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.

Polis Diraja Malaysia Report

If there is one worst thing could happen to your silver investment, it would this.

The below victim is conned by a man name Fam Kim Siong (Maybank account: 154017536054) of RM1,500 for buying silver online. Victim’s personal details is being blurred on purpose to protect victim’s privacyThis information is uploaded here with the victim’s permission to alert everyone else who are buying or planning to buy silver online.

Polis-Diraja-Malaysia-Report

The same con man has cheated another person worth of RM3,500 with the promise of delivering gold. In both cases, once he received the money through bank transfer, he can no longer be contacted.

Buying silver online could be one of the cheapest method to buy silver, however there are always 2 sides of every story. Some people would rather paying a slightly higher premium (more expensive) to only buy from reputable dealers; while some would take the risk to buy lower premium (less expensive) from less reputable dealers. As much as the choice is yours, I would like to give you a few quick tips:

  • If this is the first time you buy from a dealer, always consider Cash On Delivery (COD). COD is a method you collect silver and pay cash when you meet up with the dealer. If the amount is small (less than RM1,000), you should consider meeting at coffee shops or shopping center; if the amount is relatively larger (more than RM1,000), consider meeting up in a bank so that money can be deposited into bank account immediately.
  • If this is the first time you buy from a dealer, always test his silver by buying a small amount first. Yes, it is OK to buy just 1 oz for testing purpose (of course, you don’t have to tell him that you are testing him). Investment grade silver is always 99.9 fine silver. Spend a little money to ensure the dealer is selling genuine silver. If you are planning to buy larger amount from the same dealer later, you might even want to send his silver to assayer service (this is the professional level of testing). Your silver will be cut into pieces to verify the inside content. However, you might not be able to sell this piece of silver in the future later. If you want to take a less destructive method of verifying the silver content, consider using a Densimeter. It measures the density of the silver item by dividing the reading of weight by volume. Your silver would not be affected.
  • As Warren Buffet said, “don’t put all your eggs into one basket“. If you are buying a large amount of silver online, you should discuss with your dealer to separate the delivery into few shipments. For example, if you are buying 120 oz of American Silver Eagle (equivalent to 6 tubes, each tube has 20 oz),  you can request these 6 tubes to be sent in 2 batches (3 tubes each batch on 2 different days).

There are many, many other tips you should know when investing in silver. Obviously, I could not cover them all in this short article, I do hope you would consider looking into my eBook Practical Guide For Investing Silver In Malaysia to find out more about the tips. The above victim’s case is a perfect example of those “costly mistake” anyone could make. If he have read the eBook before investing in silver, I’m fairly confident he would have avoided such “mistake”.

Silver Malaysia eBookIn the eBook, I’d also provide you a list of trusted and reputable dealers in Malaysia that you can safely buy your silver from. In fact, I personally buy from these companies / individuals. To find out more about silver investment, take a look at eBook: Practical Guide For Investing Silver In Malaysia.

The Truth

Have you watch the video? Please watch. “The Truth” is a highly awakening video everyone should watch. Really.

If you are now in certain form of debt (including credit card debt, personal loan, car loan, Ah Long debt, or any other creative debts), this did not happen by chance. The global monetary system is designed to get you into debt. The more debt you have, the more powerful “they” have over your life such as indirectly forcing you to cling to your job. When it comes to money, nothing happened by chance. The truth is, EVERYTHING is there for a reason and the reason is usually NOT benefiting you. Monetary system could simple if you understand how it works; but if you don’t, I recommend you take your time to look at these FREE educational videos I have compiled over long period of time.

Last week, I shared Rio Tinto’s Kennecott which contributes to US 16% annual silver production has landslided. This mine will likely shut down production. 5 million oz of annual silver supply (and 500,000 oz of annual gold supply) is vanished.

This week, I will share with you more precious metal mines are closing down due to the recent crash of silver (and gold) price. For the miners, it is simply not worth the cost to bring out new metal when the production cost is higher than the gold & silver price they can sell for.

1. Drumlummon Mine, United States

Miners drill holes on a grid pattern in the Drumlummon mine in 2010

Miners drill holes on a grid pattern in the Drumlummon mine in 2010

U.S. Silver & Gold is shutting down its historic Drumlummon mine because it costs more to produce an ounce of gold than it’s worth, the company announced on April 24, 2013.

During the first three months of 2013, the mine near Marysville produced just over 2,100 ounces of gold at a cost of nearly $2,300 per ounce. At the point of  the announcement, gold price was only $1,431. To put this into simple  layman terms, no businessman would want to continue an operation that requires RM2.30 to produce a product that can only be sold at RM1.40. Fair?

2. Pascua Lama, Chille

Pascua Lama

Pascua Lama is supposed to bring 700,000-800,000 oz of gold and 35 million oz of silver annually. Barrick (the company) is considering permanently suspending the Pascua Lama project. Barrick CEO, Jamie Sokalsky said “we are working to address the environmental and other regulatory requirements on the Chilean side of the project“. Do note that the shut down of Pascua Lama is due to environmental issue rather than silver & gold price crash. However, this would impact the global supply of physical gold and silver severely.

Knowing that for every 100 oz of paper silver being traded, there is only 1 oz of physical silver back them. For every 1 oz of physical silver that you buy at current suppressed price, you are making the silver manipulators to walk on a thinner layer of ice and helping to bring silver back to their true value.

Silver short term price movement might not be too exciting. Last week, I shared that silver price is “potentially” going to $20 within the next few weeks. Of course, do not know for sure if that would happen. But I will share with you what I observe:

Descending Triangle is one of the patterns in Technical Analysis. We draw one trend line that connects a series of support and a series of high. Once the breakdown occurs, the price is potentially going lower.

Descending TriangleHere is how silver price chart looks like:

Click on image for full resolution

Click on image for full resolution

How low would it go? I do not have the answer. However, during such suppressed price, I see it as an great opportunity to buy silver at undervalue price.

The MOST interesting part about our current situation is, regardless how low silver price, you might NOT be able to buy physical silver. Click here to see some proofs of physical silver shortage happening in both our Malaysia local silver stores and other silver stores in overseas.

Assuming that there is silver, premium (which contribute to the final purchase price) is much higher than it used to be. The premium for silver bullion is being updated 2 to 3 times in a week. The disconnection of silver spot price and physical silver is obvious and getting wider. Right now in US (a matured silver marketplace), it has been reported that some dealers are charging premium of more than 25%.

Looking at the silver chart earlier for the potential downtrend. This could be just the beginning. So, EVEN if silver price drop to $11, PHYSICAL silver might be selling at $30, $60, or even $100. In fact, I would be worried for you if you could still find silver at that time.

Silver Malaysia eBookTo find out more about silver investment, take a look at eBook: Practical Guide For Investing Silver In Malaysia. You will find out where I personally buy my silver from and my review on the dealers.

Is It Time To Sell Silver?

silver_1_year_o_usd

You can notice that silver price has been on down trend since October 2012. So, is it time to sell silver now to cut your lost? The short answer is, NO.

David Morgan has a great saying about a market like this, “it will either scare you out or wear you out.” (Note: “wear you out” means making you tired). When you have a narrow view by focusing on a short period of time, you will get tired of chasing the pricing and afraid the price might continue drop lower. All you will see is negativity. Consider taking a longer period to see a bigger picture:

silver_5_year_o_usd

$26 is an extremely critical point. It has been a strong support for many times. It has been reported physical silver mining cost is between $26 to $28. Can silver price drop lower than this? POSSIBLE, but NOT LIKELY to stay lower than this for a long time.

About two-thirds of silver is used in industry and jewelry. If silver spot price dropped below $26, there are 2 possibilities could happen:

  1. Some miners will be forced to scale back / close down. Simply because no one wants to spend RM1.00 to produce a product to sell for only RM0.80. The industrial manufacturers will run out of silver once the current supply is dried out. Silver price will shoot back up drastically.
  2. The gap between physical silver price and paper silver price continues to get wider. The paper traders could short paper silver price to as low as $1 but no one will be able to buy any physical silver at $1 (as no one wants to sell at that price). Anyone who owns physical silver would be holding tightly to their silver and not willing to sell unless the buyer is offering a fair price.

Silver miner with nugget

The fact is there is 5 times less above ground available silver than there is gold (3 to 5 billion oz gold vs. 1 billion oz silver). Silver has thousands of application usages while gold has little. When we look at new supply including mined and recycled, new silver is only being added by about 10 ounces for every 1 ounce of gold. Yet investors are buying 50 times more silver for every 1 ounce of gold purchased.

This is totally unsustainable. The above scenario is like saying a manufacturer is selling 50 products a day but he could only produce 10 products a day. Where did the remaining 40 come from? It could be the old products that he has not sold previously, but sooner or later the old products will run out and that is when silver market gets REALLY interesting. By then, I would rather be gladly holding to my physical silver, than rushing to buy silver.

Since silver is both precious metal and industrial metal, silver price rises when

  • The economy improves and industrial demand grows, OR
  • The world’s major currencies continue to be debased (high inflation),

Remember, silver is an industrial metal first, precious metal second. But regardless which scenario happens, silver price rises. What if a robust economy and high inflation? Well, that is as good as you are getting a promotion (with increment) and bonus at the same time.

Personally, I do not think robust economy and high inflation are both happening together. World economy did not improve. Euro zone is still in trouble and US unemployment is still high. However high inflation is on its way. Few months back, US has launched Quantitative Easing Forever (they will be printing money without any limit, forever printing); while Japan announced their attention to double Japan’s monetary base to $3 trillion by the end of 2014. The direct consequence of such actions are high inflation. Precious metal is often a good hedge against high inflation. Robust economy? No. High inflation? Yes.

The most basic lesson in successful investment is Buy Low, Sell High. Simple theory, but many failed to truly understand it. In order to sell high, you need to buy low first. Unfortunately, when the price is low, investors are afraid that price might go even lower and then miss the opportunity to buy low.

So, what if you have already bought some silver at higher price, let’s say $35.00? Right now, when price is low, you can consider practicing Dollar Cost Average to lower your effective purchase price.

silver_1_year_o_usd

For example: Assuming exchange rate for USD and MYR is 3.15 and for simplicity sake, we remove the premium calculation in this example.

During this downtrend of silver price, if each time you bought the same amount of silver silver (let’s say 1 oz) at:

  • $35.00 (RM110.25)
  • $33.75 (RM106.31)
  • $32.15 (RM101.27)
  • $29.00 (RM91.35)
  • $27.00 (RM85.05)

Your effective purchase price (average cost) is ONLY RM98.85/oz. You do not have to wait until silver price go back up to $35.00 (RM110.25) before selling it just to break even. You can break even when silver price is merely $31.38 (RM98.85). Everything moves in cycle. When price move up to $32, although you bought some silver higher price at $35.00 (RM110.25), you can sell all your silver at $32 (RM100.80) each and already making some profit.

Silver Malaysia eBookDollar Cost Average is a strategy designed to protect investor from huge price fluctuation / changes. Dollar Cost Average is 1 of the 4 strategies I discussed in the eBook: Practical Guide For Investing Silver In Malaysia on the approaches to invest in silver. The preview chapter can be found here.

Malaysia EPF

Manulife Asset Management published a report on Malaysia population “aging” issue.

  • In 2010, only 5% of Malaysian population are above 65 years old.
  • By 2050, there will be 15% of Malaysian population above age 65.

Malaysia population is getting older. As each year passes us, there will be more elderly seniors compared to the previous years:

  • In 2010, every 100 working person are supporting 7 retired elderly seniors.
  • By 2050, every 100 working person will be supporting 23 retired elderly seniors.

When comes to retirement age and financial support upon retirement, the 1st thought Malaysians think about is EPF. Taking a deeper look, there are LESS THAN 40% of working age Malaysians have an EPF account.

EPF

There are a couple of issue with our EPF:

  1. It is a one-for-everyone solution in retirement planning. Undeniably, EPF is safe and stable by consistently giving 4.x% to 6.x% dividend (in the past 15 years). Last year (2012), the dividend payout from EPF was 6.15%, which can be considered reasonably. Unfortunately, this return is merely slightly above FD (fixed deposit) rate. This might be an okay plan for someone above age 50 and have a family with wife and kids. He cannot afford to take high risk due to his age and dependencies. However we have other groups of working class such as someone who is below 30 and have no dependencies (no wife, no kids and parents are still healthy). They can take much higher risk in order to make higher return. Their money in EPF earning merely 4.x% to 6.x% dividend is doing a relatively poor job for their money. This group of working class need to consider an alternate option to grow their wealth quickly.
  2. Most people finished spending their EPF savings within 3-5 years. Firstly, as of end 2011, 86.5% of the active EPF contributors have LESS THAN RM100,000. If an elder spends RM1667/month (for food, medical attentions and other daily necessities), his fund will run out in LESS THAN 5 years. Secondly, most retired folks are not prepared to handle such large amount of money. They have been receiving salary all their life and only managing their salary of few thousands Ringgit (perhaps RM3000, RM5000, RM8000, etc), but they are not prepared to handle RM100,000 or sometimes even more. They are not intellectually prepared due to insufficient financial education and they are not emotionally prepared with that large amount of money. Their financial blueprint will immediately bring them back to the level where they do NOT have so much money. This is the same reason why most lottery winners that became millionaires overnight became broke again (or in worse financial situation) within 3-5 years.

Apart from better money management skill, we should consider taking a little risk and grow our personal retirement fund (not purely relying on EPF). In my opinion, the most potential  investment in this decade is silver investment. Silver is known as the largest wealth transfer in human history in this decade. Just like Energy, wealth is never destroyed, it is merely transferred from one pocket to another. The challenge with our modern generation is, the money / wealth have gone invisible. If you are not trained or educated in this subject, you won’t even realize “the transfer” has happened.

Silver investment is really simple. All you need to do is buy low, sell high. Unfortunately, most people are doing the exact opposite. When the price is going higher, they came in and  bought during the high price then soon found the price started crashing down. When silver price did come down, that’s the time they should buy but now they are conquered by their fear that silver price might drop further and paralyzed them from taking any action.

Remember this, if you want to sell high, you need to buy low. Price fluctuation (ups and downs) for silver will always be there. Price moving in straight line NEVER exists. At the point of writing this, silver price is $29. I would not call this as the rock bottom price, but this is definitely a good price to buy some cheap silver. It is always better to buy at a good price, than waiting for the best price that might never come.

For more of my work, please take a look at the eBook: Practical Guide For Investing Silver In Malaysia (3rd Edition).  

Silver Price Dropped, Now What?

Last week (20th Feb), silver price has a drastic drop of almost $1 within 6 hours:

In the past 30 days, silver price felt from $32 to $28.

Take a look at the longer term for silver chart from September 2012 to February 2013, we can observe the following:

Lower High

This chart shows a lower high pattern. Lower high means each of following high is lower than the previous high. High 1 peak is about $35, High 2 peak is about $34.40, High 3 peak is $32.25. In other words, High 3 is lower than High 2, and High 2 is lower than High 1. Let me repeat this, a lower high pattern where each of the following High is lower than the previous High.

Lower high is a pattern that signals market is losing strength. Does it mean silver price will continue falling? I can’t be sure as market tends to always surprise us. I won’t call the current price as a rock bottom price but it certainly is a good buying opportunity. Remember, in order to sell high, you need to buy low; unfortunately most people are afraid at that point that price might drop even further.

Throughout the last 10 years, there are many good buying opportunities. If you missed out the previous opportunity, you might not want to miss out this time. Remember my previous  question on when is the best time to plant a tree? The first best answer is 10 years ago. The second best answer is now!

If you are wondering whether you should cut lost now, I will share with you a simple guideline when to continue holding to an investment and when to consider let go. The solution is to refer back what were the fundamental factors that made silver a great investment. If the fundamentals have not change, keep holding. Remember, an arrow can only shoot forward by pulling backward first.

When comes to investing silver, you have to mentally overcome your own emotions, step back and look at the fundamentals silver. The world has limited supply of silver, rising costs of mining, growing investment demand and industrial demand, and an active currency war where the winner is the central bank with their paper money (fiat currencies).

Since about 75% of new silver supply came from mining, it is important to keep an eye on the mining cost. In Mid 2012, Pan American Silver (PAAS) claimed mining cost for silver is $13.87 per ounce. Many experts think the number is totally illogical and the actual mining cost for silver is $26.54. This would make perfect sense as why silver price has been strongly supported at $26 since 2011 until 2013 because that is exactly where the mining cost is. It cannot go lower than!

Strong Support

Is the price currently going to $26? If it reaches there can it be supported at $26? Most importantly, when is the best time to buy?

In Malaysia Silver Investor Membership, I showed a simple yet effective formula to the members on when is a good time to buy and sell silver. At the point of writing this ($28.76), the indicator shows it is a good time to buy some silver. You could wait till silver price touches $26 (the very strong support), but if silver price doesn’t go there and re-bounce to $30 range, you might have just missed a good buying opportunity. In silver investment, you would rather be 1 year too early and not 1 day too late!

On 20th Feb 2013, Eric Sprott (silver expert and billionaire fund manager) said he still believes silver is the investment of the decade. Eric stated silver should be $100 today, and he expects silver to massively outperform gold. He conservatively expects the metal to reach $200/oz, however $200 is not be considered as the top. He said, “When you trade 1 year’s silver production in a day- matter of fact I think we traded one year’s worth of gold production yesterday, which is absolutely ridiculous!“. All we know is that the price should be up massively, he added.

Practical Guide For Investing Silver In Malaysia (3rd Edition) is updated with latest information for silver investment. NEW chapters are added to provide quality content to readers. You will also receive FREE Special Report: Maybank Silver Investment Account

When Is The Best Time To Plant A Tree

When is the best time to plant a tree?

The 1st best answer is 10 years ago. The 2nd best answer would be NOW! If you have invested in silver 10 years ago, you would have bought silver below $5 and you could sell your silver now for about $30. That is almost 600% increase in value in 10 years! If you did not buy any silver 10 years ago, now probably is the 2nd best time to buy some silver.

Interesting, there are so little people know about the value of silver. Last week, I showed a video to test how much people know about gold price, this week, the video is to show how little people know about silver price. Although silver price is traded for around USD30, most people would NOT even buy it for 1 dollar. When come to investing, many people don’t make money simply because they don’t truly understand buy low, sell high. They might have heard of the terms, but they never truly understand and practice “buy low, sell high”. Well, the reality is, when they don’t even know the true value of something, how could they buy low and sell high?

This video is the best example:

2 precious metal gurus – David Morgan and Mike Maloney are discussing silver in their car. They discussed the role of gold and silver. If gold suddenly disappeared from the world, nothing is going to change. Everything will still be the same because gold has very little industrial application. However, if our modern life do not have silver, no modern technology would ever exist and we will be living in stone age!

For the first time, if we take all the gold and silver available in the world, there are 5 times more gold than silver for investment. Investment grade gold & silver are those that have at least 99.9% purity. There are about 3-5 billion oz of gold available for investment but there are only 1 billion oz of silver available for investment.

Below are one of the conversations we have in Malaysia Silver Investor Membership. One of the member asked me some questions which I think it could benefit more people if I post it in this blog. For privacy concern, I have blurred the name of the members.

Member

In the membership platform, we have members coming from different level of investment experience. Not only myself ready to answer any question raise by members, many other experienced members are also generously sharing information, advice, and news updates to the rest of the members.

I have written Practical Guide For Investing Silver In Malaysiaan eBook specifically written for Malaysian in silver investment. You will learn different silver investment strategies and I will show you how to invest silver below market price! Click here to find out more.

Gold Price

One of the members in Malaysia Silver Investor Membership has shared the following video (with the rest of the members) to show how ignorant people are on gold price.

We can’t entirely blame the people how ignorant they are on gold, because for the past 42 years, we are living in a world that uses fiat currency (paper money) for daily transaction.  In 1971, Richard Nixon, the president of United State back then took US Dollar off the gold standard. Before 1971, each Dollar is backed by certain amount of gold. After 1971, the  Dollar is just paper as the Dollar is no longer backed by gold. Since every country currencies  (including Ringgit Malaysia) is backed by US Dollar as reserve currency, from that point onward all the “money” in the world has become paper currency that the central government can print anytime and any quantity they like. While we as middle class are working hard everyday for that? How ironic?!

Most of us in this generation are brainwashed to believe that the paper currency printed by government (which is just some paper not backed by any gold) is actually money. We never have a proper / official education on the value of gold. Most of us buy gold for cultural reasons. It is just a wisdom passed from the previous generations. We never question or fully understand the fundamental of precious metals (gold & silver). This is exactly the reason why I started this silver blog to share more information on silver.

If there are so little people understand gold, there are even less people understand silver.

The potential for silver is extremely positive. Last 2 months, silver coins were sold out in US Mint for twice! Canadian Mint faced the similar shortage problem. Silver, apart from being a monetary metal, it is also one of the most highly sought after industrial metal that being used up in large quantity. China being the 3rd largest silver producer in the world still does not have enough silver and they have to import more from other countries.

10 Years Silver Chart

According to Christenson from Deviant Investor, the highs in 2004, 2006, 2008, and 2011 were at or above that trend line. A price of $15 in 2006 was just as extreme as a nearly $50 price in 2011 and a possible $100 price within the next two years. The ten year chart of silver prices is plotted on a logarithmic scale and shows a highly volatile exponential increase in prices over that ten year period. The higher trend line extends to approximately $100 by the end of 2013. Prediction – Certainly Not! Possibility – Yes!

If you are interested to find out more about silver, I highly recommend you to read the following book.

I have written Practical Guide For Investing Silver In Malaysiaan eBook specifically written for Malaysian in silver investment. You will learn different silver investment strategies and I will show you how to invest silver below market price! Click here to find out more.

No Debt, No Problem?

Last year (May 2012) when I published my 2nd Edition eBook Practical Guide For Investing Silver In Malaysia, I discussed that US is going to hit the debt ceiling of 16.4 trillion Dollar latest by early 2013. This does not require us to be a professionally-trained economist to recognize, anyone who spend a little time to learn the fundamental of economy could would predicted it.

Debt ceiling for a nation is like a credit card limit for an individual.

maybank credit cardTake example I am an employee who has a credit card with limit of RM20k. When I spend on my credit card and hit my credit limit, I have to pay it off. If I don’t, the bank is going to punish me by giving me a bad record and I will have problem getting a new loan in the future. What I do now is I ask for a bigger credit limit of RM30k, RM50k, RM100k, RM200k and RM500k. Since I have not hit my credit limit, I could continue spending.

This time, when I hit my credit limit I’m NOT going to ask for a bigger credit limit. I found a new trick, I say “temporarily ignore” the credit card limit. By “ignoring” my credit card limit, the bank cannot come after me and I’m now free from financial trouble.

Does it make any sense to you? No!

The exact same non-sense is happening to US economy. On 28 January 2013, US has “temporarily suspend” the debt ceiling. In other words, US has hit the debt ceiling of 16.4 trillion Dollar and they make it official that they are going to ignore the debt ceiling for now. What a convenient excuse! I wonder if you could tell your bank to “temporary ignore” your car loan installment and your house loan installment? :)

history

A wise man once told me, if you want to predict the future, look at the history. Very similar event has happened in US history. In 1971, President Richard Nixon has “temporary” taken the dollar off the gold standard. Before 1971, each US Dollar is backed by certain amount of gold. Today, every Dollar (or Ringgit) that we are holding is not backed by any gold, they are just paper. The “temporary” has lasted for 42 years until today.

Right now, US could continue spending and getting deeper into debt without any ceiling. Thanks to Quantitative Easing (QE3 and QE4) that happened in the last 6 months, US is printing 85 billion Dollar every month – without a definite date to stop printing. The market is flooded with worthless paper currencies. When US prints, the whole world follows to print. Bank of Japan has also announced their version of QE, they are printing indefinitely starting from 2014. This is the formula for guaranteed hyperinflation.

You might or might not have heard about hyperinflation. If you think 5% inflation is bad, this is what happened to the value of German “money” during 1920s. This is the kind of hyperinflation we are expecting in the near future.

German Mark

With such disastrous monetary policy on our way, a financial logical reaction is to allocate your wealth into precious metal. Precious metal (gold and silver) has been a form of money for many thousands of years. Human use precious metal as money long before the invention of paper money. If you think the society has modernly evolved and no longer need precious metal, consider this:

In late January 2013, HSBC Bought $876 Million Worth of Silver. Silver coins was sold out in US Mint – not once, but twice recently. A new historical sales record of 7.5 million oz American Silver Eagle coin sold in a single month just happened in January 2013, created the highest monthly sales in history.

Many smart investors have started allocating their money into precious metal, particularly silver. Today, silver remain as an affordable option in precious metal. When 1 oz gold (31.1gram) costs about RM5300, 1 oz of silver costs only slightly above RM110. Gold is the money of king, silver is the money of people and debt is the money of slaves. If you have tonnes of cash piling your garden, please go ahead buy some gold. But if you are like most people, I highly recommend you allocate some of your wealth into silver. Silver is not only a form of precious metal (that protects your wealth during financial crisis), but also a highly demanded industrial metal. Keeping a couple of silver coins is never a bad idea.

I’ve written the eBook Practical Guide For Investing Silver In Malaysia. This eBook will show you how you can invest silver in a smarter way in Malaysia. In fact, I also shared my short term, medium term and long term exit strategy. Click here to find out more.

GoldSilver Insider Update from Mike Maloney (Jan 2013)

After US Mint sold out their silver coins (American Silver Eagle) – for twice, Canadian Mint now controlling their available remaining silver very carefully. Alex Reeves (Senior Manager of Communications for Royal Canadian Mint) said, “Due to very high demand for Silver Maple Leaf bullion coins, the Royal Canadian Mint is carefully managing supply to ensure all our bullion distributors are served and we continue to take orders.” This situation proves one thing: the physical supply for silver is extremely tight. It is not easy for many manufacturers to source for physical silver for production. This including Apple could not  produce sufficient of 27 inch new iMac. Click here for previous post.

This is the latest update from Mike Maloney in Gold Silver Insider Program. Mike Maloney is one of the most respected persons in precious metal industry. He studied economy history, understands current economy mess and he has been actively raising global awareness about the role of gold and silver under current troubled economy. Most importantly, Mike realizes the strong fundamental of silver and the potential. He personally invested 90% of his cash into silver.

In Malaysia, many precious metal investors would like to join Mike’s Insider Program for the great information. You can become a member by purchasing 500oz of silver, 10oz of gold, or purchase the membership program outright from GoldSilver.com. The membership program costs USD1,659.10, which is equivalent to RM5,143.21.

Insider Program

First option, 500 oz silver – the silver that offered by GoldSilver.com falls into the category of what I call “less attractive”. There are 2 main categories: coins (legal tender) and large-size silver bars. Buying coins from overseas is an unwise move choice for most retail investors in Malaysia because 15% tax to be paid at Kastam Diraja Malaysia. In other words, you are buying silver 15% more expensive than others. If you can get 15% cheaper from local dealers, why pay 15% extra? The local dealers have their “tricks” to bring their cost lower but we will leave that discussion for another day. Another category is large-size silver like 10oz and 100oz. Large-size silver has lower premium, is value-for-money investment and there is no tax. However the liquidity is relatively low in Malaysia. 10 pieces of 1 oz silver can be sold of much easier compared to 1 piece of 10 oz silver. Imagine this, any middle class working person can afford to start investing in 1 oz of silver for slightly above RM100. But for 10 oz bar that cost more than RM1,000, I’m afraid not too much people can afford. Let alone buy the 100 oz.

Second option,10 oz of gold – due to gold silver ratio is ~50, GoldSilver.com makes the criteria (amount) for getting into the Insider Program at 50 times lesser than silver, which is 10 oz of gold. Gold silver ratio can be calculated by simply dividing gold price with silver price. For example, if today gold price is USD1660.30 while silver price is USD31.28, hence gold silver ratio is 53 (1660.30 / 31.28). Most people buy gold for cultural reasons. For example during Chinese and Indian wedding, people buy jewelry like gold necklace, gold ring and other gold jewelry. For some well-doing Chinese families, new born baby is given gold jewelry too. On the other hand, government central banks keep gold and they hoard gold as an hedge against the decline of USD. While gold is mainly  being hoarded, silver is an industrial metal that being consumed. Do recognize that when the silver is used up, it is gone forever. I have nothing against buying gold, but many facts clearly shown us silver has much greater potential compared to gold, hence allocating more than RM55k to purchase gold (so that the person can get into the insider program) might not be a great plan unless the person has already allocated RM500k for silver.

Third option, purchase the program outright for USD1,659.10, or RM5,143.21. While the information in GoldSilver Insider Program remains great, paying RM5,143.21 for a membership program might not be affordable for many people. In fact the high entrance fee potentially push the genuine learners with low capital away. I always find this ironic, some young and low budget investors usually have limited amount of capital to invest. If the gurus are asking for high cost to get the information, where else would such young and low budget investor find money to invest??

In order to solve this problem, I have written an eBook titled: Practical Guide For Investing Silver In Malaysia that will show you exactly how to invest in silver from your 1st oz until your 1000 oz. The eBook will show you what are the safe methods to invest silver in Malaysia. Where to look for investment-grade silver with lowest price. Mistakes to watch out when investing silver and a lot more tips and tricks for investing silver in Malaysia. In fact you can also join Malaysia Silver Investor Membership for a much affordable fee.

A famous says “If you think education is expensive, try ignorance“. Making a financial mistake is never a fun experience. The eBook contains 100+ pages of great information and 2 bonus reports to guide you step by step investing silver. Click here to find out more.