Silver Investment Cycle

If you are interested in the buying silver in Malaysia as silver investment, there are a few essential parts of information you need to know before investing. Silver has seen a phenomenal rise recently, with the price just $10/oz in 2007, rising to almost $50 earlier 2012, before settling to $30 at the end of year 2011. Price has been consolidating at $27 – $28 in June to August in 2012.

Anyone who 3 years ago had the insight to think that the current gold and silver prices were cheap would be looking at a 6 fold turnover on his original investment. Of course, for silver investment in 2008 you would have needed to have phenomenal insight to know that a silver boom was about to happen, but these things can be predicted.

Even though its tempting to think that anyone who went into silver investment was just lucky, the phenomenal rise is a deliberate part of the investment cycle. When silver was just $7.50, no-one thought that it would rise so much in such a short time on its own – everyone just thought it would stay at that price. However ‘smart money’ or influential organizations with a lot of money were accumulating silver without raising much public notice. They would be buying in small amounts so to not drive up the price, but to gradually increase their own stocks. After a time, this ‘smart money’ would be informing institutional investors such as large hedge funds and pension funds to invest in silver – and then with their combined might start buying of silver in droves – this would start to propel the price into the public eye, and overwhelm anyone selling silver.

Bubble – Silver Investment Cycle

One this phenomenal price increase was in the public eye, there would be mass media advice to do silver investment, and the public would start to buy silver heavily. Those that got in at the start started to make money and see their investments increase, and they would tell their friends. Even when they sold for a decent profit, they would see a rise would be so meteoric that they missed and feel that they sold too early, and plough profits back in for a higher price. At this stage of course, the smart money has stopped buying, it is selling and making vast profits. The time comes when the institutional investors realize the smart money is selling, and they too begin to sell, causing the market to peak and start to fall. When this happens, initially the public see this as a bargain and send the price up slightly before they realize that the investors with the money to prop the market up are selling as quickly as they can – and this causes a climate of panic selling.

The price then quickly falls, as members of the public who have invested in silver at a far higher price sell for a loss as they think that the bottom has fallen out. At this stage, the media are announcing that silver investment is a bad investment, and fueling the panic.

This panic returns prices back to a low price, and it is here, where smart money gets another opportunity to buy again at a low price to start the cycle all over again. If you are thinking of buying silver in Malaysia it pays to know the perfect time to buy and sell.

If you are ready to catch the opportunity in the coming silver investment bull market, download this eBook to educate yourself how to invest silver in Malaysia.