Should You Invest in Silver?
With so much hype around the manipulation of metal prices, many investors wonder if they should invest in silver. The hype comes in the form of the well known conspiracy theories such as that there is a cartel of traders that manipulate the price of silver. Another theory is that governments, institutions, and investors have been hoarding the metal for years to control the price.
Whatever the theories are about silver prices, the price of this metal went up considerably in 2007 but has seen better days, particularly since June. See history of silver prices: http://silverprice.org/silver-price-history.html
With the current financial issues we are facing, most investors consider gold and silver to be great inflation hedges. However, this theory too is in question. Personally, I think the world economy is in for some additional financial turbulence and I strongly recommend silver as being great investment vehicle over the next few years.
I found an interesting, yet outdated article on the conspiracies surrounding the price of silver at moneyweek.com that you may want to take a look at. ‘Don’t Buy the Conspiracy Theory, Buy Silver.’ (http://www.moneyweek.com/investments/precious-metals-and-gems/dont-buy-the-conspiracy-theory-buy-silver.aspx )
Any comments about the prospect of investing in silver amidst the current financial uncertainty? For the layman out there, maybe someone can continue this thread and describe how you invest in silver?
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IMO there are very strong reasons to be bullish about Silver. Especially after the ‘demand destruction’ phase of the financial crisis passes and the inflationary stage hits.
There is a (very comprehensive) article here about Silver’s fundamentals:
http://blog.goldassets.co.uk/2008/05/28/why-the-silver-price-will-continue-to-soar
In terms of investing in Silver, you have a range of options. ETFs are a popular method but I don’t think that people realise the counterparty risk that is involved. Recently when AIG was in trouble all the commodity-based ETFs (or ETCs) trading was suspended.
So in a real financial panic you would lose one of the main reasons that gold/silver is popular: If you own bullion, there is zero counterparty risk, its yours and short of govt banning gold/silver ownership it will stay that way.
At the moment there is a massive shortage in the physichal market, and premiums are very high (up to 40% on some coins such as silver dollars) – either wait for the price to rise so that some sellers can enter the market, or perhaps the perth mint certificate programme which a very efficient way to get into Silver, since there are minimal storage costs but you also own physichal bullion so the counterparty risk is minimised (though not eradicated, you would have to take personal possesion for that!)
Sorry for the delay in my response…it was a Friday night.
What are ETFs? I am ignorant about silver trading, I just have bullion. Any addtl insight on this topic is appreciated.
By the way, you have a great blog on this subject. Can’t wait to have a little time to dig into some of the content. ( http://blog.goldassets.co.uk/ )
Also, on another note. What are your thoughts on the conspiracy theories I touched on?
Tbird