Big Brother of Silver

Gold, is widely known as the big brother of silver. When gold price moves, silver price follows. If you look at the long term gold chart and long term silver chart, the price and percentage of movement might not be exactly the same, the direction is however identical. Generally, silver price movement is more volatile than gold price.

long-term

If you want to know what is going to happen to silver, look at gold.

223.519 metric tons of gold was imported into mainland China for the month of March. Compare that to the 51.3 metric tons and 97 metric tons imported in January and February 2013. The last time China importing gold on this scale was November 2011, when 102.6 metric tons was imported after the crash in prices from the short-term peak of $1,922 per ounce troy.

Gold Demand in China

From January 2013 to date, China has bought as much gold as whole year of 2011. Let ‘s be reminded that now is only early May 2013. If such trend continues, the demand for gold would be growing exponentially. When people are shorting the paper gold price (selling paper gold), there are people who take advantage of the low gold price to buy up physical gold.

China is buying the dips, they keep buying physical gold whenever there is significant drop in paper gold price. As evidenced by gold and silver American Eagle sales from the US Mint, the 2.841 metric tons of gold coin re-exported from Hong Kong into the U.S.

To summarize the situation, here is the analogy:

The powerful financial institutions and individuals who trades in paper gold are doing their work to bring down gold price. When gold price came down, the Chinese are aggressively buying physical gold into China (from the U.S). Later, the Chinese sell back the gold to U.S… What?!

China vs US currency war

During the price drop in April 2013, gold coin sales has been higher. January sales is usually much higher than the other months, because January is when the new design being released. Due to price drop, the numbers from US Mint showed the sales for April 2013 is even higher than January. While the paper gold price is smashed down, many investors simply recognize this is a fantastic opportunity to buy physical gold.

us-mint-gold

Gold is the big brother of silver, both gold and silver are precious metal. However, silver has an additional demand as industrial metal. Silver is a metal highly consumed in manufacturing including car, electronic (TV, smartphone, refrigerator, RFID chips, etc), car, clothing, water purification, solar panel and much, much more. In fact, silver has more than 10,000 known applications.

There are approximately 3-5 billion oz of physical gold available for investment in the market, but there is only about 1 billion oz of physical silver available. If gold is a great buy, silver is even greater.

During the recent price drop, silver sales has gone much higher than the previous 2 months:

us-mint-silver

In the first 4 months of 2013, the US Mint sold MORE THAN 18 million American Silver Eagle bullion coins. That’s the first time ever the Mint has sold this many coins so early in the year, setting a record in the 27-year history of the series.

In that same period of time, the world’s silver ETFs actually added 20 million ounces to their vaults. That’s nearly $600 million of worth of silver being bought within just 3-4 months, all while silver prices were steadily declining.

Again, when there are people busy shorting (selling) the paper silver. Many investors understand the physical silver is the real tangible asset, and took advantage to buy silver at such low price.

During silver price drop last month, the world has literally facing a shortage of silver. This did not only happens to Malaysia silver market, but also globally. Click here to find out what happened in April 2013 during silver price crashed.

Now, look at it this way, you now have 2 choices:

  • Keep holding on to the paper money that central government can print as much as they can, while seeing them use the paper money to crash precious metal price, OR
  • Take advantage of current low paper price, exchange your paper money with tangible physical precious metal that has limited supply on earth.

Silver Malaysia eBookTo find out more about silver investment in Malaysia, take a look at eBook: Practical Guide For Investing Silver In Malaysia. You will find out why silver is a better investment compared to gold and learn how to buy your 1st silver coins.

20 thoughts on “Big Brother of Silver

  1. Dear Mr Foo,
    I wish to invest in gold or silver.and I would be grateful if you you could give me some sound advice .I have never invested in either product before.
    My questions are;
    !. Which would be a better investment do you think-Gold or Silver?
    2.Should I invest in PAPER or PHYSICAL gold /silver?
    3 Is this an opportune time to go in?
    4 Would you advise me to open a silver investment account with Maybank? .
    5 How should I go about investing in either of these , being a layman in the field?
    Kindly enlighten me.
    Many thanks

    • Hi Patrick,

      1. Silver is generally more volatile than gold. If you could take the risk, go for silver. If you want to have something more stable, go for gold. Remember, investment is always about the balance of risk and reward, the higher the risk, the greater the reward and vice versa.
      2. Physical.
      3. For long term investment, anytime is a good time as long as price has not reach previous peak.
      4. For Maybank Silver Investment Account, there are couple of concerns, I suggest you take a look here: http://silverinmalaysia.com/maybank-silver-investment-account
      5. The best channel is to start by reading the eBook (Practical Guide For Investing Silver in Malaysia). I have spent years to prepare the material and updated recently. The eBook would give you detailed explanation on the type of silver you should invest in, explain to you what the concerns are when investing in silver items, show you a list of trusted and reputable dealers and much, much more: http://tinyurl.com/silver-ebook

  2. Hi Daniel,

    In your opinion, should I buy at least 1oz of physical gold to keep it at home since I have some physical silvers? Or better use the money to buy 5 x 10oz of physical silver rather than 1oz of gold coin?

    Wish you happy always!

    • Hi Terrance, depending on your risk appetite, you first need to decide what ratio of gold and silver to invest in. For example if you are elder and would take less risk, you should consider lower gold silver ratio such as 1:3. For every RM300 you spend on silver, you should spend RM100 on gold. If you have higher risk appetite, you can consider ratio 1:10. For every RM1,000 you spend on silver, you spend RM100 on gold.

    • Hi Alvin, it is not measured in terms of gram or oz. It has nothing to do with the weight. For example using ratio 1:3, when you have RM400, you spend RM100 on gold and RM300 for silver. RM100 might not be able to buy any gold nowadays so let’s assume you have double the amount of RM800. Now, you might want to spend RM200 to buy 1gram of PAMP Suisse Gold Bar and spend RM600 to buy 7 x 1 oz of generic silver bar. It is always in terms of value of the metal you are collecting rather than the weight.

  3. Good evening daniel :-)thank you for your time to check over these comment and reply us:-) anyway i got some question quite confusing around my head..
    In your opinion, which brand of silver has the highest value and easily to sold? I heard that the American Eagle are more worthy to invest in..but on the other hand, Canadian Maple Leaf has the purest 99.99 silver coin among other brands how come its value are not as high as American Eagle that has 99.9 fine silver?

  4. Hi Aaron, it’s my pleasure to help out whenever I can.
    To answer you question, there are 2 types of silver can be sold of fairly easily. First is exactly what you have mentioned, American Silver Eagle coin. The design is beautiful, it has high demand not only in Malaysia but throughout the world. You can sell this coin off in short amount of time as long as you are putting a reasonable price. Second is generic bar such as Sunshine, Scottsdale, APMEX etc. These are the bars that big shark investors go for. As long as the price is right, they can easily buy up 100 oz, 200 oz, or even 500 oz at a go.
    Yup, you are right that Canadian Maple Leaf has higher purity of 99.99% compare to the rest. However the 0.09% of 1oz silver is not that much to make an impact to the price. Furthermore, Canadian Maple Leaf is known for having milk spot, so some people might rather stay away from it.

    • Hi Alvin, yes, Panda coins are widely recognized globally. You can buy it easily. Recent years panda are semi-numismatic item so it might not catch the attention for those value-for-money investors.

  5. Hi daniel,

    Is silver panda easily selling off in worldwide?

    Are they emphasis on the premuim or purity of silvers?

    Are they check in beautiful design or huge contain of silvers?

    • Hi Alvin, silver panda coins are widely recognized globally. When investors buy silver panda, they value the premium (including the design and mintage quantity). The purity for silver panda is commonly 99.9%

  6. Sorry another one,

    Are they emphasis on premium or purity on silver? Meaning they want the beautiful design or huge contain of silver. Because American eagle has beautiful design but lower purity silver than maple leaf.

    • Hi Alvin, American Silver Eagle and Canadian Maple Leaf purity are 99.9% and 99.99% respectively. However, the 0.09% in 1 oz silver is negligible. Most testing device in the market would not be able to tell the difference. Don’t be overly concerned on the 0.09%. Personally, I prefer American Silver Eagle over Canadian Maple Leaf because American Silver Eagle have less problem with milk spot.

  7. Hi Daniel.

    I am trying to diversify my investment and after studying your site and few others. I just started buying Silver. Scotsdale Stacker 10z and 3 coins each (1 AE, 1 CML and 1CP) was my first buy. Spent slightly more than 1K. Not a bad price since the price drop on metal lately. Back to your question 3:1 ratio, I should then be spending around 400++ on gold. At this kind of price, what type or brand of gold would you recommend? I plan to buy this consistently every couple of months.

    Thanks for your time.

    Jerry

    • Hi Jerry, you can consider starting with small size 1 gram gold PAMP Suisse. Today price, would be slightly below RM200, depending whom you buy from. If you are looking for lower premium gold, you can consider KFH.

  8. Good Morning Daniel, how about the circulated American Eagle, is it worth buying with few Ringgit cheaper but come tarnished and is there any way to do away the tarnished such as using the D4 or tooth paste to polish it?. thanks.

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