David Morgan


Baby boomers, with every year that you get older, do you become more and more afraid of retiring?

I don’t blame you at all.

The worldwide economic slowdown epidemic that is forcing homeowners into foreclosure, halting consumer spending, driving up credit card bills and crashing stock exchanges on a global basis are seriously hurting many baby boomers’ plans for retirement.

Many boomers have become very fearful of their future because they were relying on their 401Ks and IRAs for a comfortable retirement. Now, they’re watching their profits freefalling downward. Many boomer investors are now seeing lots of red in their portfolios – so how can they retire?

In other words, if baby boomers aren’t adding to their wealth and if their asset values are falling, their chances of a comfortable retirement are quickly diminishing.

So, what can you do?

Simply change the way you fund your retirement. Start diversifying wisely!

Two Alarming Reports That Should Convince All Baby Boomers to Change the Way They Invest in Their Retirement Plans

- A recent S&P report, which calls Americans “dangerously unprepared for retirement,” notes that the poor performance of asset markets in recent years is hitting the piggy banks of even those most primed for retirement. The S&P 500 Index, for example, is on track to have its worst decade performance since the Great Depression!

- In an AARP survey, fifty percent of the respondents said the value of their 401(k) accounts and other investments had dropped over the past 12 months. One-quarter of retirees said their golden-years income had fallen in tandem with interest rates.

How You Should Invest in Your IRAs and 401Ks If You Want to Avoid Retiring Poor

You should fund your Individual Retirement Accounts (IRAs) and 401Ks with physical gold and silver. Yet very few investors are aware of this fact.

Here’s why you should diversify your retirement portfolio with precious metals:

- Precious metals are exempt from all capital gains taxes, so if your investments perform well over a long period of time, it can result in huge savings.

- Precious metals normally rise during periods of unsettling events such as wars, terrorism, inflation, deflation, downturns in the stock market and the US dollar.

- Precious metals usually yield large profits in no matter the circumstances.

What Makes Investing in Gold and Silver Unique

When you invest in gold and silver you can take physical possession of the actual gold or silver when you make your withdrawals. That’s correct! You can cash out in real honest-to-goodness gold and silver instead of fiat dollars. This is the most important feature of all. Down the road, in this generational bull market in gold and silver, the odds are in your favor that you will want and need the physicals when it’s time to access your investment.

How to Get Started in Investing in Gold and Silver in Your IRAs and 401Ks

Once you decide that you want to include precious metals in your retirement planning, you need to determine how much you want to invest.

How much you invest depends on:

- Your annual contribution

- Your personal goals

- Your individual investment philosophy

Three other factors to consider are:

- Your age

- Total assets

- Risk tolerance

Very few institutions are set up to handle the precious metals component of retirement plans. One of the leaders in the field that I personally recommend using is GoldStar Trust Company. They serve as custodian for approximately 20,000 self-directed IRAs with assets in excess of $700 million. One thing to note is that GoldStar is not a coin dealer, but it will work with dealers who buy and sell precious metal coins and bullion for your IRA on your instructions.

Setting up a self-directed IRA with a company like GoldStar is easy. And, there are only three steps to follow:

1. Submit the paperwork.

2. Fund the account.

3. Direct your broker which precious metals to buy.

So, start investing in gold. Start investing in silver. And start investing in other precious metals unless you want to continue having to drink a bottle of Maalox every night because you’re so afraid of the future. Follow my advice in this article, in my book “Get the Skinny on Silver Investing” and on my website, http://www.silver-investor.com and you will retire comfortably without fear.

leslie j


metals, the mnetary system evolved from

Jay Dub


I’ve been an active investor in the commodities markets for about a year now . . . specifically in silver. Just want to know other peoples opinions of precious metals.

Dr. B. Ramesh


Gold is the precious metal, I want to buy and keep it for some. Is the gold will appreicate?

SCR Analysts


From our USA research division and matching USA strategy analysts, the following financial analysis excerpts are from revisions recently completed on USA based investment portfolios:[1]

 

SCR Step 1 – Analysis: From No. D1 (USA) Financial Portfolio Research Revision –

[PowerShares (Wgt: MC)] Precious Metals-Deutsche Bank (DBP) vs. [SPDR (Wgt: MC)] S&P 500 (SPY):

(1) Observation – Relative Strength: Results in the relative strength analysis of DBP versus SPY indicate that the Precious Metals-Deutsche Bank (DBP) is strongly underperforming S&P 500 (SPY) on a relative basis.

(2) Observation – Regression: Comparison of the linear regression to the time-series that has a 3-period forward shift finds the following formation: The linear regression is below the time-series. Since the linear regression provides the “best fit” to the price path, this has negative implications for DBP.

(3) Observation – Price Performance: DBP shows a continuation of a negative price path (downward slope) on weakening indicators.

[Reference Charts: D1-6 (relative strength); AD1A-6a (regression); AD1B-6b (price)]

SCR Step 2 – Implication & Strategy:

(1) Possible Implication: The summary of the stated observations for DBP is Negative, and has Bearish implications. While some of the indicators are getting weaker, many are still quite strong. If you have a short position on DBP, it might be good idea to tighten your chosen exit stop.

 

First, and furthermore, for most investors, a diversified investment portfolio approach combining stocks, bonds, money market securities, etc., is optimal. While financial diversification cannot protect against a loss from a declining market, it can reduce the overall portfolio’s volatility. With the globalization of information technologies, college education becomes a prerequisite to most careers.  A goal of successful investing thus becomes crucial in providing the upper level education necessary for your child’s future.

 

Second, in consideration of that goal, studying the information available on this site, which has been kind enough to host our research in this article, will help.

At www.StrategicCapitalResearch.com, we provide additional finance educational materials to what you find here in both investment books and videos. Between the two sites, you should be able to find enough information to get started toward achieving your education investment goals.

 

Third, to the above analysis excerpt, the usual disclaimers apply. Since all Strategic Capital Research publications provide research that is conducted using historical data, a reminder needs to be made that the analysis of past market reactions cannot predict future market actions. In particular, no amount of historical data can predict the sudden changes that occasionally occur in financial markets.

[1] Reference chart numbers beginning with an “A” refer to the auxiliary analyses completed on the “D” portfolios located at www.strategiccapitalresearch.com/research.html

 

Skywind


The price of platinum was close to $2,300 in March, and now is below $1,000. What accounts for this, especially given that these uncertain economic times would predict a rise in the price of precious metals? See chart here:

http://www.monex.com/prods/platinum_chart.html

MasterJake946


I am wondering if anyone has an Idea of what Silver’s next moves will be. ( The precious metal )

Simon Giannakis


Intended Audience

Investors looking to speculate on the price of silver through ETFs or publicly traded silver companies as well as those looking for a store in value against inflation.

Summary Points to Take Away

Inherent supply constraints will restrict the ability of silver to react to changes in demand; thus, overall supply is inelastic – which would put upward pressure on the price of silver should demand increase.

Silver is one of the most industrious items in the world – highest reflectivity, thermal and electrical conductivity of all the metals; thus, difficult to substitute all its industrial uses should the price of silver spike.

Store of value during inflationary periods

Future growth in Solar Energy could propel demand for silver, resulting in higher future prices

Cyclical good; thus, short term price will trend downward during the low point of the business cycle

Demand for silver over the past decade from the photography industry has declined – which still represents a sizeable portion of total demand that is likely to deteriate over time.



Introduction

The price of silver has been historically volatile as it can fluctuate between the demands of industrial users and investors using the precious metal as a store of value. At times this can cause wide ranging valuations in the market, creating volatility.

Analysis

Supply Constraints

Overall silver producers are slow to react to higher levels of demand; thus, low levels of supply will ensure the price of silver doesn’t collapse on excess production, etc. Two significant factors depressing supply growth are:

(1)   Unlike gold which is hoarded, silver’s primary use is for industrial applications (approximately 40% of demand); thus, the majority of silver used in this capacity is either thrown out by the end consumer or is consumed during manufacturing. Less than 1% of silver gets reused and recycled; thus, continued supply is necessary to continue to fulfill the industrial demands upon silver. Though new silver is mined and brought to the market place – a significant portion of it ends up in the landfills. This is unique to precious metals, and very unlike gold which is hoarded (i.e. used for jewelry or as a storage of wealth, not many industrial applications;) – i.e. most of the gold ever mined throughout our history is still in existence; thus, supply continues to build upon each other unlike silver

(2)   Producers can’t react to higher prices because 75% of silver that is produced is the secondary by-product of the original mining operation (typically gold, copper, zinc and lead); thus, given that the primary resource being mined is not silver – higher prices of silver won’t provide an incentive for mining companies to speed up production as their decision making process focuses on the demand/supply issues they face for the main resource they’re trying to extract – silver is an afterthought. This is very uniqe to silver as most other metals are specifically mined for – not the pro-product produced from non-related mining activities.

It is evident by the above two points that there is strong potential of future price spikes in combination with a general upward trend for the price of silver over the long run.

Not Easily Substituted for

Silver is one of the most industrious materials in the world – highest reflectivity, thermal and electrical conductivity of all the metals; thus, difficult to substitute all its industrial applications should the price of silver rise sharply. This makes demand relatively inelastic; thus, a rise in price would be followed by a smaller decline in demand; therefore the higher price will persist (keeping in mind of the above discussion about the slow response from silver suppliers). Keep in mind that this is based on current operating conditions and technology; therefore, future developments could change the current substitution possibilities available to users of silver – but this is purely speculative at this point; thus, not a current critical threat to the price of silver.

 Store of Value in Inflationary Periods

Silver along with gold are precious metals that store buying power, protecting it from periods of high inflation (i.e. unlike currency which decreases in value during inflation, precious metals will hold their buying power and can be converted into more currency then used to purchase it to compensate for the higher levels of inflation). RecentlyI most of the significant global economic powers are issuing their respective financial institutions significant amounts of liquidity (ex. U.S. with AIG , Fannie Mae, Freddie Mac) that will expand the money supplies of the relevant nations. Though this may stabilize the economy in the short term – it will lead to excessive levels of inflation as they’ll be more money in the system chasing after the same number of goods; thus, it’ll take more of those dollars to buy those goods. In general – most investment experts recommend investors have 10% of their investment portfolio in precious metals to protect themselves in instances described above – take a look at silver to fufill this need.

 Impact of Growth in Solar Energy

 As the price of fossil fuels (ex. Oil, natural gas, etc.) rise in value due to scarcity, alternative sources of energy are being seeked. Global scientists and governments have become interested of the promise associated with solar cells to produce electricity. Silver paste is used in 90 percent of all crystalline silicon photovoltaic cells (the most common type of solar cell). Demand from future solar energy projects is estimated to triple from current levels by 2012 – brining demand to 40.6 million ounces – which is note worth though not significant given 2007 global demand of 894 million ounces. This forecast is the lower end of the estimate and should the upper end of  the demand estimate be realized – demand would go to 142 million ounces from solar energy projects. Given the supply constraints of silver (as discussed earlier), the prospect of growing demand for solar energy projects is a potential catalyst that could lead to significant increases in the price of silver if the high end estimate is reached (representing a 16% increase in demand without an equal increase in production, which keeps the price high). Readers should continue to track the growth of solar energy projects as well as competing fossil fuels as the lower costs of oil or fuel alternatives could slow down these projects and demand. Investors should continue to monitor this potential catalyst.

 Risks

 Current Global Recession

 As mentioned earlier – silver has numerous industrial applications (including new home construction and automobile manufacturing); thus, though the long term prospects appear strong, like many metals – it is subject to business cycle swings. Based on present economic climate – manufacturing is slowing; thus, demand for silver will be depressed during the low point in the current business cycle, not making purchasing silver a good prospect for short term traders. For investors who have a long term outlook – the current period may represent good buying opportunities as the price of silver has suffered throughout the year due to lower demand from industry – specifically it is down 48% from its peak during 2008 (March 17, 2008 – $21 US/Ounce) as compared to current price of $11 US/Ounce (December 31, 2008). Prices taken from NY Spot Market.

 Photography Industry

 Silver-based photography is based on the use of chemical ‘developers’( the differences in light intensity form negative images), which can then be processed into paper pictures by using silver-imbedded paper. Because of the growth of digital photography, the use of silver-based imaging by consumers has been steadily dropping as many picture takers either keep their images in digital form or use low-cost, ink-jet printers. Silver demand from photography has dropped from 225 million ounces (27% of total demand) in 1998 to 128 million ounces (14% of total demand) in 2007, and based on the above analysis this trend will likely continue. Though demand from photography has dropped year after year – it is has been replaced and succeeded by increased demand from industry (316 million ounces (38% of demand) in 1998 to 455 million ounces (51% of demand) in 2007). Should demand from industry slow down or stop the impact would severly depress the price of silver as industrial uses is currently the largest contributor to total silver demand.

 Where to go from here?

 Based on the above analysis, silver is likely a good buy at current prices given the strong fundamentals (ex. expected upside in price from supply constraints, higher demand for inflation sensitive assets (i.e. store of value) and potential growth in demand from solar energy projects).

 Several ways to invest in Silver

ETFs – some ETFs track precious metals, while others are completely dedicated to silver. These are a low cost situation as transaction/storage costs are low due to the fund buying in bulk. Note that storage costs are reflected in the market price of the ETF, not something an investor pays for separately. Word of warning – there is a theory that in a time of market crisis where precious metals would be used as a medium of exchange, etc – a silver ETF market price may not reflect the actual value as ETFs are part of the overall financial system; thus, if there is a market crash – demand may drop for ETFs (even those of precious metals) along with other stocks as well. This prevents the user to utilize from using their true silver asset holdings. This is only a theory and speculative at best – so take it with a grain of salt.

Purchasing shares of publicly traded companies with significant silver operations (ex. BHB billiton, Barrick Gold, etc. – note these are not recommendations but rather options, do your research if you choose this path). A word of warning about this route – remember that companies can always go bankrupt, but commodities can’t, meaning if you choose this route you are vulnerable to company specific risks (ex. Underperforming secondary product lines, fraud/accounting scandals, etc.)

Silver bullion & Coins – this is literally buying physical silver and storing it yourself (at home or in a safety deposit box, etc.). Provides you the safety of physically having access to it should you need it (ex. Market crash, no confidence in local currency, etc.), but on the negative side – you’ll have to find a place to store it and incur significant transaction costs (around 10%).



THANKS,

SIMON GIANNAKIS

Daniel Jones


Gold may be at its lowest point for 2008 and other metals may be on the way down too but what were the five key influences on their meteoric price rise?

Over the past five years the price of precious metals has more than doubled. The surge has been attributed to a combination of the following:

1)Depreciation of the US dollar. The World Gold Council provides evidence supporting the view of an inverse relationship between the price of gold and the US dollar. Over the past five years, from 28 February 2003 to 29 February 2008, the US Dollar Index fell 26.1% while the price of precious metals soared.

2)Inflation. Rising oil prices increase inflationary pressures. During periods of rising inflation, the price of precious metals trends upward. Studies conducted by the World Gold Council support the view that gold is a long-term hedge against inflation.

3)An increase in global wealth. The rise in global income, particularly from emerging market economies such as China and India, has contributed to increased demand for precious metals for manufacturing and jewellery.

4)Exchange Traded Funds (ETFs). The introduction of ETFs stimulated demand for precious metals. ETFs initially began as a bundle of equities tracking the performance of indices and were traded on a stock exchange in the form of shares. By 2004, ETFs moved into the precious metal sector and by early 2007 nearly 22 million ounces of gold were held in ETF accounts. By 2006, 18% of the world’s investment demand for physical gold came through ETFs.

5)Geopolitical tensions and uncertainty. Global political tensions generally trigger a short-term speculative rise in the value of precious metals. A good example is the 1979 Iranian Revolution. In the run up to the crisis, the price of gold rallied from $226 in December 1978 to $512 in December 1979, a 126.5% rise in one year. During the same period, silver surged 267.6%, from $5.93 to $21.79. The recent uncertainty generated from the credit crunch and the deterioration in the housing market has instilled fear and contributed to a similar surge.

The price of gold is currently on the way back down. However if you are looking at spread betting on gold or any other metal it is interesting to note the recent comment from Anthony Grech, Analyst, IG Index, “despite gold receiving most of the media attention, it has not been the best performing precious metal over the past five years. Platinum and palladium outperformed the precious metals sector over the past year. During this period, platinum and palladium surged 72.6% and 60.9%, respectively while gold rose 45.5%. A five year view, from February 2003 to 29 February 2008, reveals that silver was by far the best performing precious metal, up 330.8%. Platinum placed second with a 215.7% rise, followed by gold’s 178.4% increase”.

Financial spread betting carries a high level of risk and may not be suitable for all classes of investor. Only trade with money that you can afford to lose. Make sure you fully understand the risks involved. If necessary, seek independent financial advice.