Property vs Silver

Property investment is a favorite subject for investors in Malaysia. Many investors have made good profit from property for the past few years and even more are desired to be part of the game. Property is the ultimate investment tool. Not only property provides cash flow but also capital appreciation that works for investors in passive manner. If you compare property with any other investments, property always comes out as the overall champion. So, how does property compare with silver?

Let’s compare property with silver in 3 different aspects:

Cash Flow

Property is a great tool to receive cash flow. Fundamentally good properties always have high rental demand and yield very good cash flow. The best thing a property investor could do is to divide a large apartment (or a double storey house or shop lot) into many partitions and start renting them out to maximize rental return. It is always more profitable to rent out smaller rooms than renting a property as a whole. The downside is, it is more work to rent separate small rooms compared to a whole unit. In silver, cash flow is almost non-existence. A silver investor do not receive any cash flow no matter what silver he invests in. There are precious metal investment programs that provide “interest” or “dividend” or any other forms that carries the similar meaning, but that often doesn’t end up well. In silver investment, the only exception that provides cash flow is to start trading silver as a bullion dealer. You buy a piece of silver for RM120 and resell it for RM135. That is a cash flow of RM15. Some might argue that is running a trading business and it’s not a investment. Well, renting out a property requires certain amount of work too such as renovation, arrangement for furniture, finding tenants, collecting rental, up-keeping maintenance, etc. In both property and silver, it depends on how much effort the investor wants to put in order to receive the cash flow.

Capital Appreciation

Both property and silver provide capital appreciation. For property, since 2008 till date, price has increased significantly. There is no absolute number to measure how much property price in Malaysia has increased as different locations, different types of property, or even different units of property in the same project might face different capital appreciation return. In property investment, there is also difference between asking price (the price that the property agent / owner wants to sell) and transacted price (the price that the new buyer bought it for) hence it is really challenging to provide an exact number how much property has appreciated since 2008. However if anyone has been following the increase of property price, it’s totally not surprising to find out property price has increased for anything between 100% to 150% since 2008. On the other hand for silver, since November 2008 until November 2012, silver price has increased approximately 200%. It is much easier to measure the appreciation of silver price by tracking silver spot price but nevertheless there are different type of premium for silver.

Leverage

In investment sense, leverage often means using OPM (other people’s money). In property investment, an investor has leverage of 1 to 10 ratio. Example, a person has RM20,000 can buy a RM200,000 property by borrowing the remaining 90% from the bank. Banks love to borrow money for property buyers as the loan is backed by a physical asset.  If you understand how a home loan works, banks charge the maximum interest in the early years and ONLY allocate your repayment to knock off the principle portion at the end of the loan tenure.

Any “misbehave” while serving the loan (such as defaulting payment for 3 months), the banks have the rights to raise your interest from -2.4% BLR to +2.5% BLR. If we take today’s interested rate at 6.6% and you are getting a -2.4% BLR, your actual interest rate is 4.4% (6.6% – 2.4%). If for whatever reason you could not pay the installment for 3 consecutive months, the bank could increase your interest rate +2.5% BLR which is equivalent to 9.1% (6.6% + 2.5%). From 4.4% to 9.1% in a more layman perspective, that means if you take a loan of RM200k for 30 years at 4.4% interest, you are paying approximately RM1000 as monthly installment. If for whatever reason the bank increases the interest rate to 9.1%, your installment will now be slightly more than RM1600. From another aspect, if your property value appreciate for 10% from RM200,000 to RM220,000, you are making 100% return from your RM20,000 down-payment. However when your property value depreciate for 10% from RM200,000 to RM180,000, you are making 100% lost on your RM20,000 down-payment. When that happens, really quiet a tough situation to be in. Leverage is a double-edges sword, it can cut your enemy, it can also cut you.

For silver, leverage is again almost non-existence. There is no bank that will borrow you to invest in silver. Well, when there is a will, there is a way. You can take a personal loan or use over-draft facilities to buy silver, but that is highly not recommended. The fluctuation in silver price is too huge to use a loan to invest for one simple reason: the interest on the loan is a constant (fixed) while the return is unknown. Silver price could go up and come down in different time of a day. There is no benchmark for silver price movement. Taking a loan to invest in property is a calculated risk (if you know what you are doing), but taking a loan to invest in silver is purely putting yourself in risk that has no form of systematic way to calculate the risk vs return. It’s just pure risk. This act is comparable to gamble away your money in Genting Highland!

Summary

It is rather challenging to define a clear winner in investment. However if we look into the minor details, property often comes out as the overall champion. So, why are we still looking into silver investment? No doubt property is the ultimate investment tool, the reason why we are talking about silver investment is because the cycle that we are in right now. The cycle for property is almost over, transaction is low, appreciation is not growing as the previous years, prices has gone way above affordability level. Silver on the other hand has tremendous upward potential, affordable where every middle class can afford to buy 1 oz of silver every month, and silver has strong physical demand in both industrial usage and investment demand.

Practical Guide For Investing Silver In Malaysia is a non-bias eBook written by Malaysian to Malaysian to show you why silver investment is such a great option and how to invest silver in Malaysia to maximize your profit, click here to find out more.

How To Manage Silver Price Volatility

Price to get in and price to get out are the most important factors in silver investment. Price is the most important factor in almost all investment you put your money in. Your profit in silver investment is solely depend on the difference of price when you buy and the price when you sell. It is a typical application reaping profit by buying low and selling high. A simple concept but NOT many investors can fully utilize, for one reason :-

Silver price volatility is relatively high. If you have been following silver price since 2011, you will agree that silver price fluctuation could be as high as 30% in few days (within a week). Price fluctuate for 3% to 5% a day is no surprise to any investor who has been monitoring silver price.

I will show you a real life example happened last week. On Wednesday (28/11/2012) night around 10 PM, silver price dropped from $33.80 to $32.90. If you have bought a any amount of silver before the drop, that is equivalent to seeing your RM100 become RM97 in just 2 hours. I’m sure that is not a very pleasant experience.

Within the next 24 hours, silver price has climbed back up, traded within $33 – $34 range and then shoot up vertically to $34.30 on Thursday (29/11/2012) night:

If you have bought some silver when price dropped to $32.90 and sold your silver at $34.30, that’s pretty good profit for 24 hours ya? Unfortunately, in reality things is not as simple as that. No one can predict silver price movement and no one can buy and sell physical silver instantly.

It is not recommend for average silver investor to bet on short term fluctuation of silver price. That is the guarantee recipe to get sleepless nights!

In order for you to avoid your capital in silver investment get affected severely, you can consider adding silver coins that has numismatic value into your silver portfolio because many coins that have numismatic value have their own market price. They do not get affected by spot price severely. Here is an example for 1 oz Panda silver coin:

Year       Issued Price (including 15% tax) Current Price (including 15% tax)
2010 RM 92.00 RM 224.60
2011 RM 163.20
RM 172.80
2012 RM 165.00 RM 168.20

* Due to the numismatic nature of Panda coin, price might slightly varied due to different geographical demand and currency conversion rate.

From the above chart, the value for panda coins have their own market price. The fluctuation in silver spot price has little effect on Panda coins price. Earlier this year (2012), when spot price dropped to $26 – $27, Panda coins price did not drop. It remained at RM168. However, when silver spot price increased in 2010 – 2011, the Panda coins prices have significantly increased due to both increased of spot price and the appreciation of Panda coin numismatic value.

The same did not apply to other bullion coins such as American Silver Eagle or Canadian Maple Leaf. These bullion coins prices are directly affected by the changes in silver spot price. When spot price dropped, these coins price dropped and vice versa.

Back to Panda coins, apart from price factor Panda has limited and small amount of mintage compared to other legal tender coins such as American Silver Eagle coins. China population is 4.3 times more than United State population and China government is encouraging the citizens to buy the Panda coins themselves. Right now, many Panda coins remains in China (owned by Chinese collectors and investors).

The potential in Panda coins is something you should not overlook.

Hence, if you are looking for an alternative to manage silver price volatility, coins that carry numismatic value are something you should pay attention to. Panda coins are good examples. However note that not all numismatic coins are equivalently suitable for investment. A novice silver investor should stay away from high premium numismatic coins – unless he has acquired the necessary knowledge knowing what numismatic value is worth paying for.

I have written the eBook Practical Guide For Investing Silver In Malaysia to show how Malaysians can make the most return out of silver investment. If you are serious about silver investment, click here to find out more.

Why Silver Price Dropped Last Night (3rd Nov 2012)

Yesterday night, silver price crashed down from $32.26 to $30.91 after the release of NFP data.

So, what is NFP and why it has such a big impact. NFP stands for Non Farm Payroll. The total Non Farm Payroll accounts for 80% of the workers who produce the entire gross domestic product in the United States. NFP statistic is reported monthly (on the first Friday of the month). It is used by US government to determine the current state of the economy and predict future levels of economic activity. NFP is also the number Federal Reserve looking at to decide whether to introduce more Quantitative Easing.

The price got supported and closed at $30.91 for the week.

The reason why silver price crashed down is because 192 million oz of paper silver were dumped on the market in only 10 minutes between 8:30pm and 8:40pm (Malaysia time) where most of us was having out Friday night party 😀 In case you do not know how much 192 million oz of silver is, that is equivalent to a 1/4 of annual global silver production.

Now the question is, when they sold the paper silver, where did the money go?

According to the figure provided by Casey Research, every year more and more investors are selling off the paper silver; and more and more investors are buying physical silver for investment. In other words, investors are dumping the useless paper and buy more physical silver that they can hold and touch. As Mike Maloney says “If you don’t hold it, you don’t own it!“.

We are now in a very exciting time for silver. Very often, great fortune is made during time like this. Investment is nothing more than the uninformed investors transferring their wealth to the informed investors. Again and again, many people could not make money through investment because they are always playing the uninformed investors game. They simply do not understand how the game is played and get slaughtered by the informed investors. Every time when they invest (well, they thought they are investing), actually all they did was transferring their wealth to the informed investors’ pocket.

I’m glad that you are visiting this blog talking about silver. By visiting this blog, you are already stands at the informed investors side for a start. If you do not believe, try ask the people around you (your colleagues, your friends, your family members), how many of them have heard of silver investment? I can safely tell you on average 8 out of 10 would say “What? Silver? Who buys silver for investment?“. When you hear that as an answer, please smile, because that is the affirmation you are already on the informed investors side.

However, having awareness alone is not sufficient. You must have the knowledge on how to take advantage of the situation. I wrote the eBook titled: Practical Guide For Investing Silver In Malaysia to teach you how to take advantage of the situation. Not only you can learn silver investment “trade secret”, but you also get to network with a group of serious silver investors in my membership site. You have already got the advantage of stepping ahead as the informed investors, but how do you want to move on from here, it is entirely your choice.

Practical Guide For Investing Silver In Malaysia is the No.1 eBook available in Malaysia for investing silver in Malaysia. After reading the eBook and think you have not learned anything, please email me and I will gladly give you a 100% refund. Click here to find out more.

Sure Way To Lose Money In Silver

In silver investment, all physical and investment grade silver can be categorized into 3 types which are low premium, medium premium and high premium.

Example of low premium are such as Sunshine bar, APMEX bar, ASE bar, Morgan bar, Johnson Matthey bar, Buffalo round, Scottsdale Omnia round etc. This kind of bars or rounds have very little premium, which means the price is not too much above silver spot price. This type of silver is value-for-money and you basically get the most silver out of your money.

Example of medium premium are such as American Silver Eagle coin, Canadian Maple Leaf coin, PAMP SUISSE silver bars, Kookaburra coin, Chinese Panda coins, Canadian Cougar coin, Fiji Taku coin, etc. The price for this type of silver has a higher price compared to the low premium silver (1oz to 1oz comparison). However the detail of such silver is usually finer and looks much more attractive compared to low premium silver.

Examples of high premium are such as Perth Mint Proof coin series, Mongolia Long-eared Hedgehog, etc. This type of silver usually comes with an exclusive packaging, sometimes certificate and even serial number. The premium is extremely high where the price could be 3 to 10 times of silver spot price. High premium silver is suitable for personal collection and not investment purpose, at least for most people. It requires very specialized skill to make money from high premium silver. Else, most of the time you will see people losing money in high premium silver investment.

When comes to silver investment, many investors don’t make money because they don’t know what they don’t know.

If you are new to silver investment in Malaysia, you might not realize there was a Dragon Fever in late year 2011. The Dragon Fever was referring to the Perth Mint’s Australian Lunar Silver Coin Series II celebrates the Year of the Dragon (dragon bullion coin). Well, usually people just call it as Dragon. Dragon is just a medium premium bullion coin but the price was speculated so high until it seems like a high premium silver coin.

When Dragon was first launched in late 2011, the price in Malaysia market went up to as high as RM420 for 1 oz of Dragon coin. Most people bought the Dragon coin for RM3xx in early 2012. Then, Dragon price further dropped down to RM2xx for some lucky buyers. Today, the coin was being transacted at RM172 only. If someone bought the coin for RM420 in late 2011, he is literally suffering 60% lost for the coin.

Let me repeat this…

When comes to silver investment, many investors don’t make money because they don’t know what they don’t know.

For most silver investors (especially the beginners), I would suggest you to start by buying low premium silver and only allocate a small portion (20% – 30%) of your budget into medium premium silver. Save the high premium game to a later date when you are more familiar with the market.

Consider it this way. Premium is equivalent to risk. Replace the word “premium” with “risk” and you will appreciate why I suggest new investors to start with low premium silver. The lower the premium is, the lower the risk is and the safer the investment is. I won’t deny there are people who can make good profit from high premium silver. Those are the people who have specialized knowledge and their own particular network to liquidate the high premium silver. For the majority of us, it is a better idea to stick to low premium and medium premium silver.

I wrote an eBook titled Practical Guide For Investing Silver in Malaysia. This eBook specialized in showing you how to invest in low premium and medium premium silver. In fact, I would also show you other common mistakes you could potentially made like in the Dragon coin. Take a look at it here:

QE3 Is Now Official

Federal Reserve on Thursday (13/9/2012) decided to launch a new program of open-ended bond purchases. This is also known as Quantitative Easing 3 (QE3). QE3 will buy $40 billion of agency mortgage-backed securities each month, starting Friday. It’s also keeping in place Operation Twist (another stimulation package). The bottom line is the central bank will be adding $85 billion of long-term securities each month through the end of the year.

Right after the news, silver price shoot up to $34.70 (almost $2 rise):

US Dollar and silver will always work on the opposite direction. What does it means? When the value of US Dollar drops, silver price rises; when the value of US Dollar rises, silver price drops. When QE3 is launched, it is an action to devaluate US Dollar (lowering the value of the paper currencies), which means the value of US Dollar drops, so consequently silver price reacted with it and went up almost $2 within minutes.

Also take note of the open-ended bond purchases mentioned above. In layman terms, that means Fed will continue devaluating or lowering the value of US Dollar as long as they want. There is no end to it. In other words, the potential for silver price to go up is also no end. Silver price will continue to rise and rise and rise and rise…

I have said it many times and I will say it again, “this is just the beginning“. Silver price has a long way to go. This is a wonderful opportunity in our time. Most people do not know this, but you are reading this blog right now, you must take advantage of the rising silver price. Honestly, it is not too late to start now. However, before you go in to silver investment, I suggest you equip yourself with the correct knowledge to avoid getting burn.

Check out the eBook Practical Guide For Investing Silver In Malaysia. It is the most complete guide for Malaysians to kick start the silver investment. It will guide you exactly step by step how to be a successful silver investor:

Bill Murphy: JP Morgan Secret Is Out, Silver Price $100 Soon!

The prices of gold and silver are breaking out. Bill Murphy, from GATA.org, predicted all of this over a month ago, before the near 30% jump and now he says this is just the beginning. Murphy is further forecasting continued explosive moves to the upside in the metals prices. “It won’t be long in till silver is at $100,” Murphy declares. But is physical precious metals the way to go? Check this fast-moving interview to hear Bill Murphy reveal the other investment he believes will actually outperform the metals as a “10 to 20 bagger.”

Murphy states that if the JP Morgan scandal breaks as he is expecting:

There is no telling what silver could do on the upside due to a short squeeze as JPM holds naked short positions 3 times the deliverable silver available on the COMEX!

Silver market is very tight. The amount of silver available for purchase is far less than the available gold. It will take up to weeks or even months if someone is trying to buy silver in large scale. This is the very first sign of silver shortage. Right now silver price is about $33. It is not surprising to see silver to hit $50 to $60 and it won’t be long before silver price hit $100.

When talked about general economy, Bill Murphy also mentioned the average person is being squeezed. When the financial crisis hits (which many believe is going to happen within a year) standard of living is expected to drop 30% to 35%

You must know how to invest in silver to protect your financial life. If you want to invest in silver but do not know how, the best time to start is to start NOW! The “Perfect Moment” may never come. Great fortune belongs to those who are well prepared~

Silver Breakout – To Buy Or To Wait?

On 21 August, I wrote a post titled: Silver Price Explode 2012. Market started to get exciting and silver price closed at $30.82 last Friday. Without a doubt silver price has its breakout. It is being trapped into the flag since May 2011 and finally has it breakout now.

There was a reader got a little too excited with the price moving straight up for 3 days and bought 20oz of physical silver. Right after he bought them, silver price started to fluctuate around $30.50 and did not go up much. He started to get worried and asked me what happened. Well, silver price does not move up continuously for many days without any pull back. We need to set our expectation right. I repeat, silver price will not going up straight consecutively for 30 days without any pull back.

Anyway, the questions I have been getting for the past few days are:

  • Should I buy silver now?
  • Should I wait?
  • How high will silver price goes?
  • Will silver price come down?
  • When is the best entry point now?

I will answer all the questions above with the following diagram and give you a “suggestion” what you should do later on.

Referring to the graph, there was quiet a resistance at price $30.50 (end of 2011) that stops silver price from going up. Although silver price broke out, silver price is now hitting the similar resistance like what happened in end of 2011.

I won’t bore you with a bunch of technical analysis, let’s get straight to the point of what does it mean and what we should do.

  1. Silver price breakout, that’s for sure and it is a good sign that silver price was moving up in the long term. We are targeting silver price to go up to $35-$40 by end of 2012 and $50-$65 by end of 2013.
  2. If you did not follow my “suggestion” to buy when price was $26-$27, what should you do now? Should you wait any longer or buy now? Obviously, the short answer is “Don’t wait, buy now. Silver price is going to move up much higher, this is just the beginning.” Right now the price is about $30, imaging when price went up to $60 by end of next year, you will be beating yourself for not taking action now. (Just like how you didn’t buy property in KL / Penang during year 2008 / 2009?)
  3. For short term, silver price is facing a possible pull back at $30.50. If you want to be cautious, you might want to wait for silver price to break $32 before entering. Personally, I do not like betting the price to go up or come down. If I have RM200, I will spend RM100 to buy silver now. If silver price does pull back, good, I will spend the remaining RM100 to buy cheap silver; if silver price continues to go higher, great! I will spend the remaining RM100 to buy again the catch the bull trend. There is no right or wrong method but that’s how I will do it myself and how I have been advising my eBook readers and lifetime membership members.

To learn more about practical steps and guide to invest silver in Malaysia, download Practical Guide For Investing Silver In Malaysia. I will guide you step by step how you can quickly start your silver investment and how to buy silver below market price.

Silver Price Explode 2012

I have talked about the flag pattern earlier in March 2012. The forecast was, when silver price approaching the end of the flag, silver price is set to explode! If you have not read it, feel free to check it out here: Cheap Silver Ends In 2012This is how the flag looks like:

Right now, we are at the end of the flag pattern. Silver price is set to explode anytime now. Yesterday (20/8/2012), silver price has up +.51 in a single day. Chris Duane (the founder of Silver Shield Report) mentioned:

We need to get above $30.61 to get the party started and bring out the silver rockets.  The reason I say $30.61 because that is the 200 DMA and the point that breaks out of the 16 month cup and handle formation.  I feel we have until next month until the real fireworks start.  And unfortunately you are probably not going to like the kind of fireworks you are going to see…

On July 24th, Mike Maloney suggested that silver investors only had a month at the most before beginning a breakout with the price of silver.

Take a look at this chart:

You see, silver price is MIGHT NOT explode tomorrow but we are nearing the end of bear market. I mean very very near. When the price explode to $42-$48 in the next 6 to 12 months, you will be grateful that you have bought your silver now at $28+. Why $42-$48? I have a detailed explanation on my eBook – Practical Guide For Investing Silver In Malaysia. In fact, that is a very potential price you should target to exit your silver for the short term.

Personally, I have buying silver like crazy for the past 1 month to prepare for this moment. I have been buying a lot of silver rounds and some silver bars. I prefers silver rounds over silver bars because silver rounds is always being perceived as money (even though it is not). The bottom line is, I do not want to beat myself up and regret that I didn’t take any action when silver price is cheap. If you can remember during year 2008-2010 (3 years), property price in Malaysia was dirt cheap. Right now when we look back, we might call ourselves silly for not taking action to invest in property back then in 2008-2010.

The fact is, when we are not equipped with the  knowledge to take action, we often miss the opportunity. That’s why I have written the  eBook – Practical Guide For Investing Silver In Malaysia to teach Malaysians to take advantage on the silver price explosion. We all understand silver market changes from time to time, that’s why I have included a *Lifetime FREE Updates* for you if you download the eBook today.

Happy investing! I will see you in the membership site.

January – June 2011 Silver Price 50% Increase

Here is a shocking news. Although it happens more than a year ago, it still worth sharing.

GATA – The Gold Anti-Trust Action Committee was organized in the fall of 1998 to expose, oppose, and litigate against collusion to control the price and supply of gold (silver) and related financial instruments. GATA sued Federal Reserve and won twice. I believe I don’t have to further convince you on the credibility of GATA.

The chairman of GATA, Bill Murphy has made a public announcement that during January to June 2011, JP Morgan was compelled (being forced) to stop manipulating the silver market. That means during January to June 2011, JP Morgan could not manipulate silver price and silver price was traded in free market.

And see what happen when silver price is traded in free market during January to June…

Silver price has gone up from $26 to $50 dollar! Almost 50% increase!

Bill Murphy said:

Silver practically went straight up to $49 an ounce. THEN, it collapsed for no apparent reason. That reason, from my most well informed source, was that JPM came back into the market in June.

We are expecting “some movement” from August 2012 onward. Most people would see the price goes up and price goes down, and they do not have the skills to take advantage of the price movement. I hope you are not one of these people. If you want to equip yourself with the right skills and knowledge to take advantage of silver price movement, take a look at the most complete guide for investing silver in Malaysia:

Are You Losing Money In Silver?

When come to investing silver, are you making money from silver or are you losing money in silver? Many people wish to make money from silver market but unfortunately most people are losing money. Sad, but it’s true.

Take a look at this chart:

This chart shows silver price is on downtrend since 28th April 2011 at $48.70 down to $26. If a silver investor has enter the market anytime in within this period, we could safely tell he is either not making money or losing money.

When this happens, most silver investors start to lose confidence in silver, some even give up on silver. They lose hope and probably thinking silver is not such a good deal after all. This is clearly observed in the market. When silver price is on the uptrend, more people are participating in forums, Facebook group pages, seminars, bullion dealers transaction etc. When silver price is on the downtrend, most the activities related to silver would slow down.

What these people didn’t realize is, when silver price is going towards a downtrend, it is a good time to buy more instead of running away!

Malaysia Silver Investor LIFETIME Membership

Someone asked me a question whether now is a good time to enter market. I don’t have a crystal ball and I cannot accurately forecast the future price, but I will give my personal opinion anyway. This is something I previously shared with the members in my VIP Lifetime Membership page:

There are several very strong resistance, and support level for silver for the past 2 years. The numbers that we are looking at right now are $26 and $34. Since the price is around $27 these few weeks, I will tell you more about $26 support level.

$26 has been tested for several times this year. Once it hit $26, it is a dangerous sign because once it is broken, it will potentially go down to $18-$17. Again, $26 is a strong support. I see $26 as a bottom price. For now it is quiet unlikely to go down to lower than $26. Silver will be traded within the range of $26 – $34 in the short to medium term.

Today price is about $27, it is very near to the support level (the bottom $26), so to answer your question, yes, it is a good time to enter the market now.

One of the reasons why I’m being positive about this is because of the trend we are at. We are clearly at the end of consolidation since the peak in April 2011.

If silver price break support at $26, it will be supported at $17-$18. We would need another 6-12 months for silver price to climb back up. The good news is, if silver price doesn’t break $26, silver price will potentially go up to $50 or even $60 by end of 2012.

If you want to receive a solid education for investing in silver, I suggest you take a look at my book (Practical Guide For Investing Silver in Malaysia) which I have spent months and months to prepare it and months and months to update it to ensure you will receive the most updated information.