Silver In Malaysia – Why Silver Price is Not Rising?
Looking at the facts and numbers, Silver is destined to shine. There are so many articles and youtube video floating around the internet to prove that Silver is the greatest investment of the century. During Silver price boom in 1980, there were only the west was buying and caused the price to went up to almost USD50. Thanks to the hidden tax: inflation, can you roughly estimate how much is it worth USD50 in 20 years ago? For example, can you recall how much of goods RM50 can buy you in 20 years ago? and how much of RM does it take today to buy the same amount of goods today? Silver price will be MINIMUM USD 50 of 20 years ago value. The price of silver in Malaysia should proportionally adjusted according to international market.
Fast forward to today, not only the west, but also the east – and basically the whole are buying Silver, thanks the power of internet and TV news to spread knowledge very quickly and freely, the word is well informed about the facts, the numbers, the demand & supply for Silver. Logically speaking, the coming round of Silver price boom will definitely be higher than the last 1980 boom. How is it possible that a precious metal (and commodity) that has limited supply on earth being chased by an (almost) unlimited supply fiat currency will not spike up? Silver in Malaysia might not play a significant role in global market, but every oz of silver in Malaysia that being bought, it will reduce the global supply, even a little.
There is a lot lesser available Silver in proportion to demand – either above or below ground – than available gold.
Due to the industry consumption of Silver and low supply from mining, the situation will only get worse. The supply of Silver and gold gap will only get bigger. More gold, even lesser Silver. However the current gold to Silver price ratio suggests that we have almost 50 time more Silver than gold. It could be true in long time ago, but due to industry demand in the past decades, Silver consumption rate is far higher than the production. Economy basic, if supply is low, demand is high, price will go UP UP UP! There will be no exception for Malaysia, silver in Malaysia will naturally UP UP UP!
Unfortunately, the reality has slightly disappointed us Silver believer in recent May 2011 (30% drop) and Sept 2011 (35% drop). If Silver has been steadily increase like Gold did, I’m sure Silver price will be much higher. Today the general public has not yet gain confidence in Silver. You who are reading this is not considered general public. You know a lot more about silver in Malaysia comparing to the public. The public are the people whom have problem believing or even seeing Silver as a form of investment or at least a medium to keep the wealth. The best experience I have encountered is when I talk about silver in Malaysia, they would ask me why not gold instead. But whether like it or not, the big movement of anything will have to depend of the middle working class. The real spike of silver price will come when the public are rushing into the silver market.
Another factor (the main factor) that stop silver price from soaring is the artificial manipulation of silver price by the big boys. Not only the banks are interfering it, but the industry players are also coming in the suppress the silver price. Let’s not discuss about banks as I’m sure you can find a lot more better explanation about why it is banks disadvantage to allow precious metal price soar. I will talk about industry player manipulating the price instead.
Not long ago, I attended a Forex trading course. During the course we didn’t discuss much specifically about silver in Malaysia but we did talk about something more interesting. I learned that big industry players do manipulate their country currency for the benefit of their manufacturing / importing / exporting business advantage. Take Japan for example, for a giant manufacturer like Honda (and many other giant manufacturers), a slight change in Japanese currency would significant affect the cost of manufacturing and the profit gain from export. Similarly, for silver (as a form of commodity), industry player would also manipulate the price for their advantage. Take China as example, they make use of silver as raw material for solar panel, and they do use it in a very large scale. It would not cost little to suppress silver price – but imagine if it cost USD 1 million to suppress the silver price which will lead the manufacturer to buy the same amount of silver with USD 5 million; although it is unethical, it’s a no brainer for the business to spend USD 1 million rather than USD 5 million for the same amount of silver. In fact, just like any business, these big boys are not working solo and manipulating the price individually, they are working as team to strengthen each other. It would take a very big force to bring them down. Silver in Malaysia did not go through such manipulation but the price of silver in Malaysia is directly affected by the global market.
However, like a Chinese proverb says, “paper can never wrap fire”. I’m confident that silver price will one day revert to an honest price. You, will want to buy silver in Malaysia now rather than buying it when the price has reverted back to honest price.
Note: This post has little direct relevance to silver in Malaysia. It is a general discussion about silver in global market. Stay tune for more posts related to Silver in Malaysia.