity for heavy duty work. The bearings coated with silver provide great durability and safety in jet engines. The use of silver solders helps to join materials and makes leak tight, smooth and corrosion free joints. The silver alloys are used in refrigeration, air conditioners, power distribution, aerospace and automobiles. Silver membrane switches are used in most keyboards of laptop and desktop computers. Due to their durability and wide use, the market of silver-contact membrane switch is a multi billion industry in America.

The Silver demand hit about 880 million ounces last year, and the worldwide mining production contributed only 670 million ounces creating a deficit of 210 million ounce. A lot of people are unaware that the silver is the most used commodity in industry after oil. One of the best investments at this point of time is Silver. If you are looking for a profitable investment then you might want to consider investing in Silver.

If you are thinking of investing in silver, then the Silver bullion produced in America is a good option with the American Silver Eagle of one ounce. This coin is known all around the world and traded in various countries. They can be bought in a combination of 20 stacks or in a Monster box of 500 pieces. The second option will be 100% silver bars that are made in various sizes, designs and weights ranging from  bars of 1 ounce, 5 ounce and 10 ounce. The two popular silver refiners producing bars in different sizes are Johnson-Matthey and Englehard.

You might also be interested in reading the recent article on Investing in Gold or How Silver is Made.

[This article is a guest post.  Investors should carry out their due diligence prior to making any investment decisions]

Silver Bullion and Coin Collection

Have been slowly building up my coin collection of silver including a few bullion.  As of today, I have the Canadian Maple Leaf, American Eagle, Austrian Philharmonic, Buffalo coins and some Scottsdale Silver bars.  Many of them are mainly 1 troy oz and some of them are sealed in airtight containers.

The coins are nice to look at, but I seriously regretted using my bare hands to touch some of them as they now have a whittish tarnish on them which can't be removed.

Tarnish on Silver

Tarnish has appeared on some of my silver bullion.  I bought some candian silver maple leaf some time back and used my bare hands to handle them.  I thought that the oils on my finger ruining the coin was just superstition by those crazy coin collectors.  After all, we handle coins everyday and I don't see the normal 10 cent or 20 cent coins getting spoilt.

To my horror, I discovered some white stains on my silver coins which were very clearly in the pattern of my fingerprints.  Tried wiping them off with a cloth but to no avail.  They don't see to come off.  Now my shiny coins are "stained" by the white marks.

Anyone has any idea how to remove them without spoiling the silver?

Investing in Silver

Since man first discovered silver, it has been an object of desire for both its value and its use as a form of money. This usually means that investing in silver gives a good long-term return to the investment.  Not too long ago, I wrote about buying silver in Singapore, how I was buying more silver (for collection purposes) and also some of my broader investment thoughts for 2012.  Of course, I warn readers not to take what I write as any form of personal finance advice.

[Picture credits to digitalmoneyworld]

The Silver Market

The market for silver is not as big as the gold market, but is still worth an estimated $15 billion annually. Traditionally, the price of silver tracks the price of gold. The ratio was set by United States law at 1:15 in 1792, but price increases in both metals meant that the gold/silver ratio rose to over 1:60 in 2009. The price of silver has continued to rise and reached record levels in 2011, with the average price reaching $41.20 for one troy ounce.

Like most commodities, silver trades on a market with traders buying and selling the metal to make a profit. The London silver bullion market is one of the main places where it trades. Another is iShares.

Silver in Banks

In some countries investors can walk into a bank and buy silver bullion over the counter. This can then be taken home and stored in a safe or kept in a safe deposit box in the bank. It is even possible to store your silver in allocated or unallocated storage with a bank or dealer to keep it safe.

Silver comes in a variety of bars, including:
* 1000 oz troy bars (31 kg)
* 100 oz troy bars (3.11 kg)
* 1 kg bars
* 10 oz try bars (311 g)
* 1 oz troy bars (31.1 g)
* Odd weight bars

The most popular bars are the 100 oz troy, with popular brands including Engelhard and Johnson Matthey. The branded bars are usually worth more than unbranded or odd weight bars.

Investing in Silver

Silver can be both a long-term and short-term investment. In the short-term, investors can trade silver for a profit in the same way as any other commodity by always aiming to buy low and sell high. Market fluctuations can give profits on each trade, but also losses meaning that this can be a risky investment as one needs to know how to time the market (something I admit I am totally not good at!)

Over the longer term, the price of silver has generally risen, with a sharp rise over the last few years. This is great news for anyone that owned silver before 2005, but not so good for anyone thinking of investing now. Of course the market price could continue to rise, but nobody knows for sure and it could fall back down to earlier levels.

Over the past few years, investing in silver has been a great way to make money. The price has increased by eight times in 11 years and doubled since last year, but that does not mean that it is guaranteed to continue that way so never risk any money that you cannot afford to lose.

You might also be interested in reading the recent article on Investing in Gold.

Investment Thoughts for 2012

Today is the 10th day into 2012 and I realised that I have not thought out my investment plan, made any resolutions or done anything fruitful in the past 10 days!  And there has been this constant nagging in my head that tells me that I ought to focus my attention on a few things and try not to spread out my efforts too thinly.  So perhaps now is a good time to update on what are some of my thoughts for 2012.  This includes some of my personal reflections and does not constitute any investment advice.

Passive Income - Monthly Dividend Stocks and Real Estate Investment Trusts (REITs)

High on my list is perhaps creating a passive flow of income for myself either through stocks that provide monthly dividends or REITs which either provide quarterly or half-yearly distributions. For monthly dividend stocks, one has to turn to the US market.  One of the monthly dividend stocks that I have bought into is Gamco Global Gold (GGN).  REITs on the other hand are easily available on the Singapore Stock Exchange or SGX.  I am looking at diversifying my REITs holding as I am currently heavily invested in Ascott REIT.

Gold is Money and Nothing Else


For those of you who have been following me, you are perhaps aware that I have been looking towards silver both as a means to hedge against inflation as well as just for collecting purposes.  Buying silver in Singapore is still limited to only a few shops but hopefully this certain industry/sector will slowly develop.

Investing in this Site


I have also decided that I ought to invest a bit more time and money on this site.  This includes some facebook advertising as well as my plan to work on a eBook.

These are all still works in progress but I certainly hope that the perfectionist in me does not cause me to procrastinate or be paralysed such that I do nothing at the end of the year.  It has been my longest desire to write a book and an eBook might just serve that purpose.

How Silver Coins Are Made

I thought this was a rather informative video on how silver coins are actually made.  The video also shows how the die is made.  Enjoy.

Bought More Silver

After writing about buying silver in Singapore, I am amazed that there are also some other people who are interested in buying silver whether it is for collection/hedging/investing purposes.  Anyway, I also received some of the silver coins that I bought.  Just bought a really small quantity as I am mainly just trying to collect the different type of silver coins.

The coins I bought are from Golden State Mint and each coin weights 1/4 troy oz.

Here is a scan of it  =)

Buy Silver in Singapore

Lately, I have been having some bizarre interest in collecting silver coins.  It just feels cool to actually own silver knowing that this used to be used as currency across history.  But as a pretty newbie to silver, I won't call my purchases as investing in silver just yet.  Nevertheless, I have been reading up quite a fair bit about silver coins to know how much a troy ounce actually weighs.  And it is interesting to find out a whole new domain of knowledge literally about investing in silver bullion coins, using it as a hedge against inflation, etc.

Well, the first thing to realise is that it is not too difficult to buy silver in Singapore.    I am not talking about investing in silver through ETFs but really owning physical silver bars and coins.  There are actually quite a few companies that sells silver bullion.  Here are the few things that I have learnt about silver coins thus far:

1.  Buy silver coins or bars that are widely recognised

• This seems to be the advice that people are giving in various forums.  Coins widely recognised include the American Silver Eagle and the Canadian Silver Maple Leaf.  There are others like the Australian Silver Kookaburra from Perth Mint and also the Austrian Silver Vienna Philharmonic.  

2.  Silver Coins Trade Above Spot Price

• One can check the spot price for silver easily on kitco or some other website.  However, silver coins often trade or are sold above the spot price of silver.  Even on Ebay, they trade above the spot price.
• Silver price has been increasing slowly.

3.  Places to Buy Silver in Singapore [Grabbed this off another forum]

• www.1silver1.com (Website is a bit slow so need to be patient)
• www.silverag.com.sg
• www.silverbullion.com.sg
• www.yashabullion.com
• www.goldprice.com.sg
• www.goldsilvercentral.com.sg
• www.royalsmithbullion.com

Many of these shops have a minimum order (e.g. 20 x 1 oz coins) or a minimum purchase of $2000.  Some of them have minimum orders of 500 oz and based on today's price of silver, will literally cost you a 20 over grand (estimated $48++ for a 1 oz silver coin). So you really have to be serious about it before making a purchase.  The first link actually allows customers to buy 1 oz silver bar as a minimum order.  But it is a Scottsdale silver bar and I am not certain that it is as widely recognised as the other silver coins.

4.  Buying off Ebay

If you prefer to buy loose pieces, you can always buy them off Ebay.  However, prices are slightly higher when you do not buy in bulk.  Many sellers also do not ship to Singapore.  

Question:

Do you invest in silver or gold?  

If  yes, where do you buy them from?

How do you store them?