The Return & Demand of Silver

In the previous post, I mentioned:

  • When Obama took over US in 2008, silver price was less than $15.
  • Right now, silver price in year 2012 is about $32.
  • So, how much silver price be when Obama leaves office in year 2017?

The following is the Total Return Performance of Major Financial Assets during the Obama Presidency: 4th November 2008 to 5th November 2012.

Source: http://www.caseyresearch.com/gsd/sites/default/files/Total%20Returns.jpg

Silver is a clear winner (more than 200% return). Imagine you put RM1,000 into silver in 4/11/08 and you cashed out 4 years later on 5/11/12, your RM1,000 has turned into RM3,000. Gold was only about 1/2 of the return of silver. In other words, if you put RM1,000 into gold in 4/11/08 and you cashed out 4 years later on 5/11/12, your RM1,000 has turned into slightly more than RM2,000 only.

During Obama’s presidency, Quantitative Easing (QE) 1, 2 and 3 were introduced by Federal Reserve. QE1 was supposed to fix the financial crisis in 2008 but it didn’t work. Hence, there came QE2. Unfortunately QE2 didn’t work out as good as the expected, that’s why there was QE3. One of the greatest scientist Albert Einstein said, “insanity is doing the same thing over and over again and expecting different results“. What Federal Reserve doing fits the definition, perfectly!

Tun Dr. Mahathir bin Mohamad said, QE is a privilege for the rich nations only. When Greece lost money, it cannot print currency notes or issue cheques to pay debts. Greece needs to borrow money from European countries to repay loans. Again no currency notes would be involved. The amount lent would be credited to the Central Bank of Greece which then would issue cheques to the commercial banks. We hear that banks like Goldman Sachs have recovered and are able to pay back the loans given them by the Federal Reserve Bank. The quick recovery is through borrowing the Q E money from the Fed at no interest or minimal interest and then buying Government bonds. Buying Government bonds is actually lending money to the Government. The Government has to pay interest on the money borrowed, which gives Goldman Sachs a good return. Hence the quick return to profitability of Goldman Sachs.

When US is doing all the QE they want, let’s take a look at what happened to China.

33% of the China demand comes from jewelry and coins, with the rest from industrial use in photography, solar and electrical appliances. Chinese investors want hard assets such as silver, especially when it’s cheaper than gold and requires less funding.

China government have been encouraging their citizens to invest in precious metal since 2011 hence the spike of Panda coin production in 2011. Being the 3rd largest silver producer in the world, yet China has been a net-importer for silver for MANY YEARS. In layman terms, net-importer means China consumes more silver than it has produced – by importing more silver into the country. In other words, although China is the 3rd largest silver producer in the world, the production is not enough and China has to import more silver from other countries.

Practical Guide For Investing Silver In Malaysia is the No.1 eBook available in Malaysia for investing silver in Malaysia. You will get a solid fundamental for investing silver in Malaysia & learn how to maximize silver investment return. Click here to find out more.

Happy Deepavali Silver Price Update

Click on image to view full size

It is important to understand Support level and Resistance level as they are some of the most important parts in technical trading. When silver price breaks current resistance level, the current resistance level will become the support level for next trading range. Similarly when silver price breaks current support level, the current support level will become the resistance for next trading range.

The red color is the current resistance level, if price ever break the resistance, it will be a clear sign to enter the market as silver price is at the floor price for the new trading range. On another hand, if silver price breaks the current support level (in green color), it is a clear sign NOT to enter the market as silver price is at the sky price for the new trading range.

This is a sample post from Malaysia Silver Investors Membership. If you are interested to learn more similar posts and stay ahead in your silver investment, consider joining Malaysia Silver Investors Membership:

Too Big Then Fail

When comes to money, anything that grow too huge, it will be gone. It will always be replaced by something smaller or something invisible.

Enron – a corporation employed 20,000 staffs and it was the world’s leading electricity, natural gas, communications and paper companies, with revenues of $101 billion in 2000.  When the mega corporation grown to this huge, disaster is awaiting. Enron declared bankruptcy on December 2, 2001. It was the largest bankruptcy in US history back then. Interestingly, Enron was not the only example of huge corporation failure. Later in year 2002, Worldcom (another even bigger corporation) filed an even bigger bankruptcy, surpassed Enron record. Then in year 2008, Lehman Brothers filed the largest ever bankruptcy in US history. Enron, Worldcom, Lehman Brothers are the typical examples of when something grown too huge, it will be gone. These huge corporation has been replaced by something smaller.

Maybank is Malaysia’s largest financial services group in Malaysia. Maybank has more branches than any other banks – in all over Malaysia. When the bank has grown this huge, it is taking a shift to go invisible, which is a very smart move. The invisible approach is known as online banking. Customers no longer have to queue at the counter to perform transaction. Right now, a Maybank online banking customer can pay bills, reload hand phone credit, transfer money, buy shares, place a fixed deposit, and a lot more just by going online. Money transactions can be done online and many prefer to do it online because it is safer, save time and more efficient. The whole monetary transaction process has gone invisible. Now, we no longer can see the money with our eyes, we need to see the money with our mind. Simple because, the money has gone invisible.

For anything huge to stay, it will have to go either invisible or replaced by something smaller.

Many things started off small, it grown into a success. When success grown too big, human are blinded by arrogance. In the examples of Enron, Worldcom and Lehman Brothers, many people blindly believed that the corporations are so huge and they should not fail. Unfortunately, the reality is they failed.

Shipping industry started small and it grown into a huge industry. When everyone was extremely confident that Titanic was an “unsinkable” ship, it sank. Titanic was weighted 46,328 tons, 268 meters long and 55 meters high, approximately the same size as London’s Tower Bridge. It has simply grown too huge. This is another example of something has grown too huge, everyone believed it would not fail, and then it failed. Titanic took 1,514 lives.

Another local example is Genneva Gold. It started off small, grown into a huge company with 60,000 customers and monthly turnover of RM2 billion. It was raided by Bank Negara Malaysia on 1st October 2012.

According to Awang Adek Hussin (Malaysia Deputy Finance Minister), Genneva Malaysia’s liabilities exceeded its assets. The reason Genneva attracted the attention of local authority in the first place simply because it has grown too huge and did not go invisible. Now, it is potentially replaced by smaller precious metal dealers in the market.

So, what’s the big deal of showing all the huge failure?

Those are the failure of the past. What we want to concern is, what is going to happen next? And how we make the most benefits from it? In order to answer that, we need to look for what is extremely huge now. The answer is: the US Economy.

Image from page 10, Practical Guide For Investing Silver In Malaysia

Obama was re-elected as the president for the next 4 years. Obama is a big government guy. He is supporter of Keynesian economics. In simpler terms, he is good in spending money and creating more money. Ever since he took over the US government in 2008, US debt level has been increasing ever since and it was increasing in the fastest rate in US history.

Last year Obama cut $38 billion dollars out of $3.5 trillion dollars in spending. This is equivalent to me cutting RM380 who happens to be spending RM35,000 while only earning RM22,000. Get the idea?

US Economy has grown too huge and it is waiting for the financial disaster. I’m personally preparing myself to take advantage of this by investing in silver. When US Economy comes down, both gold and silver are going to shine. For a number of good reasons, silver is going to beat gold in the coming years. You can find out more about the reasons here.

Lastly, I will leave you with this, when Obama took over US in 2008, silver price was less than $15. Silver price now is $32. So, how much silver price be when Obama leaves office in year 2017?

You can find out more about my work, the eBook: Practical Guide For Investing Silver In Malaysia will explain the current economy and how it affects you as Malaysian. It will show you how to take advantage of the economy mess through silver investment.

Silver Technical Analysis by FutureMoneyTrends.com

The following article is provided by Joshua Enomoto, FutureMoneyTrends.com:

What a difference a day makes! After three weeks of significant downturn in the silver market, it appeared that the bears lost downside momentum, and that the bulls would regain control above critical support lines in order to launch a concerted assault on the revered $50 price point. Instead, Friday of November 2nd happened, taking whatever pretense of predictability the COMEX may have had, and shoved it way down the nearest drainage ditch. 38,400 contracts, or 191 million ounces of silver being sold off within the space of 10 minutes can have strange effects on people: Elation for those who received a “word of encouragement” and thus initiated massive short positions, but despair for most not privy to such advanced warning. After such devastating losses, is it wise to be in this market? Prominent commodities experts like David Morgan think so. In fact, there are many compelling technical arguments to suggest that the recent downswing has been overdone, both in the physical bullion itself, as well as the companies that mine it from the earth.

First, let’s start with a technical overview of spot-silver:

Friday’s sell-off puts silver bullion right on the 1st support line, which coincides with the current 200 day moving average. The single day drop was accompanied by immense bearish volume, which is rather peculiar (read suspicious) due to the fact that the overall volume trend was decidedly downwards and negative, as momentum traders, or the weak hands, began to exit the market after silver failed to rally beyond $35 since the announcement of QE3.

Is the technical implication as bad as it appears? There are two schools of thought here. Market participants may want to brace themselves for an attempted mauling of the $30 key psychological support barrier. If the bears can succeed in driving prices that low, it would violate the 38.2% Fibonacci retracement level of the August rally, and would suggest further downside towards $28, the last line of support before a nerve-wracking drop to 26. On the positive side, we can see that from October 5th until the 23rd of that month, the bears succeeded in taking the price down from the high-34’s to $31.50, which represents a 50% retracement. From $31.50, the bulls put on the brakes and mounted a slow climb right underneath the main trend line, or roughly where the 200 DMA is located. The fact that we saw a rising consolidation pattern develop off the 50% retracement level tells me that most of the weak hands did indeed exit the market.

So what about the Friday sell-off? It’s either conspiracy or lunacy…an act of collusion or a moment of panic. Which brings us to profitability, the art of cashing in on black swan events. Aside from investing in the physical bullion or ETF’s that track spot price performance, another avenue is through the mining industry. While investing in mining companies does have its fair share of critics due to the fact that there are several variables exclusive to the industry that often results in a lack of correlation between the company and the underlying asset, many top silver producers are technically poised for a breakout move.

Thanks Joshua from FutureMoneyTrends.com provided such an insightful technical analysis. Some investors might consider the above analysis is a little too complicated. I have discovered a simple yet practical and powerful formula for you to use to determine when is a good time to buy silver and when is a good time to sell silver to maximize your profit. The formula is available in Malaysia Silver Investor Membership.

This is a Lifetime Membership. You only pay once and you can stay inside for as long as you wish – to learn all about silver investment in Malaysia. Click here to find out more. Inside, you will receive latest silver market news, see myself and the other silver investors discussing about tips, tricks and strategy how to maximize our profit in silver investment.

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.

Silver Is Rarer Than Gold

Knowing how great the opportunity in silver is not enough. Every great success is always started by one ACTION. Have you taken your action in silver investment?

Unlike stock, unit trust, and property, investing silver in Malaysia is a very different investment, I have written the eBook titled: Practical Guide For Investing Silver In Malaysia. It is the No.1 eBook available in Malaysia to show you how to invest in silver.

Investors Abandoning Paper Silver To Buy Physical Silver

Silver exchange-traded products (ETP) are typically known as paper silver. When someone buys ETP, he is buying paper silver and NOT physical silver. Some might argue that silver ETPs are backed by physical silver but I would keep this simple. When you buy silver ETP, do you receive physical silver? The answer is NO, that means you are buying paper silver. Simple.

Take a look at the black color bar, the addition to silver ETP (paper silver) is getting less and less since 2009. In fact from year 2010 to 2011, there is a negative growth for paper silver. Clearly, the investors no longer want to put money into paper silver.

Take a look at the orange color bar, investors have tripled their silver bullion purchases since 2007. The investors are buy more and more physical silver and abandoning their paper silver because they sense something wrong with paper silver.

Data showed gold sales for the whole year in 2012 were 525,000 oz. Silver sales were 2,449,000 oz just for the month of October 2012. For the whole year, silver sales were 28,244,000 oz. In other words, silver sales  is 54 times higher than gold. The gold silver ratio in earth crust is only 10 times more but investors are buying silver 54 times faster. How long can this sustain? Don’t be surprised that one day when you wake up, there is no more silver left for you to buy.

Silver is cheaper than gold. However it tends to follow the same upward trends. This would make silver an attractive alternative for investors. In fact, silver has even proven itself to outperform gold. Silver is a finite resource with infinite usage. The opportunity in physical silver is enormous. It is one of the most undervalue precious metal known to man.

Investors who understand what is happening already parking their wealth into physical silver, what are you waiting for?

Practical Guide For Investing Silver In Malaysia is the No.1 eBook available in Malaysia to show you how to invest in silver. The investors around the world are moving their wealth into physical silver, not paper silver. If you want to learn the best way to invest silver in Malaysia, 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:

Silver Price Update 14 Oct 2012

A quick update for silver price. This is the weekly chart for silver. There are many period for technical analysis ranging from 1 minute, 5 minutes, 10 minutes, 15 minutes, 30 minutes, 1 hour, 2 hours, 4 hours, 8 hours, daily, weekly, monthly. So, which one should you use?

Personally, I would ignore any chart between 1 minute to 8 hours because they consist of too many “noises“, changes too rapidly and confuses the trend. In fact, as long-term and value investors we do not have all day to monitor silver chart. We want to look at something fundamentally strong which is the weekly chart.

In this chart, silver price is meeting a strong resistance at $36 and strong support at $26. Although we have broken from the flag formation (click to learn more about flag formation), silver price is still trading within the range of $26 to $36.

So what does it mean? There are 2 possibilities outcome for this pattern.

First possibility (Direction A, refer chart above), silver price will be finally breaking out from the strong resistance. It will shot all the way up exceeding $40 by the end of the year.

Second possibility (Direction B, refer chart above) silver price movement is again blocked by the strong resistance at $36. Silver price will continue to trade within $26 – $36 range until the next attempt to break the resistance.

I discuss silver price forecast in my membership site in detail. If you are interested learning silver price movement, I recommend you to join my private silver investor membership site to receive frequent updates. In fact, this update is given to my members way earlier before it hit the public. See you inside!

Robert Kiyosaki: Conspiracy of the Rich

In the latest update (October 4, 2012) of Robert KIyosaki’s Conspiracy of the Rich, he mentioned:

Early in 2012, the ECB, European Central Bank, announced LTRO, which stands for Long Term Refinance Operations: a.k.a. printing money. This is a violation of the Euro’s founding principles.

Last month, US Fed Chairman Bernanke announced QE3: a.k.a. printing $40 billion a month until… until what, I wonder?

The Bank of Japan followed immediately with their own “quantitative easing,” imitating the US and further weaken the purchasing power of the Yen.

What does this mean? It means the central bankers of the world are choosing to “Live today” and “Die tomorrow.” They are “Out of bullets.” They can no longer lower interest rates so they chose to print, print, and print.

Robert then continued discussing about US debt, you can check out the full article here. What I want to bring to your attention is all the major financial power in the world are printing money. When the whole world is printing money, it is close to impossible for our country Malaysia NOT to follow printing money.

Why? The answer is simple. Malaysia produces goods and exports to other countries. When the other countries are printing money, they are devaluing their currencies. Their currencies is weaker than it was. Now, they will need more amount of their currencies to buy the same amount of goods in Malaysia. In other words, Malaysia become expensive.

When this happens, all the other countries will look for cheaper alternative and no longer want to buy from Malaysia, because we are expensive. Our country financial leaders are not going to allow that to happen because when that happens, our Rakyat will have no job, economy will slow down, crime rate will increase, a whole chain effect will happen.

Therefore, our central bank BNM will manipulate our currency (Ringgit) to lose the same amount of value like all the other countries in the world. So that the export activities can continue like nothing happened. Sorry if this is a rude awaken call for you, but the Ringgit you are holding (or inside your bank account) can purchase less and less stuff everyday. Your “money” is losing value due to these money printing activities.

Lastly, Robert ended the article with the following paragraph:

If you are just starting out investing, I suggest you begin by reading a few books and buying a few silver coins. Knowledge and real money, silver and gold, are better than Obama or Romney. — Robert Kiyosaki, October 4, 2012

Practical Guide For Investing Silver In Malaysia is the No.1 eBook available in Malaysia to show you how to invest in silver. Forget about the free articles over the internet, they give you 1001 reasons to invest in silver but never show you how. Click here to learn how.