Monday, September 7, 2009

Silver Spot Price vs Physical Silver Price

 There seems to be a widening gap between the silver price and physical silver price.

If you have one hour to invest (not burn), take a look at this series of videos. There are 6 parts to it. This is just part 1. You might have to turn on your speaker volume because it's not so clear:

I think silver spot (or paper) prices can be easily manipulated, and some people are trying darn hard to suppress prices. A company can short (i.e. sell) tons of silver futures (futures are just mere promises to deliver silver) to artificially suppress prices. There is, however, a tremendous upward pressure on the physical silver price. So even if spot price were to drop to below $10, it is irrelevant to physical silver price. And from my  observations and personal buying experiences, I find that this is true. I used to compare physical silver prices to the spot prices, and was uneasy when physical silver prices seem to rise faster than spot prices. I thought that the sellers are  taking advantage of the rise in spot prices by charging more and more premium above the spot price for the physical bullion. This is true in a way, but not entirely true now that we know spot prices and physical prices should not be compared like that.

Anyway, the shortage of physical silver is too great. Already, some major mints are running out of stock. With the huge imbalance between supply and demand, the current physical silver price is laughable.

Sunday, September 6, 2009

Silver, the Forgotten Metal

Got my Silver 2009 American Eagles today. I'm glad that 3 of my friends are investing with me. I went to Pasir Ris to get the silver coins after my tuition lesson, and was surprised at how heavy those silver weigh!


These silver coins are beautiful. My camera is really doing them injustice with the lousy resolutions. I went to Chinatown and got them verified to be authentic stuff. Sadly, and not surprisingly, no shops in Chinatown sell .999 silver. Or maybe there's one that I don't know of. Everyone thinks that silver is useless metal.

A week ago, I bought gold from this uncle in a shop. He doesn't sell silver but he has his own personal silver collection. I told him about my silver purchase and he went something like: "Wah! You bought those silver for S$29/oz? You're so street-smart, you can sniff out lower prices. I bought mine for S$31/oz."

Today my friend and I went to his shop again, and asked for his opinion of our newly bought silver Eagles. He thought that we wanted to sell our silver to him. And guess what he said: "Silver no value lah. Each coin (1 oz)  is only a few bucks, maybe around S$6." What !! Apparently, this uncle had forgotten that I was his customer a week before. He was just saying it cost him S$31/oz the week before, now he said it's S$6?

I knew that it serves no purpose to ask these jewelers about their opinion on silver prices anyway. They may be good sellers, but they don't necessarily understand economics. To say that 1 oz of silver is worth $6 is the most absurd thing I've ever heard. Even my young sister can tell you that the market price now is USD 16-17/oz excluding premiums. Just check the internet duh!! Oops... maybe uncle doesn't know how to use the internet, or maybe he thinks I'm just a small kid he can con. Whatever -_-

Anyway, I believe that silver will again be actively traded in the near future. We may well see silver bullions make their way back into these goldsmiths and jewelers in Singapore. But for now, it has been forgotten by many.

Silver is money. We'll see its spectacular comeback soon, in the form of explosion in prices. It is already doing a big comeback in the past few years, but there's more to come.


Friday, September 4, 2009

Another President not doing it right.....America's days are numbered

When Obama stepped up into the US presidency, the world was filled with hope that he will bring changes for more peace and prosperity. His critics, however, can already see his flaws even before he was elected. Now I am in support of those critics. Obama is not doing it right. He has similar policies to his predecessor Bush's. His foreign policies are still aggressive, his economic policies are as bad as - if not worse - than Bush's. He is just doing what Bush had done, and doing it on a much larger scale too.

The recent financial crisis has provided US with the opportunity to set things right. The US should have let the system crash, to get rid of all the excesses that had been built up over the past few decades, to get rid of all the companies that are bad. Yet, what the US chose to do was to get deeper and deeper into debt to bail out fundamentally unsound companies, and widen the budget deficit to more than US$ 1 trillion. The Obama administration is projecting budget deficit to hit $9 trillion in the next 10 years, up from $7+ trillion. Who can believe them? The real figure might even be higher. The US has missed its chance to apply the brakes. Now it is heading for a crash. Each time it tries to create currencies to 'battle' economic downturns, it is just postponing the inevitable. It is just gonna make future crashes much more painful for itself. Do people actually believe that US will be as strong as ever? Unfortunately yes. But look, who in the right mind will support a company that is saddled with ever-increasing debt, and ever-widening budget deficit? Only an insane person would!

Obama's various programs to stimulate the economy are wrong! He's just pumping in more and more phony USD into the system. He's just encouraging the masses to spend beyond what they can already spend. He's inflating a bubble that is already inflated. To think that the US can grow out of this problem with debts is preposterous. History has shown that this will never happen. Some will argue that without the US to consume Asian goods, Asia will not do well. That may be true in decades past, but it's certainly not true now. The US can only get into so much debt. They won't consume forever. Asians will have a higher standard of living if they kick the Americans off the island. They will have more goods for themselves to enjoy. They need not work that hard. The US is not helping Asia grow. It is in fact holding Asia back. Just look at the current crisis. For the first time, Asia leads the West out of the economic downturn. The US and UK are still in recession, with reports that they will get out of it this quarter. I don't think so. It is just an illusion that they're out of trouble. A bigger crash in the future awaits.

In the early 1900s, Great Britain was the world superpower. It lost its status to the US because of its flawed economic policies. The US has been doing exactly what GB had done wrong back then. People forget history fast. In the 21st century, we are going to see Asia, possibly China and/or India, gain the superpower status. The American Dream is over. Just like how people migrate to the US to build dreams in the 20th century, Americans are going to migrate elsewhere to build dreams now and in the future.

We are already seeing a shift of economic power from the West to the East. The Asian countries have strong economic fundamentals, with good savings and strong production. In the next few decades, Asia is going to shine brightly.

Although US influences are getting weaker by the day, there'll still be severe economic upheavel when the USD finally crashes. That is because the USD still forms 60+% of the world's reserve currencies, and the world is still holding on to so much US debt instruments. And don't forget that the whole world also uses fiat currencies. The whole world had also inflated the currency supplies. This includes Singapore. The East won't escape recessions and crashes. The difference between the East and West is that the East is better positioned to get out of recessions.

China and Russia have seen the dollar collapse coming, and they are already dumping the USD and buying up gold in huge amounts. China is already the world's largest gold producer, and it is fast becoming the largest buyer of gold.

The only safe haven is gold and silver, the best moneys that history has ever seen. The best metals that will preserve wealth. In the next few years, we will see a massive wealth transfer from currency and equity holders (generally) to real asset holders, especially gold and silver. Other commodities will do very well too. I believe agriculture will do supremely well too, given that this sector is way underinvested. Unfortunately, I don't have the time now to research more in-depth on it.

Buy Gold and Silver. It is really a once-in-a-lifetime opportunity. It is a sure one-direction bet for the next few years. It is as certain as the sun that will rise in the morning. Peace.

Busy Precious Metals, Busy Me

Gold shot up last night. Today I went to the jewelers, and the price per gram has also shot up by SGD 2. September has normally been a good period for gold. Gold has risen in 16 of the past 20 Septembers. There're several reasons for this: the dollar continues to weaken, Indian wedding season is just starting, and according to Miguel Perez-Santalla, a Heraeus Precious Metals Management sales vice president in New York, “a major hedge fund had a mandate to buy 500,000 ounces of gold”. Gold prices will likely keep increasing in the 4th quarter well towards the end of the year, as the Chinese start buying gold for CNY as well.

Now gold is at USD 980++, up from about 940++ last week. 1,000 is the psychological barrier. Once gold is able to breach that barrier and stay above it, we may well see gold prices go even higher.

I do believe gold may drop a bit sometime next year, due to the effects of the crazy printing presses pumping currencies into the economies to artificially stimulate them. However, I still think it can go to 2000 in the next 2-3 years. And up to the moon thereafter.

Silver has increased last night too. %-gains wise, it's much better for silver. Gonna get new silver coins this weekend. Yeah!

Right now I'm super busy with 4 tuition students, and 4 possible new ones coming in. This week, by word of mouth alone, I got 2 new students, and 2 potential ones. The power of word of mouth! Reminds me of MLM 4 years ago. It's quite alright handling this many students actually, if not for the fact that I need to revise my O level stuff again. got 1000 ++ pages of stuff to read. Zzzz

If only those money I squandered in MLM can come back to me, and be invested in silver.... =/
Web Statistics