With Market, Without Price

Last week, the manufacturer of American Silver Eagle coin, United States Mint announced:

“The United States Mint will issue its last weekly allocation of 2013 dated American Eagle Silver Bullion coins on Monday, December 9, 2013.  We will begin accepting orders for 2014 dated American Eagle Silver Bullion coins on Monday, January 13, 2014.”

us-mint-close

What this means is, U.S. Mint will not be selling any American Silver Eagle coins for more than 1 month (between 9th December 2013 to 13th January 2014). This is not the first time U.S. Mint stop taking order. The similar announcement was made in late 2012 >> American Eagle Silver – Sold Out!

The record all time high sales for American Silver Eagle coin is 39.87 million oz in 2011. At the point of writing this article (3rd Nov 2013), the coins sales has reached 39.18 million oz. If you are reading this article in mid November (or later), I’m fairly confident the bullion coins would have made a new record by passing 2011 all time high record.

ase sales

In year 2011, there was major crash in silver price and sales went all time high. In 2013, there was another big drop and again, sales demand went up significantly. It seems that the lower the price goes, the higher the demand. This defies the basic supply demand principle and cannot go on forever. Physical silver is a finite resource with infinite demand and applications. When industrial usage used up the physical silver; when investors continue to buy physical silver at a rate and volume that increasing every year, physical silver will be used up (due to low price), and people will be wondering – now what?

It is ironic to see physical silver has highly demanded yet silver price has not significantly rise since 2011. The reason is because silver spot price is still largely controlled by paper silver price. This is a “with market, without price” situation, which means there are demand for physical silver but silver spot price did not catch up. Many physical silver investors are experiencing paper lost for holding the physical silver.

Malaysia property market is the opposite of this known as “with price, without market” situation. Property prices has been soaring for the passed 5 years. Transaction has been slow since early 2013, yet price did not drop significant. I was talking to a real estate agent over the weekend, he shared that he has one property being viewed for 13 times and yet could not sell it off. Many property investors are experiencing paper gain for holding their property.

Are these both illusions that would only clear themselves over time? Personally I’m in no rush of selling silver or buying more property. What is your game plan?

Silver Malaysia eBookPractical Guide For Investing Silver In Malaysia is an eBook specifically written with a Malaysian’s context for silver investment. You will learn different strategies, practical tips and tricks for investing in silver. Click here to find out more.

Malaysia’s Bubble Economy

The following article is written by Jesse Colombo and published in Forbes on 15th October 2013, titled “Malaise Is Ahead For Malaysia’s Bubble Economy”:

The emerging markets bubble began in 2009 after China pursued an aggressive credit-driven infrastructure-based growth strategy to bolster their economy during the global financial crisis. China’s economy quickly rebounded as construction activity flourished, which drove a global raw materials boom that greatly benefited commodities exporting countries such as Australia and emerging markets. Emerging markets’ improving fortunes began to attract the attention of global investors who were seeking to diversify away from Western nations that were at the epicenter of the financial crisis.

Rock-bottom interest rates in the U.S., Europe, and Japan, combined with the Federal Reserve’s multi-trillion dollar quantitative easing programs encouraged a $4 trillion torrent of speculative “hot money” to flow into emerging market investments over the past four years. A global carry trade arose in which investors borrowed at low interest rates from the U.S. and Japan, invested the funds in high-yielding emerging market assets, and pocketed the interest rate differential or “spread.” Soaring demand for EM assets led to a bond bubble and ultra-low borrowing costs, which resulted in government-driven infrastructure booms, alarmingly fast credit growth, and property bubbles in numerous developing nations.

Surging capital inflows into Malaysia after the Crash of 2008 caused the ringgit currency to rise 25 percent against the U.S. dollar in just two years:

MalaysianRinggit1

Foreign holdings of ringgit-denominated bonds hit an all time high:

foreign-institutional-holdings-of-local-bonds

Foreign direct investment (net inflows, current dollars) immediately recovered from its crisis-induced plunge to dramatically surge to new highs:

Malaysian-Foreign-Direct-Investment

The Kuala Lumpur Composite stock index rose 120 percent, aided by growing interest from foreign investors:

malaysia-stock-market

Malaysia Is A Classic Credit Bubble Story

Malaysia’s $303 billion economy has been growing at an average 6 percent rate in recent years due in large part to a growing government and household credit bubble.

malaysia-gdp

Since 2010, Malaysia’s public debt-to-GDP ratio has been hovering at all time highs of over 50 percent thanks to large fiscal deficits that were incurred when an aggressive stimulus package was launched to bolster the country’s economy during the Global Financial Crisis. After Sri Lanka, Malaysia now has the second highest public debt-to-GDP ratio among 13 emerging Asian countries according to a Bloomberg study. Malaysia’s high public debt burden led to a sovereign credit rating outlook downgrade by Fitch in July.

malaysia-government-debt-to-gdp

Malaysia’s government has been running a budget deficit since 1999:

malaysia-government-budget

Like their government, Malaysian households are also binging on debt, which has caused the county’s ratio of household debt to GDP to hit a record 83 percent – Southeast Asia’s highest household debt load – which is up from 70 percent in 2009, and up greatly from the 39 percent ratio at the start of the Asian Financial Crisis in 1997. Malaysian household debt has grown at around 12 percent annually each year since 2008.

It’s no surprise to see an inflating household debt bubble when Malaysia’s bank lending rate is at record lows:

malaysia-bank-lending-rate

Ultra-low interest rates have caused Malaysia’s private sector loans to increase by over 80 percent since 2008:

malaysia-loans-to-private-sector

Malaysia’s M3 money supply, a broad measure of total money and credit in the economy, shows a similar worrisome trend:

malaysia-money-supply-m3

Malaysia’s high level of household debt led the country’s central bank, Bank Negara, to recently impose lending rules that cap maximum terms of personal loans to 10 years and mortgages to 35 years – a decrease from the common 45 year mortgages.

Datuk Paul Selva Raj, CEO of the Federation of Malaysian Consumers Associations (FOMCA), said 47 percent of young Malaysians are currently in “serious debt” (debt payments amount to 30 percent or more of their gross income), something that could catch up with them very quickly.

“Car purchases and credit card debts are among the main reasons for bankruptcy in Malaysia,” said Paul. “It’s the culture we live in. There’s a lot of emphasis on status and being ‘cool’ – but being cool costs money.”

Malaysia’s household credit bubble is helping to fuel a consumer spending boom:

malaysia-consumer-spending

Malaysian car registrations are up by 50 percent since 2008:

malaysia-car-registrations

Malaysian corporate leverage, which includes corporate bonds and bank loans, is also rising at an alarming rate, reaching 95.8 percent of GDP in 2013 from 79.9 percent in 2007.

Malaysia Also Has A Property Bubble

Like most other countries that are part of the emerging markets bubble, Malaysia has a property bubble in addition to its credit bubble.

The charts below show the parabolic rise of overall Malaysian property prices:

malaysiapropertybubble

Accounting for nearly half of all household debt, soaring mortgage loan growth is a primary reason why Malaysia’s household debt is increasing at such a rapid rate.

Plans to build the tallest building in Southeast Asia, the 118-story Warisan Merdeka Tower, are a major Skyscraper Index red flag.

How Malaysia’s Bubble Economy Will Pop

While Malaysia has fared better than Indonesia, India and Brazil during this summer’s emerging markets rout, the country still has an extremely dangerous economic bubble that will pop when the overall emerging markets bubble pops in earnest. Malaysia’s bubble will most likely pop when China’s economic bubble pops and/or as global and local interest rates continue to rise, which are what caused the country’s credit and asset bubble in the first place. The resumption of the U.S. Federal Reserve’s QE taper plans may put pressure on Malaysia’s financial markets in the near future. Malaysia’s rapidly deteriorating current account surplus due to weaker exports is another worrisome development.

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Jesse Colombo published a follow up article on 18th October 2013 in Forbes, titled “It’s Not A Bubble Until It’s Officially Denied, Malaysia Edition”:

Lim-Guan-EngThe report received a favorable response from Lim Guan Eng, the Chief Minister of the State of Penang, who said in a press statement, “Even renowned financial analyst Jesse Colombo wrote in the Forbes online magazine that Malaysia’s economic bubble will burst due to its high government and household debt.”

Lim went on to say, “Interestingly, Colombo said that plans to build the tallest building in Southeast Asia, the 118-story and RM5 billion Warisan Merdeka Tower, is a major Skyscraper Index red flag.” The Skyscraper Index red flag refers to a Dresdner Kleinwort report in 2009 which showed a correlation between the construction of the world’s tallest buildings and the impending end of business cycles.

(The following “I”, “me” and “my” refer to Jesse Colombo)

INDONESIA-APEC-SUMMIT

The report also struck enough of a raw nerve that Malaysia’s International Trade and Industry Minister Datuk Seri Mustapa Mohamed refuted my assertion that the popping of China’s precarious bubble economy will also pop Malaysia’s bubble in a press conference in Kuala Lumpur, saying “The Chinese economy is not going to tumble. It’s going to stay strong. We’ve seen high growth in China for many years.”

“Malaysia is not going to be adversely affected. Anyway, we are focusing more on domestic resources growth and it’s becoming more relevant in this context,” he added.

There seems to be an unwritten rule that government officials across the world must deny the existence of economic bubbles that pose a great threat to their countries. When I was warning about the U.S. housing and credit bubble in 2005, Ben Bernanke infamously denied its existence. Officials are denying the UK’s and Australia’s housing bubbles, along with many other post-2009 bubbles that I am currently warning about.

I don’t see how public officials’ bubble denial does anything but harm to their countries’ citizens. Denying the existence of bubbles does not make them disappear, but only serves to hamper the early detection process that is so critical to the survival of terminal illnesses, whether physical or economic.

I also don’t see how denying the risks posed by China’s massive economic bubble does any good either. I will be writing an extensive report about China’s bubble after I finish covering bubbles in Southeast Asia, but for starters, they have a multi-trillion dollar debt bubble that has exploded in recent years as their government has encouraged the building of scores of empty “ghost cities” to generate economic growth.

Charts show a ballooning Chinese credit bubble:

China-GDP_0

HKDebtBubble1

The chart below shows how much of a role debt-fueled construction plays in China’s current bubble economy:

China-Cement2

It is very difficult to completely deny the existence of a bubble in China, and even worse to say that Southeast Asian economies won’t be affected by its popping. I genuinely want to see emerging market nations thrive, which is why I am working to raise awareness of their bubble problems, as I did with the U.S.’ bubble. I want the rest of the world to avoid making the same bubble mistakes that the U.S. and peripheral Europe did that devastated our economies, but bubble denial on the part of policy makers only makes this unfavorable outcome more likely.

Bank-Negara-Zeti-Akhtar-Aziz

On 20th October, Bank Negara Malaysia Governor, Dr Zeti Akhtar Aziz responded as following:

There is no reason to believe that Malaysia has seen the formation of an asset bubble that is about to burst, as the country has addressed many of the issues and risks related to it. Three series of macro prudential measures had been introduced this year to avoid the very risk of the formation of such a bubble asset. Conditions between now and in 1997/1998 are different. We are now on a growth path.

She added that domestic demand was driving Malaysia’s economic growth and the country was not at the epicenter of the recent global financial crisis. Our financial intermediaries remain resilient and the supply of credit was never disrupted.  Financial inter-mediation was continuing and financial markets continued to function. There is confidence in the financial system. This is the result of the focus over the last decade on financial reforms that have strengthened the foundation of our financial system. We believe that credit growth has moderated to a sustainable pace that supports the growth of the economy. In this regard, we continue to monitor conditions.

Silver Malaysia eBookPractical Guide For Investing Silver In Malaysia is an eBook specifically written with a Malaysian’s context for silver investment. You will learn different strategies, practical tips and tricks for investing in silver. Click here to find out more.

US Government Shutdown

The shutdown of US Government has caused US President Barack Obama to cancel his visit to Malaysia for the 4th Global Entrepreneurship Summit 2013 in Kuala Lumpur last weekend. Obama was represented by Secretary John Kerry.

john_kerry

US Government Shutdown

On Thursday evening, discussions between Barack Obama and House speaker (John Boehner) ended after 90 minutes with no specific agreement. There is no solution to the current issue of government shutdown. However, both sides said discussions would continue to prevent the US defaulting on its debt obligations.

The current government shutdown is fundamentally due to reaching high dept ceiling. There is no agreement to resolve debt and no agreement to increase debt ceiling. A new budget cannot be agreed on and hence the government has shut down.

The United States public debt has increased by over $500 billion each year since 2003, with increases of $1 trillion in 2008, $1.9 trillion in 2009, $1.7 trillion in 2010, $0.9 trillion in 2011 and another $ 1.2 trillion in 2012.

US Government Shutdown - debt ceiling

What does debt level means? Assuming United States is a person, let’s call him Mr. Richard Lee who holds a Maybank credit card. Mr. Richard Lee’s credit card credit limit is RM20,000. He uses his credit card to buy a new smartphone, go for several vacations, buy a new laptop and ops… He has just max his credit limit of RM20,000. Instead of clearing off his debt, he made a phone call to Maybank to ask for an increase of his credit limit. Maybank credit officer raised his credit limit from RM20,000 to RM50,000. Now, he can continue spending without clearing off the previous debt. What Mr. Richard Lee does next is buy a new massage chair, buy some new accessories for his sport car, and buy some new furniture for his house – all by using his credit card. Very soon, he has again max his RM50,000 credit limit. What he did was, again he went to Maybank to ask the credit officer to raise his credit limit. The Maybank credit officer raised his credit limit from RM 50,000 to RM100,000 and he continues spending.

Mr. Richard Lee’s financial situation and United States debt level is very similar. Every time when they hit the limit, instead of clearing the debt, they are raising it to a higher limit.

When Mr. Richard Lee (as an individual) could not pay off his debt or could not raise his debt ceiling, he has to declare bankrupt. When US Government (as a nation) could not agree to cut on their spending or could not agree on a higher debt ceiling, the government shuts down.

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Despite the short-term pressure on the metals, the Federal Reserve’s continued to create a weaker dollar in the long run, lead to eventual inflation and would boost the prices of gold and silver. The endless easy money policies from central banks around the globe have created a long-term boost for the various precious metals.

Gold is known the best of the precious metals, but as its price has been driven up, retail investors have turned to silver as an alternative precious metal. Unlike gold, the great thing about silver is that there is HUGE industrial demand!

In 2013 there was a significant shortage of both American Silver Eagles from the US Mint as a direct result of record high demand. Silver ETFs have continued buying silver bullion at a record pace. Demand for the metal as a precious holding is there from physical investors, and has helped get silver back to the $24.00 mark. Aside from silver being a precious metal, it also has many industrial and technological applications. There will always be physical demand. Such demand would pick up significantly when the global economy comes fully out of recession.

john_kerry_2

As John Kerry said on last Friday (11 Oct 2013), the current crisis US going through is merely an political play and it will be over.

When the economy rebounds, there will be a spike in physical silver demand in many areas. The demand will not be just in coin and bullion form, but also in jewelry, silverware and dentistry. On the technology front, silver is one of the most conductive metals out there, and thus is utilized in photography, electronic devices, optics, medical devices/tools and most recently, in nanotechnology.

Realize that tons and tons of silver are consumed in industrial processes. Some silver are recyclable while most silver is discarded into landfills. Those silver are gone forever. It is believed that 90% to 99% of all gold ever mined is still in existence above ground – in one form or another (such as jewelry and central banks holding). Available physical silver on stockpiles as a percentage of all silver ever mined is so much smaller compared to gold.

Since 1950s silver was consumed in a variety of modern applications at a amazing fast rate. By year 2000, known stocks of silver had shrunk over 95%, to around 500 million ounces. During the late 90s, 200 million-ounce annual deficit indicates the early sign of long term physical silver shortage. Thanks to new technology such as smartphones, demand for silver is unprecedented. Eventually there would not have enough silver to meet demand. The end result will likely be a rising long-term price and intense recycling initiatives (when silver price is high enough).

Silver Malaysia eBookPractical Guide For Investing Silver In Malaysia is an eBook specifically written with a Malaysian’s context for silver investment. You will learn different strategies, practical tips and tricks for investing in silver. Click here to find out more.

Silver Coin Malaysia

Before you buy silver coin Malaysia, first you need to understand that coin is also known as legal tender. Coin is issued by the respective governments and has face value. Example of coins are American Silver Eagle (ASE), Canadian Maple Leaf (Maple), Philharmonic (Phil), Chinese Panda, etc. Coins usually have finer details on the silver. The design is usually much more attractive and beautiful compared to silver round. In Malaysia, the best selling silver items are silver coins. First is ASE and second is Maple. If you are starting out in silver investment, go for ASE and Maple. Between these 2, I highly encourage you to buy ASE. ASE has silver purity of 99.9% while Maple has silver purity of 99.99%. Milk spot is relatively easily grown on Maple compared to ASE. The condition could be as bad as even when you bought Maple from overseas, milk spot is already on the Maple coin. All the above coins are not originally minted in Malaysia. But they are common silver coin Malaysia.

silver coin malaysia

Silver Coin Malaysia

Cleaning milk spot could be a very tedious job if you have a large amount of silver to be cleaned. If you are paying the same amount of money for both ASE and Maple, why bother to pay for additional problem? Another thing to take note on buying coin is there is 15% tax (tariff code HS7118) if you are importing silver from overseas. This is the reason why you might find some sellers are selling silver coin Malaysia more expensive than silver bar and silver round. However, there are dealers who managed to smuggle silver coin Malaysia and bypass the Kastam and tax, therefore their price for silver coin Malaysia is cheaper. Do note that among coins, they carry different premium. Some premium are higher and some are lower. Higher premium means the coin is more expensive. Lower premium means the coin is cheaper. Some premium is worth paying for due to certain characteristic such as limited mintage. However not all premium is worth paying for. I advise for a start, do not invest in high premium silver coins.

You probably do not know whether certain premium for silver coin Malaysia is worth paying for yet. If we compare silver with real estate, consider low premium silver as a medium class apartment while high premium silver like exclusive bungalow. For most novice silver investors, it is safer to invest in medium class apartment. In other words it is much safer to to invest in low premium coin.

Pros:

  1. Beautiful and attractive design. Well accepted by silver investors.
  2. Easiest to liquidate silver coin Malaysia (compared to bars and rounds).

Cons:

  1. 15% tax if you are importing from overseas. If you are buying from local dealers, most dealers have already included the tax into the price.
  2. Some coins carry very high premium, if you are not familiar with premium game very likely you end up losing money.

“Silver Coin Malaysia” is a sample chapter from Practical Guide for: Investing Silver in Malaysia.

Silver Malaysia eBookSilver coin Malaysia is simple when you understand coin characteristic. Practical Guide For Investing Silver In Malaysia is an eBook specifically written with a Malaysian’s context for silver investment. You will learn different strategies, practical tips and tricks for investing in silver. Click here to find out more.

Silver Price Malaysia

Calculate Silver Price Malaysia By Oz & By Gram In Ringgit

In Malaysia silver market, silver items are measured in 2 different measurement units, by ounce and by gram (or kilo gram). Many novice silver investors might find silver price Malaysia confusing. This chapter is to show how to convert from one unit to another so that investors could see the price of silver strictly by measuring the weight of the silver item.

silver price malaysia

Disclaimer: Displayed price and current price for silver price Malaysia might be varied due to spot price fluctuation. This image is displayed solely for illustration purpose only.

Before we calculate silver price Malaysia, note that when we talk about 1 ounce in precious metal it is actually 1 troy ounce. It is different from the standard ounce that people used for measuring weight of other “stuff”. For the very beginning, look at this conversion:

silver price malaysia

In the following silver price Malaysia calculation, for simplicity sake, we will use 1 troy ounce = 31.1 grams. We will also call it ounce (oz) instead of troy ounce.

Silver Price Malaysia – Conversion from Oz to Gram

To determine silver price Malaysia in ringgit, convert N number of oz to gram, you multiply N with 31.1. For example:
Convert 1 oz to grams = 1 x 31.1 = 31.1 grams.
Convert 3 oz to grams = 3 x 31.1 = 93.3 grams.
Convert 5 oz to grams = 5 x 31.1 = 155.5 grams.

This calculation is useful if the silver item is measured in oz but you are quoted silver price Malaysia in gram. By converting the weight of silver from oz to gram, it shows if an silver item is priced fairly.

For example, you are planning to buy a 2 oz coin and the respective website has published silver price Malaysia as RM 3.34/gram. The website is selling the coin for RM 310. So can you tell if the silver coin is priced fairly? Is this a low premium coin or a high premium coin? If high, how high? If low, how low? Let’s perform the following calculation:

Convert 2 oz to grams = 2 x 31.1 = 62.2 grams.
Calculate price for 62.2 grams silver in Ringgit = 62.2 grams x RM 3.34 = RM 207.75
Now, we can tell that the silver content in the coin worth RM 207.75.
The premium of the 2oz coin is RM 310.00 – RM 207.75 = RM 102.25
The premium in percentage is (RM 102.25 / RM 207.75) x 100 = 49.22%

You should be able to identify if the published silver price Malaysia premium is too high depending on the brand and mintage quantity. If you are a value-for-money silver investor and this 2oz coin is an less recognized brand in international market, you will want to skip this because you could buy other silver coins with lower premium and the silver coin that is recognized world widely. You should only buy this 2 oz coin if you are willing to pay for the numismatic value of the coin.

Silver Price Malaysia – Conversion from Gram to Oz

To determine silver price Malaysia in ringgit, convert N number of gram to oz, you divide N with 31.1. For example:
Convert 1 kilo gram to oz = 1000 / 31.1 = 32.15 oz.
Convert 500 grams to oz = 500 / 31.1 = 16.08 oz.
Convert 250 grams to oz = 250 / 31.1 = 8.04 oz.

This calculation is useful if the silver is measured in grams but you can only check silver price Malaysia in oz. By converting the weight of silver from gram to oz, you can tell if an silver item is priced fairly.

For example, you are planning to buy a 100 gram silver bar and the international spot price is USD 33.67/oz. US Dollar to MY Ringgit conversion is 3.02. The website published silver price Malaysia as RM 375.00. So can you tell if the silver bar is priced fairly? Is this a low premium bar or a high premium bar? If high, how high? If low, how low? Let’s perform the following calculation:

Convert 100 grams to oz = 100 / 31.1 = 3.21 oz.
Calculate price for 3.21 oz silver in Ringgit = 3.21 oz x USD 33.67 x 3.02 = RM 326.40
Now, we can tell that the silver content in the coin worth RM 326.40.
The premium of the 100 gram bar is RM 375.00 – RM 326.40 = RM 48.60
The premium in percentage is (RM 48.60 / RM 326.00) x 100 = 14.91%

If you are a value-for-money silver investor, this is a reasonable deal. Premium for silver below 15% from spot price could be considered as low premium. Silver price Malaysia can be calculated easily if you follow these simple steps.

“Silver Price Malaysia” is a sample chapter from Practical Guide for: Investing Silver in Malaysia.

Silver Malaysia eBookSilver Price Malaysia is simple if you follow the above formula. Practical Guide For Investing Silver In Malaysia is an eBook specifically written with a Malaysian’s context for silver investment. You will learn different strategies, practical tips and tricks for investing in silver. Click here to find out more.

Densimeter Malaysia

Weight test is the most common method silver dealers and silver investors practice to quickly verify whether the silver is real or fake. Silver weight is usually slightly heavier than the specified weight to avoid quality control rejection.

Most people might think using high precision electronic weighting scale to test is sufficient. Unfortunately that is not true.

The specification for 1 oz Canadian Maple Leaf coin weight 31.1 gram. Below there are 2 Canadian Maple Leaf 1 oz coins – one real and one fake.

compare

The FAKE coin is weighted exactly 31.1 gram. If the person who is measuring it is not experienced enough, he would have thought this is a real Canadian Maple Leaf.

Densimeter is one of the most accurate device for measuring the purity of metal content. It can be used for measuring gold and silver purity. This is how a Densimeter looks like:

densimeter malaysia

The science behind Densimeter is dividing weight (gram) by volume (cm−3). Density for pure silver is 10.49 g/cm−3. Ideally, If we take a silver item (whether coin or bar), get reading of weight and volume. Then divide weight (gram) by volume (cm−3), it should be 10.49g/cm−3.

For most people, after knowing formula for silver density, would still have problem practicing it because they will usually get stuck at measuring the volume. Densimeter is the device designed specifically to solve the measuring problem.

Densimeter In Action

fake-with-water

real-with-water

The metal plate is an aluminum plate. Aluminum is a softer metal compares to silver. The reason for using aluminum is so that when silver contact with aluminum, silver would not be scratched. If there is any harsh contact between aluminum with silver, the aluminum will be scratched instead of the silver. In other word, the silver is protected from scratches.

water-cover

Densimeter works by hanging the aluminum plate from top – without touching any part of the container. The weight of the aluminum plate is fully supported by the 4-leg hanger. Put the silver that you want to measure into the water. The amount of additional water volume would add extra weight to the electronic weight.

Since plain water has density of 1g/cm−3, each additional 1 gram would represents 1cm−3. The volume is represented by the weight. In other words 1g = 1cm−3

The Manual Calculation

In this experiment, the FAKE Canadian Maple Leaf has weight of 31.1 gram and volume of 3.66 cm−3. The density for the FAKE Canadian Maple Leaf is 31.1/3.66 = 8.49g/cm−3 which is far away from the expected value of 10.49g/cm−3.

While for the REAL Canadian Maple Leaf has weight of 31.2 gram and volume of 2.95 cm−3, the density for the REAL Canadian Maple Leaf is 31.2/2.95 = 10.57g/cm−3 which is very close the expected value of 10.49g/cm−3. Difference is merely 0.09. For silver, the density variance of  +/- 0.3 is acceptable.

Using Density Calculator (FREE with Densimeter package)

This is a simple software known as Density Calculator. It works by using the concept of metal density. With this, the user will know the metal type base on weight and volume – without worrying the different type of complicated density as shown above.

This example shows the FAKE Canadian Maple Leaf reading. The reading for weight was 31.10 gram and volume is 3.66 gram. Only inserting two readings into the calculator, it will display a result that this is an Unknown type of metal. Hence, the software tells this is a FAKE Canadian Maple Leaf coin.

This example shows the REAL Canadian Maple Leaf reading. The reading for weight was 31.20 gram and volume is 2.95 gram. Again, by only inserting these two readings into the calculator, the software will display a result that this is .999 purity silver.

In order to demonstrate how accurate / sensitive the calculator is, the following test is done:

The test was done by adjusting the volume to 2.85 cm−3 (which is 0.1cm−3 lower than the REAL silver measurement). Upon performing the calculation, it would detect the metal as Unknown. The calculator has a range of +/- 0.3 acceptance in density. The increase or decrease of 0.1cm−3 in volume would lead to 0.37 change in density, therefore it would not be recognized as .999 silver. This test shows the density calculator has high accuracy and high sensitivity.

With this easy to use Densimeter and Density Calculator, every precious metal investor can measure the purity of silver (and gold) easily at home!

Click here to watch a video tutorial how to use Densimeter to test gold and silver purity.

goldsilvertools

For more information, please visit Gold Silver Tools and enjoy *FREE* Delivery (for limited time only) throughout Malaysia.

Solar Panel

If you do not have the time to watch the video now, I highly recommend you save this video and watch it later. Free Video Download: [Silver – The Element of Change] This is a high definition video, Google anti-virus would not be able to scan it but it is absolutely safe to download.

Did you know apart from investment purpose, silver also has great demand from industrial usages. Electronic components consumption is the largest among all. However what is worth mentioning is consumption of solar panels that are coming up fast and strong.

solar

Photovoltaic technology is the backbone of the solar industry. Initially when it started, it did not even worth registering on silver demand charts before year 2000. The amount of silver consumed by solar panel makers has risen approximately 50% per year since that time. At the point of writing this (year 2013), solar panel accounts for 5.6% of all industrial silver use.

SilverFabricationDemandbyMajorUse2012

China, Japan and India

China (on 4th July) announced to raise China’s solar generating capacity from 21 gigawatts (GW) to 35 gigawatts (GW) by 2015. That is 67% higher from previous target which mean there will be a yearly addition of 10 GW from 2013 to 2015.

Japan will increase its solar generation capacity by about 5.3 GW in 2013. Japan’s domestic solar power market is expected to reach $19.8 billion, which mean Japan will pass Germany as the world’s largest solar market and overtake Germany as the world’s largest solar energy user.

India plans to increase its solar output to 20 GW by 2020, starting essentially from the scratch. On a worldwide basis, solar power generating capacity is projected to be 20 to 40 times the amount of current capacity by 2020.

What does it mean?

According to Silver Institute, making 1 megawatt of electricity requires up to 2.8 million oz of silver. If China and Japan do increase their solar generation capacity as much as they planned, which is total of about 27 GW. These 2 countries alone would require approximately 91 million oz of silver (or 2,824 tonnes of silver). That is equivalent to 11% of global mine supply by referring to 2012 numbers.

Why does this mean to us as precious metal investors? A simple answer would be that growing demand could crimp supply and push on prices.

If the world continues to produce as much silver as it did last year, while the demand in various industrial application are growing. Given currently low silver prices and increasing difficulties getting new mines permitted… The action to take is rather obvious: buy silver now! At current market price, it only takes less than RM100 to buy your 1st oz of silver.

Silver Malaysia eBookPractical Guide For Investing Silver In Malaysia is an eBook specifically written with a Malaysian’s context for silver investment. You will learn different strategies, practical tips and tricks for investing in silver. Click here to find out more.

What Happened To Ringgit

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The value of ringgit went down to the lowest point in the past 3 years during an aggressive sell-of across emerging-market assets. (Emerging markets are countries with social or business activity in the process of rapid growth and industrialization. Malaysia is part of the emerging markets.) By looking at the current trend, the value of ringgit will continue going lower – hence a higher USD exchange rate.

What happened to ringgit? The ringgit has declined 10% against the USD since end of May. This is due to worries over capital outflow from Malaysia’s government bond market to U.S. Treasury yields. U.S. Treasury yields are increasing and they appears to be more attractive for investors. (Bond yield is the percentage return that the investor will receive)

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As you could notice from the chart, almost 50% of Malaysia government bonds are hold by foreigners. This is significantly higher compared to some of the other countries in Asia. If the foreigners decided to exit Malaysia bonds, it will cause the value of ringgit to go even lower.

Malaysia household debt is currently at 83% of gross domestic product. Earlier this month, Fitch Ratings (an international credit rating agency) downgraded its outlook on Malaysia from “stable” to “negative”. Both the high household debt and credit rating downgrade are factors that could trigger higher outflows from Malaysia bond market.

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Indian rupee felt to a record low, the currency has weakened about 28% versus the dollar in the past two years. Thailand is in recession as domestic demand has been low and such trend is expected to continue Indonesian stocks have dropped about 20% since their peak and heading for bear market. A financial storm is directly above Asia. It is comparable to the 1997/98 Asian financial crisis.

During 1997/98 Asian financial crisis, Malaysia was hit extremely badly. Stock market dropped from 1,385 to 295 points while ringgit went down to as low as RM4.80 to US$1.00. At the peak of the crisis, interest rates went up to as high as 18%.

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From a prudent employee to an active investor, everyone was hit during 1997/98 crisis. Property loan installment increased for both home owners and property investors, employees lost their jobs, businesses closed down, just to name a few. If you were old enough to sail through the 1997/98 financial, I’m sure you would agree that was nothing close to a pleasant experience and you wish you would never have to go through that again. Today 15 years later, are we going to see the same scenario again?

Malaysia's central bank governor Zeti Ak

Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz assured the public that Malaysia (being the 3rd largest economy in South-East Asia) has the strength and capability to manage the current volatility. Zeti said Malaysia has robust foreign exchange reserves level, which stood at US$137.9 billion (RM456.5 billion) and low levels of foreign-currency debt at around 1% to 2% of GDP.

However if for whatever reason in the coming months, BNM could not “manage” the financial volatility efficiently, expect higher interest rate. Interest for debts will be substantially higher. Property (especially high rise luxurious sub-sale sector) would have little or no demand as many middle class might start to lose jobs. Stock market will crash and cash will be king.

Holding cash alone is useless if you have no idea what to do with the cash. The easiest way to profit from financial crisis is through stock investment because of high liquidity. You can buy and sell a stock fairly quickly. Legendary stock investor Warren Buffet said “be fearful when others are greedy and be greedy when others are fearful”. Value Investing is something Buffet personally practices during stocks selection, find out more about Value Investing here:

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7 Stages of Empire

India government attempted to slow down gold imports by implementing sharp tax increases. Silver – became the next target for investors. Silver imports increased drastically as there are no such import tariffs applied to silver.

The latest news from China has given silver yet another boost. Silver demand is both from the industrial and the precious metals investment sectors and China currently ranks as the world’s second largest silver consumer after the USA. China currently is the 3rd largest silver producer in the world. China is closely following Peru (world no.2 silver miner). If Chinese industrial growth is indeed beginning to recover, and with the better economic data coming out of the U.S. then silver’s industrial usage may be entering a good growth phase.

Chinese silver production and consumption have both been rising at an annual double digit percentage rate. There were fears that a Chinese slowdown would cut this rate of increase, so the news that the latest Chinese data was reporting stronger industrial growth, imports and investment gave a big boost to metal prices, with the volatile silver price perhaps moving most of all.

In last week article, I pointed that U.S. Mint sales for American Silver Eagle has been at record high level. This scenario suggests that investors’ interest in both East and West are going strong.

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