Jhon and Mary have just sold an investment property and have 300k to reinvest. Not happy with the interest they will get for their money from a bank for a 6 month contract they have opted to invest in PM's.Their choice is one or the other,Gold or Silver? Which would you choose?
Silver because Gold is at all time highs and Silver has many more uses than Gold. Although Gold will go up of course, what is guaranteed is that Silver has a very bright future and that $37 is still way too cheap.
I'd say gold is safer than a bank.There is no interest,sure.Maybe that indicates something,no? When the world economy recovers,put it back in the bank. Or silver. Its not about making money,but to ensure retention of value. Though gold will probably rise in price. If you want to make money however , go to silver , After all"Whats guaranteed is that Silver has a very bright future " If the Economy goes,silvers industrial use will reduce. Speculators will retreat into cash. These are very unstable economic times.
Question 1. Do they have somewhere to store 300kg of silver? Denominate in gold. Speculate in silver.
250k gold 50k silver If you had to put all your eggs in one basket then I'd put them in the gold basket.
Okay, so... hypothetically if Jhon and Mary bought 7,500oz of silver at approx $40 an oz and over 6 months lets say it went to $50 an oz (b4 taxes etc..) thats $75k profit (approx). And if they bought 214oz Gold (approx) at $1400oz (approx) with the money,gold should be about $1750oz when the 6 months expire to reach the same $75k profit as silver. Question is... from a profit scenario which metal has the greater potential to deliver and why ?
Conversely, from a loss scenario which metal has the greater potential to drop and why Gold is stable, silver is volatile. The time frame is only 6 months - too short IMO to be speculating with a silver-heavy "park our money for 6 months" investment. Gut says silver will outperform gold over the next 6 months, but it's volatile and manipulated - I'd be more comfortable with a heavier gold exposure over that short timeframe if it was money that they couldn't afford to gamble with. Perhaps even 1/3 cash, 1/3 gold and 1/3 silver - that way they've got 1/3 in a "capital guaranteed" form (but subject to low returns and at risk from inflation), 1/3 in stable gold that should still outperform cash, and 1/3 in the speculative silver. If it was $300,000 to "speculatively invest" for 6 months, then all-in on silver might be a valid investment. But if it's $300,000 that's "our net wealth" that needs to be protected...
Silver looks good http://www.kitco.com/reports/KitcoNews20110328AS_silver.html The amount of silver used for industrial purposes is forecast to rise to 665.9 million troy ounces by 2015, which would be a 36% increase from the 487 million used in 2010, according to a report from the Silver Institute released Monday. The report, The Future of Silver Industrial Demand, was produced on behalf of the Silver Institute by the precious metals consultancy GFMS Ltd. Industrial use of silver accounts the largest share of annual fabrication demand, the Silver Institute said. The "base case" forecast from GFMS is predicated on what the consultancy sees as the most likely outcome for the global economy, the consultancy said. "The report demonstrates how buoyant silver industrial demand is, not only because of the lack of substitution, but also because of the wide range of established and growing new uses that make up industrial demand," said Michael DiRienzo, executive director of the Silver Institute. "This report maintains that we expect to see robust gains in industrial silver demand over the next five years, further emphasizing silver's essential role in industry."
Lock in c) Electrum, thanks Eddie. Seriously though, I would choose silver due to the industrial demand.
+1 I couldn't approach a PM investment without parking something decent in Gold. Silver is the speccie play, but end game always has and always will be about the yellow.
