Tag: silver investing

Buy Gold & Silver When Everyone is Selling

Gold and Silver Bullion

Gold and Silver BullionIf you want to know the best way to become wealthy, you should listen to those who are already wealthy. You may have started to get nervous, as you have watched the price of gold and silver decline almost every day in the month of September. Don’t make the mistake of selling gold and silver when the precious metals market is down. To borrow a famous quote from J. Paul Getty,”Buy when everyone else is selling and hold when everyone else is buying. This is not merely a catchy slogan. It is the very essence of successful investments.”

The strategy of buying when the majority of investors are selling, or selling when the majority of investors are buying, is known as contrarian investing. In order to be a successful contrarian investor, you must have conviction that your precious metals consultant has provided you with enough information so that you feel confident your analysis is accurate and the consensus market opinion is wrong. When you don’t follow the majority consensus, and go against the trend, you can look foolish if the trend continues. On the other hand, big gains can be made when you are right.

Whether you are betting on a 20-1 long shot at the racetrack, or buying gold and silver when the experts are forecasting lower prices, you are going against the odds. Many of the most successful contrarian investors have made small fortunes by investing in precious metals when the rest of the world thought they were making a foolish mistake.

Jim Rogers – Opportunity to Buy Gold

Jim Rogers, who made his fortune in commodities, is well known for being a contrarian investor. He does not buy when prices are near their highs. Momentum stocks, without underlying value, do not make it into his portfolio. He buys in quantity when an investment falls out-of-favor and he believes it is on sale. Rogers view on gold is fairly neutral these days. He is maintaining his position, but believes that there is still room for the precious metal to decline further. He notes that almost all commodities drop to about 50 percent before beginning a bull run. Gold did have a very bad 2013, but prices have only retreated by about a third since hitting their highs (touched $1,900 per ounce) in September of 2011. Jim Rogers believes that there will be a strong buying opportunity in the next year or two if gold moves down toward $1,000 an ounce, or about 50 percent from its September, 2011 highs.

Marc Faber is Saying Buy Gold and Silver

Mark Faber, alias “Dr. Doom,” is perhaps the biggest contrarian of them all. He has been predicting since 2011, and continues to predict, a steep decline in the stock market is just around the corner. While gold and silver prices have dropped by about 4 percent in the first half of 2014, Faber stands firmly in his conviction that gold and silver will outperform 1 the stock market in the coming months and years.

George Soros Got it Right

Sometimes it is smart to sell gold. George Soros, the billionaire hedge fund manager, and noted contrarian, got out of gold stocks in May of 2011 while everyone was still buying. He locked in solid profits and did not take the ride down when gold began its steep decline in the following years.

Contrarian precious metal investors rarely get the timing exactly right, but they are prescient enough to see that a trend is nearing its end. Don’t be a contrarian investor just to go against the crowd. Be a contrarian investor when you believe that you are right and the crowd is wrong.

Additional Sources

1- http://www.bloomberg.com/video/71299760-marc-faber-likes-gold-silver.html
Image Credits: JR image, MC Image & GS Image.

Silver Deserves Your Full Attention

Silver Bullion Coins Bars

Silver Bullion Coins BarsIs it better to own $10,000 worth of gold than to own $10,000 worth of silver? The answer depends on whether you think that gold prices will appreciate at a faster rate than silver prices over the period of time you intend to hold either of the precious metals. While an ounce of gold has always commanded a much higher price than an ounce of silver, astute precious metal investors know that the only way to measure the success of any investment is in terms of the percentage return.

If you are going to buy precious metals, your goal should be to earn the best return on your cash investment. It can be a difficult decision whether you should buy gold, silver, or even platinum. While gold is the most revered, and platinum the most expensive, silver may offer the greatest value. Take a look at some of the reasons why physical silver may be the best precious metal investment.

Silver Price

Although you can buy both gold and silver bullion coins in fractions of an ounce, the majority of investors and coin collectors prefer to buy them in one-ounce form. If you want to buy an ounce of gold, you will have to come up with about $1,300.

You can reach into your pocket, and for a little over $20, you can own a troy ounce of silver. Silver is commonly referred to as the “poor man’s gold” just like a donut is the poor man’s fancy French pastry.

Gold sells for roughly 65-times the price of silver. From a strictly psychological point of view, people perceive silver as being more attractive than gold when the ratio between the two precious metals is high. A lower price always creates demand and that ultimately causes the price to rise.

Industrial and Manufacturing Use

Silver has many uses. In addition to its use to produce coins, bars and rounds, silver is used in flatware, tea services, decorative items, and jewelry. It is used in photography, certain types of batteries, to pain electronic printed circuits, and to create specialty mirrors. Used in far greater amounts than gold for industrial and manufacturing applications, silver gets “used-up” which creates pressure on supply. When supply is low, prices go up.

U.S. Mint Sales of American Eagle Silver Coins are Strong

Through the first eight months of 2014, sales of silver American Eagle bullion coins totaled 27,713,500 ounces. Projected over a full year, that comes out to roughly 41,570,250 ounces. For comparison, sales in 2012 were 33,742,500 and a very strong 42,675,000 in 2013 (when silver prices experienced a big drop). Strong demand at the U.S. Mint is a positive sign for silver prices in the future.

Geopolitical Concerns

So far, the precious metals market has had a mixed response to the wars and political unrest around the world. Recent events are showing the world that the threat of terrorism is pervasive. People are afraid of a terrorist attack here in the United States. It is very possible that the U.S. and its allies will become more entangled in Iraq in the coming months. Silver, like gold is a safe haven investment in an uncertain world.

Spot silver has dropped by about two dollars an ounce over the past few months and it is now at a point where it is cheap. Consider buying physical silver because it has the potential to outperform gold and the other precious metals in the coming months.

Precious Metals: Simon Says Take One Small Step Forward

Gold and Silver Bullion

Gold and Silver BullionIf you are trying to decide if now is the time to invest in precious metals, it is understandable if you are getting confused by the mixed signals that you are receiving. Knowing when to buy can help you maximize the return on your investment. Just like the game of “Simon Says” that you played as a child, it is easy to take a misstep. In the childhood game, if you moved before Simon said to move, you lost the game. As an investor in physical metals, you should only move (buy) when the market conditions are favorable for a rise in precious metal prices.

Mixed signals are created because there are so many variables that can drive the price of precious metals either up or down. While it is easy enough to find all types of statistics and news about precious metals, there is rarely any strong consensus on how the latest data should be interpreted.

If there is one thing true about the precious metals market, it is that there is no shortage of experts and analysts who are willing to share their opinion about the future direction of gold and silver prices. They all have access to the same data, but they select and shape that data to support their bullish, bearish, or neutral position on precious metals. Objectivity does not always prevail when forecasts are given. Take the example of Peter Schiff, CEO of Euro Pacific Capital.

Schiff is one of the well-known proponents of gold, having jumped on the bandwagon in 2011, when gold reached $1,900 per ounce. At that time, he, and many others were predicting that the precious metal would hit $5,000 per ounce. Today, 3-years later, and with gold having fallen back to around $1,300, Schiff is still saying that gold will hit $5,000. He avoids answering the question of when gold will hit the $5,000 benchmark he has set. Technically, he can still be right, even if it takes ten years to see his prediction come true.

Precious metal price movements can be largely attributed to two distinct forces. Economic forces are the strongest and have the biggest impact on long-term prices. Geopolitical forces can cause major price moves in the short-term, but usually do not play a significant role in long-term price trends.

Economic Forces

What the Federal Reserve does, or plans to do, affects our economy and the price of precious metals. If and when the Fed stops printing money and allows interest rates to rise, one of two things can happen. It might signal that the economy is strong and the stock market will be able to rise further without the Fed’s help. That would be negative for the price of gold and silver. On the other hand, the stock market could go into a serious decline when the easy-money policy is stopped. Equity investors would seek safety in alternative investments, including physical gold and silver. Such a scenario would be positive for precious metal owners.

Geopolitical Forces

Any escalation in the tensions with Isis in Iraq and Syria, Hamas and Israel, Russia and the Ukraine, or a terrorist attack in Western Europe or the United States, could cause precious metal prices to spike. If, by some miracle, these world battles can be settled peacefully, precious metal prices will fall, at least temporarily.

As an investor, it appears that economic conditions that are favorable for precious metal prices slightly outweigh the geopolitical conditions that can hurt precious metal prices. If you are interested in buying gold or silver coins and/or bullion, Simon says to take one small step forward.

U.S. Mint – Platinum Coin Sales Collapse as Coin Buyers Rush for Gold & Silver

American Eagle Platinum Coin

American Eagle Platinum CoinFive months ago, the U.S. Mint began producing platinum coins after a six-year halt. They should have remembered that they stopped production for a reason, as sales have plummeted. It seems that investors are not getting behind the platinum coin, as gold and silver coins remain the favorite.

Speaking to Bloomberg, Jason Carstensen, a medical-sales representative who spends thousands of dollars a month on coins, said about platinum, “It’s not considered a currency.” Most experts view platinum as a more of an “industrial commodity,” with gold and silver maintaining favored nations status amongst investors as a hedge against inflation and drops in the market.

Timothy Green, an industry historian, consultant, and author, told Bloomberg, “Platinum has been around for some time, but I would think of it more as an industrial metal. Gold, on the other hand, has been associated with every old civilization. It is in a class of its own.”

According to Bloomberg, the U.S. Mint has sold just 13,600 ounces of platinum coins this year, while selling 313,500 ounces of gold coins and 27.71 million ounces of silver. The drop in platinum in favor of gold and silver seems to tie directly to the concern that the Federal Reserve’s policies are leading the U.S. down the road to inflation.

The Mint decided to bring back the platinum coin in March of this year after research showed a demand for the metal. It did sell 10,000 ounces that first month, but demand immediately dropped and has not returned.

“The platinum coins are gorgeous.” Kevin Lipton, who has been selling coins for decades and owns Kevin Lipton Rare Coin Inc. in Beverly Hills, California, told Bloomberg. “While I do sell a few coins, it’s not really that much in demand. We live in a society that covets gold and silver.”

Michael Haynes, the chief executive officer of American Precious Metals Exchange, had a similar view in a statement to Bloomberg: “Long-term, coin buyers are more keen on buying gold and silver rather than platinum, and that’s how it has been always. Even though it is precious, it’s more an industrial metal in people’s minds.”

Five Reasons Why 2015 Will Be a Banner Year for Precious Metals

precious metal coinsSo far, 2014 has been a pretty good year for gold with the precious metal up about $100 from the beginning of January until the beginning of August. During that same time period, silver has remained flat, with prices hovering around the $20 mark. There were several days when it looked like the precious metals were going to break-out of their narrow trading range, but apparently, the impetus was not strong enough to find true direction. Here are some strong reasons why 2015 could very well be a banner year for precious metals.

1. Federal Reserve is Poised to Act

Federal Reserve SealThe Federal Reserve is a deliberate body that tries to be as transparent as possible without being too specific about their intentions. When the Fed speaks, they do not mention a date when they are going to make a policy change. Instead, they use language such as “if conditions warrant” or “if the economy progresses as expected” they will raise interest rates sometime in the first half of the next year. Well, that language has been spoken this summer and Fed-watchers have interpreted to mean that the bond-buying program will come to a halt before the end of 2014 and interest rates will start to rise in the first half of 2015. Once we are in 2015, the market will know with more certainty what the Fed will do. A tighter monetary policy will weigh-down the market and be good for the precious metal markets.

2. Fighting Around the World Will Intensify

If you think things are bad in the Ukraine, Syria, Iraq, and Israel today, just wait and see how much worse the fighting gets in another few months. We are in tumultuous times and that puts fear not only into every person in the affected areas, but also into the minds of every investor. When anxiety and fear are pervasive, precious metals do very well.

3. The Stock Market Will Take a Major Tumble

It is usually a good sign that the stock market is about to take a downward turn when you see investor interest in the momentum stocks start to wane. At about 18 times-earnings, the PE ratio of the S&P 500 Index is near the high-end of its historical range (7-22). A dividend yield for the S&P 500 of under 2 percent is another signal that the market could be heading into bear territory. No one knows for sure, but the scale is definitely tipped toward the downside for the stock market. When money leaves the stock market, some of it finds its way into precious metals.

4. Mid-term Election Results Won’t Make a Difference

If you were hoping that some new blood in Congress and the Senate would inject some enthusiasm for actually improving our economy, I’m afraid you will be sadly disappointed. Nothing will change, except the names, and we will stay on the same course as 2014. For precious metal investors, the present path of the economy is likely to mean higher gold and silver prices in 2015.

5. A Weaker Dollar

Crumbled U.S. DollarEvery day that passes means that our national debt is growing bigger. At last count, the country owed more than $17.6 trillion. It does not take a genius to realize that rising debt makes the dollar worth less against other world currencies. When the dollar weakens, gold and silver prices rise.
 

Banks Sued for Rigging Silver Prices

Silver Bullion Coins Bars

Silver Bullion Coins BarsThe Guardian is reporting that a lawsuit was filed this past week by an investor claiming that banks have “unlawfully manipulated” the price of silver and its derivatives in order to “reap large illegitimate profits.” The investor, J. Scott Nicholson, filed the class action suit against HSBC, Deutsche Bank, and the Bank of Nova Scotia. He is hoping to include other investors who have bought silver future contracts since 2007.

“The extreme level of secrecy creates an environment that is ripe for manipulation. Defendants have a strong financial incentive to establish positions in both physical silver and silver derivatives prior to the public release of silver fixing results, allowing them to reap large illegitimate profits,” Nicholson said.

This lawsuit comes on the heels of a similar scandal involving gold price fixing, which led to Barclays being fined $26 million and Deutsche Bank withdrawing its participation in setting gold and silver benchmarks in London beginning on August 14th. Silver prices are set in London once a day via a conference call between the banks.

The scandal broke back in March, when a group of separate lawsuits were filed accusing banks of rigging the daily gold price. The Financial Conduct Authority (FCA) in London ended up fining Barclays for “failing to prevent manipulation of the gold price in London.” Now, due to these scandals, a top European financial expert, Sir Richard Lambert, is expected to be appointed to oversee a government-led investigation into financial markets according to The Guardian.

It remains to be seen what effect these scandals and subsequent lawsuits will have on gold and silver prices. Physical gold closed down slightly today at $1,295.75 an ounce and physical silver closed up a bit at $20.58 an ounce.