Hi all, I am hoping someone can explain to me if buying silver is just a gamble on currency fluctuations. Lets say i buy an ounce in Australia with Aussie dollars at $21 in and the current exchange rate is 1 aud = .77 usd. Now lets say in 3 months the Aussie is now worth .60usd and silver is still at $16usd an ounce and i decide to sell my ounce and receive Aussie dollars. Am i making or losing money? So is it just pegged to USD? Any help explaining this would be really appreciated. Thanks
Depends on your perspective. In the scenario you outline, a fall in the AUD relative to the USD, with Ag priced in USD remaining the same, you would have higher value in AUD. This doesn't mean it is pegged to the USD any more than it is pegged to the AUD. For example, if you exchanged $21 AUD for $16 Euro (instead of 1oz Ag) and once the USD:AUD exchange rate dropped to from 0.76 to 0.6, if the USD:Euro rate remained unchanged, you could swap the $16 Euro for $26.67 AUD. It wouldn't matter which you bought when converting back to AUD, you would get the same profit/loss in AUD. So if you consider silver to be currency, yes it is a gamble on fluctuations. Yes, You will make money if the AUD goes down and the silver or Euro value (denominated in USD) stays the same. No, it is not pegged to the USD, western perspective just seems to view it in those terms.
Don't forget the variables with regard to bars, coins etc. (Each dealer will have their own premium on buy and sell) The Perth Mint provide sell and buy back data for gold, silver, platinum and hallmarked jewellery which may give you a bit more of an idea. http://www.perthmint.com.au/metalPrices.aspx Hope this helps.
Silver is like any monetary asset: a blind, or educated bet, or informed / privileged certainty, competing with all other monetary assets, with its worst competition position at its peak price, and best at its bottom price. Competition also occurs also inside its market, regardless the markets of other monetary assets, with a sale at a peak requiring a buyer at that peak and a purchase at a bottom requiring a seller at that bottom. In other words: your money-making requiring a money-losing. Which is essentially the case for anything that is used to store value. Those that bought it first, tend to make. Those that bought it last, tend to lose. A fluctuation, is a rinse and repeat. That is, what "investing in silver", and any other dead thing including electronic and paper dollars, comes down to. Another approach is the squirrel one. Autumn. Pick up what is cheap. Winter. No need to buy expensive.
Gold and silver prices has consistently reduced over the past several time. But, considering about the supply and demand cycle, these prices will be definitely rising in the future. So, it's better to get it now, so that you can sell them when prices go up.
Yes, if the AUD goes down relative to other currencies, you will make money. On top of the wildly fluctuating silver price of course. We have seen silver price swings (in AUD) both ways of almost 5% in a day in recent times. Long term you have to factor in inflation, but short medium terms, yes, it's that simple, AUD goes up you lose money, AUD goes down, you make money.
When I want to buy, I hope AUD is up and Silver Price is down. When I want to sell in the future (my goal) I want Silver to be more and AUD to worth less. Also hoping house prices will also go down so I can buy my 1st unit/house... Did I get the ups and downs right? :/ Am I asking to much
