Is Silver the New Gold..???

The value of silver has skyrocketed in recent decades –leading many investing experts to believe that silver’s price could outpace gold for the first time in history.

This infographic covers silver’s meteoric increase and the factors that have led to silver’s exploding value. In short, it’s not speculation: silver is a commodity that’s being influenced by old-school supply and demand. We also take a nod to the future to see where silver’s price may be headed based on the most up to date demand data.

In short, silver is a limited commodity that’s in short supply…and high demand.

Gold Silver Ratio Exceed 50, So…

Gold Silver Ratio is one of the main indicators to determine the value of gold and silver. Gold Silver Ratio basically means how many oz of silver it takes to exchange for on oz of gold. The calculation can be done by dividing gold price with silver price. For example, if gold price is $30 and silver price is $3, the calculation will be 30 / 3 = 10. The Gold Silver ratio will be 10.

Right now, gold price is $1766.00 and silver price is $33.90. That would make Gold Silver Ratio as 52.09

Gold Silver Ratio mainly fluctuate between 50 to 55 for the past 6 months. Recently Gold Silver Ratio hit 59 and is obviously approaching 60. It is time to give a more serious thought into Gold Silver Ratio when we invest in silver. This is how Gold Silver Ratio looks for the past 6 months.

Looking at the 6 months chart, Gold Silver Ratio is on the uptrend.

In fact, if we look at the following 1 year Gold Silver Ratio chart, it has broken the 2 major resistances at 54 and 58 respectively. Which further proves the point that Gold Silver Ratio is on uptrend.

Okay, it’s on uptrend, but so what? What does it mean to investors?

If you plan to exchange your gold for silver right now, think again. Reason is simply because Gold Silver Ratio is on uptrend. 1 oz of gold might change you 58 oz of silver now. If you are willing to hold on a little longer, 1 oz of gold might change you 68 oz of silver in the next 6 months.

Gold Silver Ratio can only go up base on the following 2 variables:

1. Gold price goes up faster than silver.
2. Silver price drops faster than gold.

$26 is a very strong support for silver price. Recently, the market has been testing it several times and luckily it has not been broken. Once it is broken, the next support we are looking at is $18.

Are You Losing Money In Silver ???

When come to investing silver, are you making money from silver or are you losing money in silver? Many people wish to make money from silver market but unfortunately most people are losing money. Sad, but it’s true.

Take a look at this chart:

This chart shows silver price is on downtrend since 28th April 2011 at $48.70 down to $26. If a silver investor has enter the market anytime in within this period, we could safely tell he is either not making money or losing money.

When this happens, most silver investors start to lose confidence in silver, some even give up on silver. They lose hope and probably thinking silver is not such a good deal after all. This is clearly observed in the market. When silver price is on the uptrend, more people are participating in forums, Facebook group pages, seminars, bullion dealers transaction etc. When silver price is on the downtrend, most the activities related to silver would slow down.

What these people didn’t realize is, when silver price is going towards a downtrend, it is a good time to buy more instead of running away!

Someone asked me a question whether now is a good time to enter market. I don’t have a crystal ball and I cannot accurately forecast the future price, but I will give my personal opinion anyway.

There are several very strong resistance, and support level for silver for the past 2 years. The numbers that we are looking at right now are $26 and $34. Since the price is around $27 these few weeks, I will tell you more about $26 support level.

$26 has been tested for several times this year. Once it hit $26, it is a dangerous sign because once it is broken, it will potentially go down to $18-$17. Again, $26 is a strong support. I see $26 as a bottom price. For now it is quiet unlikely to go down to lower than $26. Silver will be traded within the range of $26 – $34 in the short to medium term.

Today price is about $27, it is very near to the support level (the bottom $26), so to answer your question, yes, it is a good time to enter the market now.

One of the reasons why I’m being positive about this is because of the trend we are at. We are clearly at the end of consolidation since the peak in April 2011.

If silver price break support at $26, it will be supported at $17-$18. We would need another 6-12 months for silver price to climb back up. The good news is, if silver price doesn’t break $26, silver price will potentially go up to $50 or even $60 by end of 2012.

January – June 2011 Silver Price 50% Increase

Here is a shocking news. Although it happens more than a year ago, it still worth sharing.

GATA - The Gold Anti-Trust Action Committee was organized in the fall of 1998 to expose, oppose, and litigate against collusion to control the price and supply of gold (silver) and related financial instruments. GATA sued Federal Reserve and won twice. I believe I don’t have to further convince you on the credibility of GATA.

The chairman of GATA, Bill Murphy has made a public announcement that during January to June 2011, JP Morgan was compelled (being forced) to stop manipulating the silver market. That means during January to June 2011, JP Morgan could not manipulate silver price and silver price was traded in free market.

And see what happen when silver price is traded in free market during January to June…

Silver price has gone up from $26 to $50 dollar! Almost 50% increase!

Bill Murphy said:
Silver practically went straight up to $49 an ounce. THEN, it collapsed for no apparent reason. That reason, from my most well informed source, was that JPM came back into the market in June.

We are expecting “some movement” from August 2012 onward. Most people would see the price goes up and price goes down, and they do not have the skills to take advantage of the price movement. I hope you are not one of these people.

New Ringgit Old Silver

Bank Negara Malaysia has issued the third series of currency notes carry a theme named “Distinctively Malaysia” and are inspired from motifs of flora and fauna drawn from various cultures in Malaysia to “reflect the diversity and richness of Malaysia’s national identity”.
The interesting part is, the color choice of the new paper currencies is very similar to the “hell money” used by Chinese. As part of Chinese’s tradition, these “hell money” is burned to their late ancestors.

A person can spend few Ringgit to buy Millions, Billions and even Trillions worth of the “hell money” notes. The reason why few Ringgit can buy few Billions worth of “hell money” is because the “hell money” can be printed at a very low cost. So, this started to ring a question… What is the difference between the “hell money” and the paper currencies issued by Bank Negara Malaysia?

Fundamentally, both of these money are printed by machines. Both of of these money do not have real monetary value in it – it is merely a “belief”. When it comes to paper currencies, Mike Maloney accurately pointed out “we are all dreaming the same dream“, dreaming that the paper is money.

This new RM20 note is intentionally damaged by someone. If more parts of the paper currency is being damaged as such, I wonder if this piece of paper would still carry the value of RM20. Realistically, if the new paper currency of RM20 is being used for the next 10 years, that is exactly what is going to happen to the paper note.

When that happens, do you think the paper currency note is so rare that Bank Negara will need to refurbish the paper currency and re-use it? No! Bank Negara will simply print more paper currency – they have the “authority” to do it very quickly and very cheaply. Print! Print! Print! By the way, who gave Bank Negara such ”authority” to create money and de-valuate all the other paper currencies in Malaysia? Some people call it creating inflation? Hmm….

Now let’s look at physical silver:

Physical silver CANNOT be “printed” by Bank Negara. In order to produce 1 oz of silver, it take a lot time, a lot of effort and it costs a lot of money. This is the form of honest money that represents a storage of value because Bank Negara cannot print physical silver and de-valuate the value.

When a paper note is damaged, Bank Negara will response with “Never mind, we will print some new ones…”; when physical silver is found after a long lost, it goes into international news. It is being dug up even when it is at the bottom of the ocean:

Example 1 - 200 Tons of Silver Found on WWII Ship

Example 2 - 17 Tonnes of Silver Found Hidden at Puri Math

Example 3 - 48 Tons of Silver Found 3 Miles Below Surface of North Atlantic.

Paper currencies can be manipulated anytime. Silver is a form of precious metal that has limited supply and it has been used as form of monetary metal for thousands of years. I’m not sure about you, for me physical silver seems to be much more valuable than paper currencies.

The fact is, the Ringgit is “paper currency” while silver is “real money”. For the past 41 years, since 1971, US Dollar is totally off the gold standard, the whole world (yes, including you and me) has been brain washed to believe that paper currency is money. No! Paper currency is NOT money!

Currency has the following characteristic:

• medium of exchange
• a unit of account
• portable
• divisible
• durable
• fungible

Money is:

• all the characteristic of currency.
• storage of value.