NO MATTER WHAT ... BUY SILVER

By TaipanPublishingGroup.com

A lot of my friends are having kids right now. Over the weekend, we had some friends over for dinner. One of them brought his eight-year-old daughter. She loves animals, and was great with all our dogs and horses, but we ended the night exhausted! Explaining the rules, keeping a watchful eye over the bigger dogs, reminding her to use her inside voice... I'm still tired from the visit. And I can't begin to imagine how much harder it would be with two kids. Especially with the arguments, trying to decide who's right and who needs a time-out. The mainstream financial media is like a couple of eight-year-olds. We hear arguments from both sides -- corporate earnings are beating records, but at the same time joblessness could jump to 10% again. Which is it? And how do you plan an investment strategy against such bipolar predictions? Here at Smart Investing Daily, we believe the U.S. economy is at another tipping point. The recent market rallies are unsustainable, are similar to an extinction burst... You know, when a child is throwing a tantrum and he lets out one last big scream before he falls asleep. But in case I'm wrong, wouldn't it be nice to know of an investment that could make you profits if the market rises or falls? Well, I've got one for you...

Invest in Silver

Silver is an interesting precious metal. It protects against inflation like gold. But silver also has a lot of industrial uses. That makes it like copper, which booms during economic recoveries. One of the toughest aspects of gold is to find out if it's trading more as a currency or a commodity. Is gold demand up because of concerns about the debt crisis? Or is gold up because of jewelry demand in India and China? It's an important question, but one that doesn't apply in the same way to silver. Silver straddles the metals industry. Certainly, gold and platinum have industrial uses, and we like both of these precious metals as investments right now. Consider this, though. About a quarter of all platinum consumption came from recycled platinum. That's not the case with silver, and that could mean increased demand during an economic recovery. In fact, 487.4 million ounces of silver were used for industrial purposes in 2010. That's well over four times the amount of silver used to make coins and medals. That's also a gain of about 20% from 2009. Not bad in a struggling economy. With uses that span electrical circuits, water purification, photography and other industries, industrial silver demand makes up 66% of silver production. But there's another aspect of silver that should get your attention -- silver investments. World investment demand climbed 40% last year to more than 279 million ounces. And get this... Hedge funds and money managers increased their silver positions by 19% last week, according to the U.S. Commodity Futures Trading Commission... the third week of gains. (Don't forget to sign up for Smart Investing Daily and let me and fellow editor Jared Levy simplify the market for you with our easy-to-understand articles.)

How High Could Silver Prices Go?

Bloomberg reports that silver could climb as high as $70 an ounce by next March... a jump of almost 75% from current prices. Let's take a look at a chart to see if this is a realistic forecast.

View Larger Chart

This is a chart of silver futures for September delivery. See that pop from late April? A huge move... but prices fell short of silver's all-time high of $50.35 an ounce in January 1980. Since January 2011,silver prices have climbed 26%. That's not a bad gain; it beats gold's gain of 12% handily. But that's not near the pace silver would need to climb in order to meet a 75% gain by next March. Is it possible? Yes. Between September 2010 and May 2011, silver prices climbed 140%. But just as quickly, a huge chunk of that gain disappeared when silver prices dropped from $48 back below $35. Realistically, silver prices may test that all-time high by Thanksgiving. At that point, smart investors should ruthlessly protect their gains. That strong resistance silver shows around $50 an ounce will be tough to beat. Expect a drop in prices anywhere above $48. For investors considering an exchange-traded fund like the iShares Silver Trust (SLV:NYSE), look to the price spike in late April to find your resistance point. For investors looking at silver mining companies, be aware that mining costs, like fuel prices, impact profits. Keep an eye on operating margins as companies report earnings. Lower margins could mean lower earnings moving forward.

Publisher's Note: Taipan's Michael Robinson is the best in the business when it comes to playing the silver market. So far this year, he has led American Wealth Underground subscribers to gains of 200%, 68%, 140% and 353%... all thanks to silver and the metals market. Michael recently unveiled his latest special report. There is a strong chance it will lead to his biggest gains yet. To learn what our silver expert has uncovered, follow the link.

Article brought to you by Taipan Publishing Group. Additional valuable content can be syndicated via our News RSS feed. Republish without charge. Required: Author attribution, links back to original content or www.taipanpublishinggroup.com.

Original Source

INDEX

BUY SILVER

ALLAHYARHAM DATO' SALLEH MAJID - PELABURAN TERBAIK

Allahyarham Dato' Salleh Majid meninggal pada 1hb Januari, 2012.
Didoakan agar Allah mencucuri rahmat ke atas Rohnya. Semoga ilmu yang bermanfaat yang diajarkan menambahkan timbangan pahala ke atasnya.
Allahumaghfirlahu warhamhu wa'afihim wa' fu anhu. Amiin.

• How to buy gold?
• Public Gold products
• Gold Investment Rate of Returns
• Why buy Silver bars?
• Index

ORIGINAL ARTICLE

Pelaburan Wang Dari Kaca Mata Dato' Salleh Majid

- Dato' Salleh Majid ialah bekas Presiden Bursa Saham Kuala Lumpur (kini Bursa Malaysia)

MINGGU ini saya bercerita sedikit tentang emas sebagai pelaburan. Sebenarnya emas sudah menjadi bahan pelaburan sejak harganya mula-mula diselaraskan pada tahun 1717 oleh Sir Isaac Newton. Pada tahun 1971, emas tidak lagi terikat dengan Dolar Amerika dan diperdagangkan secara bebas. Pada 6 Oktober 2009 baru-baru ini, harga emas di pasaran emas dunia melonjak sebanyak AS$24.60 kepada AS$1,041.80 seauns sehari. Enam bulan dulu harga terendah emas ialah AS$868.70 dan setahun dulu harganya ialah AS$709.50 seauns. Dalam masa setahun harga emas naik sebanyak 46.8 peratus. Lima tahun dulu harga terendahnya ialah AS$412.10 iaitu kenaikan sebanyak 152.8 peratus. Secara purata seseorang yang melabur jangka panjang mendapat pulangan purata dalam masa lima tahun sebanyak 30.5 peratus. Rasanya pelaburan di pasaran saham sendiri tidak boleh memperolehi keuntungan sebanyak itu.

Tidak ramai yang sedar akan pulangan yang lumayan daripada pelaburan emas. Cara yang baik untuk melabur emas ialah dengan membeli syiling emas atau emas keping selain barang kemas. Untuk makluman, suatu auns bersamaan dengan 31.10 gram. Bagaimana pun harga jualan emas di institusi kewangan berbeza-beza kerana harga emas bukannya sesuatu yang terkawal. Banyak kos perkhidmatan seperti insurans diambil kira oleh institusi-institusi ini. Syiling dan emas keping ini boleh diperolehi di bank-bank seperti Maybank dan OUB. Ada juga yang menggunakan buku pas seperti Public Bank tetapi pelanggan tidak menyimpan dan melihat emas sebenarnya hanya jumlah dan harga semasa pembelian dimasukkan ke dalam buku pas. Kini ada pembelian dan penjualan boleh juga dilakukan dengan Koperasi Etika Emas yang mempunyai cawangan di seluruh negara.

Kenaikan harga emas tertakluk lazimnya atas tiga faktor utama.

Pertama: Penyusutan nilai Dollar Amerika. Apabila nilai Dollar Amerika susut harga emas akan naik, apabila Dollar Amerika stabil harga emas akan susut. Emas bertindak sebagai pelindung nilai menentang Dollar Amerika. Pada masa ini Dollar Amerika lemah dan menunjukkan tanda-tanda akan menjadi lebih lemah. Ada juga ura-ura negara Asia Barat dan China akan menggunakan mata wang lain selain Dollar Amerika disebabkan kelemahan Dollar Amerika ini. Walaupun peralihan kepada mata wang selain Dollar Amerika (euro misalnya atau mata wang bentuk baru) bukan sesuatu yang boleh berlaku dengan segera, berita itu telah cukup untuk melonjakkan harga emas dunia.

Faktor Kedua: Harga emas akan naik selari dengan kadar inflasi. Apabila inflasi naik, harga emas akan naik selaras dengan inflasi. Dalam keadaan negara-negara di dunia termasuk kuasa-kuasa ekonomi besar menyuntik pakej rangsangan ekonomi dengan besar seperti AS$787 bilion pakej rangsangan Amerika Syarikat kesannya ialah peningkatan inflasi. Amerika hanya mengecap duitnya sesuka hati dan ini akan menyebabkan nilai duitnya akan turun.

Faktor Ketiga: Kenaikan harga petroleum akan menyebabkan harga emas naik selari dengan kenaikan kos penghasilan dan penghantaran barangan, jika harga petroleum jatuh. Dijangka emas juga akan turun tetapi pada tahap minimum. Terdapat beberapa cara untuk melabur dalam bentuk emas dan diterangkan secara lengkap di dalam www.gold.org/value. Orang ramai boleh melabur secara langsung dengan membeli emas bulion (jongkong), syiling emas, dinar emas, atau secara tidak langsung melalui gold futures, options, waran atau sijil pelaburan. Salah satu cara paling popular dan cepat berkembang dalam sekuriti bursa di seluruh dunia yang dikenali dengan nama Gold ETF (Exchange Traded Fund). Antara bursa saham dunia yang menawarkan Gold ETF ialah di Australia, Amerika Syarikat, Perancis, Hong Kong, Jepun, Mexico, Afrika Selatan, Switzerland, Singapura, Turki dan United Kingdom. ETF ini dalam bentuk sekuriti dan disokong 100 peratus oleh emas secara fizikal. Pelaburan secara ini berkembang dengan pesat sehingga 38 peratus daripada pelaburan yang dikenal pasti terdiri daripada sekuriti bentuk ini. Di sini belum ada lagi Gold Emas ini diperdagangkan di bursa kita. Melihat pergolakan yang berlaku sekarang terutama sekali tergugatnya kedudukan Dolar Amerika ekoran krisis ekonomi yang berpunca di Amerika, daripada mereka dan merebak ke seluruh dunia. Orang ramai sudah tentu mencari sesuatu bentuk pelaburan yang lebih selamat daripada pergolakan harga.

Bijak Wang –  Dato' Salleh Majid

MINGGU lepas saya dijemput oleh TV3 menerangkan tentang emas sebagai pelaburan alternatif dalam program Bijak Wang. Minat dengan pelaburan emas memang sedang meningkat. Melalui program tersebut pun ada beberapa penonton yang menelefon bertanyakan beberapa perkara tentang emas. Saya diminta menerangkan mengapa wajar melabur dengan emas. Emas sebenarnya ialah suatu komoditi yang tidak luntur ditelan zaman. Walau tertanam beribu-ribu tahun sekalipun, emas tetap berkilau.

Tidak ada negara yang mata wangnya tidak tertakluk kepada turun naik nilai emas, termasuklah negara kita semasa krisis 97/98 yang mana mata wang kita dikatakan menjadi bahan spekulator dan pernah jatuh ke paras serendah RM4.50 untuk satu Dollar Amerika. Mata wang dunia tidak lagi disokong oleh emas dan negara seperti Amerika Syarikat didapati boleh mengeluarkan seberapa banyak wang sesuka hati mereka. Sekian lama mata wang Dollar Amerika digunakan untuk segala-galanya daripada rizab negara kepada dagangan dunia.

Boleh dikatakan tidak ada urusan yang tidak lepas daripada Dollar Amerika sehinggalah Kesatuan Eropah menghasilkan Euro yang menjadi pencabar kepada kedudukan Dollar Amerika. Apabila berlaku krisis ekonomi pada tahun 2008 yang berpunca di Amerika, dollar terus tertekan kedudukannya selaku mata wang utama. Tambahan pula negara seperti China yang banyak membeli Bil Perbendaharaan Amerika Syarikat merasa bimbang mengenai penurunan nilai dollar dan menyarankan penggunaan mata wang alternatif untuk perdagangan. Pada waktu sama China juga mengajak negara-negara Asia Barat mengubah haluan menggunakan mata wang lain selain Dollar Amerika.

Suasana begini dicampur dengan defisit kerajaan Amerika yang berjumlah trilion dollar menyebabkan ramai orang membeli emas selaku pelindung atau insuran. Mereka yang mengambil langkah perlindungan ini bukan saja orang individu tetapi juga negara. Selasa minggu lepas, Bank Negara India telah membeli 200 tan emas dari Dana Kewangan Antarabangsa (IMF) dan ia telah melonjakkan harga emas pada hari itu. Dikhabarkan IMF akan menjual sebanyak 200 tan lagi. Kenaikan permintaan ini menyebabkan harga emas terus meningkat.

Minggu lepas sehingga semalam (Jumaat) emas naik dari AS$1091 (RM3,815) seauns kepada AS$1106 (RM3,871). Bagaimanapun mereka yang ingin membeli emas patut melihat pembeliannya untuk disimpan selama 365 hari. Bukan untuk dijual minggu depan atau bulan depan kerana dengan mengambil sikap demikian segala turun naik harga (volatiliti) dapat diatasi. Misalnya sejak setahun lalu, harga emas naik sebanyak 52 peratus dari AS$734.90 (RM2,572) seauns kepada AS$1116.80 (RM3,908) seauns. Kalau emas tidak penting mengapa kerajaan India membeli 200 tan emas minggu lepas? Kebimbangan akan kejatuhan nilai matawang dolar Amerika dan kemungkinan pemulihan mungkin akan mengambil masa lebih lama daripada dijangkakan kerana pengangguran di AS hampir mencecah 10 peratus dan masalah yang membelenggu sektor perumahan belum dapat diatasi lagi.

Kerajaan China juga menasihatkan rakyatnya menyimpan 5 peratus daripada wang simpanan mereka dalam bentuk emas dan ini bakal menaikkan lagi harga emas. Kita ingat semasa zaman ramai pelarian meninggalkan negara asal mereka seperti semasa perang Vietnam. Mereka yang lari daripada Kemboja membawa bersama emas dan apabila sampai di sini mereka menggunakan emas tersebut untuk memulakan perniagaan dan hidup baru. Contohnya di kawasan Kota Tinggi, Johor. Ramai orang Kemboja yang memiliki perniagaan seperti barang kemas dan perniagaan kain. Emas diterima di mana-mana tidak kira di negara mana sekalipun, emas tetap emas.

Seperti yang pernah dinyatakan dahulu, emas boleh dibeli secara buku pas dan secara syiling atau keping (wafer) dari bank-bank perdagangan. Selain itu, barang kemas juga suatu pelaburan dalam “bentuk emas” walaupun ketulenan emas pada barang kemas adalah rendah daripada emas keping iaitu 91.6 peratus bagi barang kemas dan 99.99 bagi syiling dan emas keping.

Bagi Bursa Malaysia pula, mungkin Dana Dagangan Bursa Emas (Gold Exchange Traded Fund) mungkin boleh difikirkan selaku salah suatu tawaran di bursa kita. Dengan adanya ETF Emas ini dapatlah lebih ramai pelabur melabur dalam emas dengan modal yang lebih rendah.

WHY BUY SILVER?

Original Source

Silver Has Enduring Value
Mankind�s timeless fascination with silver stretches back 6,000 years. As early as 700 B.C., the Mesopotamian merchants used silver as a form of exchange. Later, many other civilizations also came to recognize the inherent value of silver as a trading metal.

The ancient Greeks minted the drachma, which contained 1/8th ounce of silver; and in Rome, the basic coin was the denarius, weighing 1/7th ounce. And let’s not forget the English shilling "sterling," originally denoting a specific weight of silver, which has come to mean excellence.

Today, millions of people throughout the world recognize silver’s intrinsic value and have made it popular as an affordable investment.

This page explains how to use silver to diversify your investments and hedge against inflation. It will also introduce you to some of the most widely accepted silver investment products.

Silver is a Precious Metal
Although silver is relatively scarce, it is the most plentiful and least expensive of the precious metals.

Precious metals are valued for their beauty and relative scarcity in the Earth’s crust, and their superior properties. They are very malleable, highly resistant to corrosion, superior reflectors of light and are unsurpassed as conductors of heat and electricity.

Besides signifying status and wealth, silver has been one of the most romantic and sought after of all the precious metals. Mystified by its beauty from the beginning of time, people have been drawn to remote areas of the world in search of this white, reflective metal.

Silver has often been surrounded by mystery. The Incas of Peru called it "the tears of the moon" because they were awed by silver’s strange gleam, and the Chinese believed that a silver locket hung around a child’s neck would ward off evil spirits.

Silver’s Role In Your Financial Planning
For the average investor, silver can be an effective means of diversifying investment assets and preserving wealth against the ravages of inflation.

Although the value of silver may vary, it has an intrinsic value that is immutable and permanent. Accordingly, many experts suggest that investors should include it among their investment assets.

Why? Because silver can be an important store of value. For example, between 1971 and 1981, the U.S. dollar lost more than half of its value, while silver prices rose nearly five times.

But what about the future? Nobody knows; but many financial planners still suggest including silver among the investments of their clients.

A Final Word To The Wise
For more information about how to invest in silver, you should consult with well known, reputable brokers, bankers, financial advisors or dealers.

Prior to making any investment, you should make sure the seller is capable of delivering exactly what it is selling, and is providing you with the conditions under which it stands ready to buy back your silver.

The Silver Institute does not provide advice as to the buying and selling of silver or the advisability of trading in commodities, nor the tax consequences of any investment or trade in silver.

Original Source

FORECAST ON SILVER PRICES

1. Silver will be USD50/oz this year
2. Silver forecasted to be USD86.75

GOLD PRICE CLIMBS TOWARDS $1600/OZ

As you have probably heard, the gold price has reached the highest price today. It has touched the resistance level of USD1600/oz and mark a new high of USD1601.20/oz at the point of updating this blog.

Just to let you see the evidence of the increase in gold price in real example.

We bought 2 gold bracelets in 2007 at RM75/g. The initial purpose of purchase is for investment. Just keep it until we need money for other important thing.

Let's see what is the price of jewellery today, 18th July, 2011. Source http://www.fgjam.org.my/

In almost 4-and-a-half years, the 916 gold has increase from RM75/g to RM173/gm. This is already more than double the gold price. To be exact, the increase in 916 gold is 231% during this period.

Now, I am calculating the rate of return per year of the jewellery should I sell it today.

916 gold price today : RM173

916 gold price in 2007 : RM75

Rate of return per year from the example

= 173/75 divide by 4.5 years

= 51.3% per year.

This is good or this is good? :D

This is a very real life experience to me. To double your money (in this case, in gold jewellery) in just 4 years is definitely awesome. See Rule of 72 in previous article. We should always be looking out for the highest return to double your money. And best, if you do not hold cash much, but to keep in physical gold bar or silver bar to reduce the impact of inflation in your daily life.

Upon seeing the returns, my better half was asking me during lunch today why I did not buy the necklaces as well during that time!! If only, he have persuaded me then (well, I did not want to look greedy buying everything! ;-) ), we will be smiling a bigger smile from ear to ear looking at the hike in gold prices.

See the gold price climbs for the past 2 years :

In July 2010, the lowest price was USD1158/oz. Today, it has reached 1598/oz.

The rate of return is 38% for the past one year.

P/s : Kena dapat komisyen drp kedai Kembang Jaya ni. ;-)

In GoldAlert.com, the article below is written on 17th July, 2011

Gold Price Climbs Toward $1,600

The gold price climbed toward $1,600 per ounce Sunday night as worries over the surge in borrowing costs for Italy drove investors to add to long positions in the yellow metal. Gold prices, which have risen for ten consecutive days, advanced amid a flare-up of the European sovereign debt crisis. Italian ten-year bond yields crossed 6% last week and traded to record spreads against similar duration German bunds. The lack of deal over the weekend to raise the debt ceiling also helped bolster gold prices late Sunday.

HSBC gold analyst James Steele provided a bullish forecast for the gold price in a note to clients, stating:

“The climate driving gold higher is similar to that of Q2 2010 when gold also jumped to then record highs, buoyed by the emergence of the Greek sovereign crisis and U.S. quantitative easing. Gold is reacting to a similarly bullish cocktail of factors, except that as policy makers appear to have more limited options now, conditions are more gold-bullish now than in 2010.”

HOW TO REDUCE YOUR CREDIT CARD DEBT?

I was watching Oprah yesterday and Suze Orman was with her talking about debts.

Imagine, in the studio in the show alone, the total debt (credit cards, housing, car loan, personal loan etc) was over RM2million. Wow! There must be only about 50 people inside the room.

We have to realise our accumulating debts and take actions to reduce it. Here are some tips.

REDUCING CREDIT CARDS DEBT

Credit Card is the highest interest bearing loan. Thus, it has to be eliminated first.

1. Rank all your credit cards with the highest interest charged. Eg No1, Bank A with 24% pa or 2% per month. No 2, Bank B with 18% pa or 1.5% per month
2. Every month, pay all the minimum requirements for all cards
3. Find extra money to pay the first card every month.
4. Once first card is paid off, pay the second highest interest rate card.
5. Repeat the action until all debts are paid off

HOW TO IMPROVE YOUR CREDIT LIMIT

• Pay more than minimum payment on each card
• Pay credit cards bills on time
• Never go over your credit limit

SPENDING ACTION PLAN

1. List down all your expenses and categorise them into WANTS or NEED
2. Circle all expenses with WANTS
3. If you have debts or NO savings, eliminate the WANTS
4. Save enough to cover for 8 months expenses
5. Decide how much you can save each month & add 20%
6. Search around for a savings Acc with the highest interest rate

So, what do you think? Does this helps you much? Let me hear what you think.

Suze Orman's Article

• Record keeping

Suze Orman's video

• Suze Orman's money mistakes you can't make

GOLD AND SILVER AS MONEY - REASONS AND RELEVANCE TODAY

Why is gold - and perhaps to a lesser extent silver - considered as money? Ronald Stoeferle examines the historical reasons and why they are still just as valid today.

The need for a stable means of exchange is as old as mankind. Cigarettes, seashells, salt, goats, dried fish, or paper all fulfilled that role at some point. Their scarceness in relation to annual production made them bad items of value storage; most commodities come with an annual flow that outweighs the stock by a long shot. Therefore in the long run only gold and silver prevailed.

MISES EXPLAINS HOW MONEY WAS CREATED

The regression theorem that Ludwig von Mises postulated in "The Theory of Money and Credit" is a pivotal piece when it comes to our understanding of the monetary character of gold. It says that the expectation with regard the future purchase power of money depends crucially on the knowledge about today's purchase power of money. . Today's evaluation of purchase power in turn is derived from yesterday's purchase power.

If we continue this regression, we find that at the beginning of the process there has to be a good that was generally needed and had an industrial use. This means that money has emerged from a tangible good. This also includes the demand for jewellery and thus gold. According to Mises only those goods that have a generally accepted utility value can turn into generally accepted, natural money. Gold and silver were already used as jewellery before they assumed their monetary functions. According to Mises the past experience is the decisive factor for the future trust in monetary stability.

The trust in the stability and the future purchase power is essential for the value measurement of money. According to the regression theorem people only trust in money as long as it offers a certain degree of safety with regard to the future money supply and thus to the future purchase power. From our point of view, the high stock-to-flow ratio seems to play an important role in this context. In the following we want to discuss this central and unique, and hitherto quite disregarded, feature of gold.

STOCK TO FLOW RATIO DISTINGUISHES BETWEEN GOLD AND COMMODITIES

"A stock of anything has to be started at a moment in time. A stock of 170,000 tonnes does not just suddenly appear. At some point, long ago, the decision was made to begin to hoard gold. No one hoards something that will not hold its value over time. No one would put a dozen eggs or an iron bar in the back shed and expect it to have value fifty years later. The crucial point to understand is that when the original decision was made to begin to acquire and hoard gold, it must have already been regarded as a store of stable value over time, otherwise the decision to store it would not have been made." Philip Barton, "The Dawn of Gold" (to be published later this year)

GOLD'S STOCK-TO-FLOW RATIO AT 65

The most important feature of gold is definitely its extremely high stock-to-flow ratio. The aggregate volume of all the gold ever produced comes to about 170,000 tonnes. This is the stock. Annual production was 2,586 tonnes in 2010 according to the World Gold Council. That is the flow. Dividing the former by the latter, we receive the stock-to-flow ratio of 65 years.

Stock-to-flow ratios gold and silver vs. commodities

Sources: The Gold Standard Institute, Sharelynx.com, Erste Group Research

STOCK-TO-FLOW AS MOST IMPORTANT REASON FOR THE MONETARY RELEVANCE OF GOLD AND SILVER

Paradoxically, gold is not scarce - the opposite is the case: it is one of the most widely dispersed goods in the world. Given that its industrial use is limited, the majority of all gold ever produced is still available. The recycling of existing gold accounts for a much larger share of supply than for other commodities. This is also why any significant production expansions or disruptions can be absorbed more easily. We therefore believe that gold is not that precious because it is extremely scarce, but because the opposite is true: gold is considered that precious because the annual production is so low relative to the stock. This feature has been acquired in the course of centuries and cannot be undone anymore.

Global gold reserves grow by an annual 1.5% and thus at a much slower rate than all the other money supply aggregates around the globe. The growth rate is vaguely in line with population growth. The trust in the current and future purchase power of money or any means of payment not only depends on how much is available now, but also on how the quantity will change over time.

If mining production were to increase by 50% (which is highly unlikely), this would only translate into an annual increase of 3%. This fact creates a sense of security as far as the availability is concerned and prevents natural inflation. If production were down for a year, this would also have little effect on the overall situation.

On the other hand, if copper production were to be disrupted for an extended period of time, the stocks would be exhausted after about 30 days.

For example, if a huge new mine were to come online and supply doubled, this would come with huge repercussions for the copper price, but with hardly any for gold. This stability and safety is a crucial prerequisite for the creation of trust. And it is what differentiates gold and silver as monetary metals clearly from commodities and the other precious metals. Commodities are consumed, whereas gold is hoarded. This also explains why traditional supply/demand models are only of limited use for the gold market.

Further distinctive features in relation to commodities:

· Gold does not corrode or go bad

· Gold is easily worked on and easily recycled

· Gold has a high ratio of value per weight and volume unit

· The storage and transportation costs of gold are low in relation to its value

· Gold has clear quality standards that can easily be checked

These seem to be some of the reasons why central banks around the world hoard gold instead of copper or coal.

"Lasting backwardation in gold is tantamount to the realisation that ‘gold is no longer for sale at any price' [1]

We have now explained why gold is no commodity, but rather a monetary good. Due to the high stock-to-flow ratio gold tends to be traded in contango. This means that the futures price is above the spot price. The last backwardation in gold dates back to 2008, while silver was traded in backwardation in January 2011. In the case of backwardation, the market sends a signal as a result of which demand all of a sudden increases, and it makes no sense anymore from an economic point of view to bet on a later delivery date, given that the costs of storage, financing, and insurance would be higher. Backwardation is a clear sign of supply shortages.

We entertain some doubt about the alleged amount of 170,000 tonnes of above-ground stock. The figure is based on the calculations of a National Geographic article of 1998. Since then, practically all institutes, magazines, and analysts have based their models and assumptions on that figure. The conclusion of the article was that only 10,000 tonnes were produced in the whole 5,850 years prior to the California gold-rush. That amounts to only 1.7 tonnes a year which seems to leave a large question mark over the estimate.

On top of that we believe that almost 30% of annual gold production ends up in the private/black market rather than the official market. The volumes of artisanal mining should not be underestimated, especially in Latin America, Africa and Asia. Therefore we entertain doubts about the 170,000 tonnes and we think it makes sense to at least question the figure and to entertain the idea that substantially more gold than claimed might be around. On the other hand, this would only add to the power of the stock-to-flow ratio of gold.

Original source

INDIA TO IMPORT 350 TONS OF GOLD, 1200 TONS OF SILVER

NEW DELHI (Commodity Online): India’s state-owned trading company—Minerals and Metals Trading Corporation (MMTC)—said on Thursday that it would import 350 tons of Gold and 1,200 tons of Silver in 2011-12 as demand for the precious metals is rising fast.

"We plan to 350 tons of gold and 1,200 tons of silver in the 2011-12 fiscal as the domestic demand for these metals are fast rising," MMTC Marketing Director Ved Prakash told reporters.

India is one of the largest importers and consumers of gold and silver in the world. As the domestic production of these precious metals is negligible compared to their rising consumption, India has been importing hundreds of tons of gold and silver every year.

Prakash said that import of gold by MMTC in the current fiscal is expected to increase by more than 40 per cent with the yellow metal fast emerging as a safer investment option.

"We are stepping up import of Gold this fiscal due to rising demand for the nobel metal. Also, its value as a safe option, in the current volatile market, is rising,” he said.

The company almost doubled its import of gold at 45 tonnes during the April-June quarter this year compared to the same period last year, he added. He said besides gold, the demand for Silver is rising as

it gives better returns.

Silver prices have been touching new peak in India thanks to robust demand amid short supply in the global market.

Majority of silver in India is used in the production of ornamental items like jewellery, utensils and gift articles. Every year, India buys more than 4,000 tonnes of silver and over 960 tonnes of gold.

Original source Index

MORE CHANCES TO ACCUMULATES IN PRECIOUS METAL

These are the prices at 6:05pm on 1st of July.

Indeed, these are the support price that we should be looking at. Time to purchase everyone.

Watch out for better prices tonight before the market closes.

See Authorised Dealers to buy.

See Index