Monthly Archives: July 2011

How Silver Bullion Can Protect Your Investment Portfolio

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As fiat currencies face an uncertain future due to their unbridled generation by central banking systems, inflation spirals out of control. Inflation is caused by devaluation of these currencies, as they continue to be printed, artificially increasing their amounts on international money markets. The risks of large drops in the value of fiat currencies is a distinct possibility in our current period of economic uncertainty, as countries generate artificial capital to mitigate the effects of slowing growth.

Worldwide debt is rising exponentially, which could ultimately result in hyperinflation. The debt spurred by economic factors like war, unemployment, an aging populace and job outsourcing, all but guarantee that paper money will continue to be printed. The problem is that no one knows how long this can occur without the eventual resulting deflationary drop. Many investors look to precious metals to hedge their bets when the efforts of banking systems are no longer enough to prop up fragile economies in the face of increased unbacked currency generation. Governments possess no other weapon against hyperinflation.

Silver is a precious metal which is uniquely suited to provide protection from extreme currency fluctuations. It’s value as an industrial metal, in addition to being an intrinsically valuable metal for monetary exchange, gives silver an edge, since its technological applications are constantly increasing.

More easily refined and occurring naturally in larger quantities than gold, silver has always retained a lesser value than gold. In times of economic hardship, silver becomes more practical than gold because of its undervalued status, since unlike gold, it is typically not stockpiled and therefore remains at relatively small amounts, above ground. Adding to its appeal is its unusually large, currently uncovered short position on the COMEX exchange, compared to other commodities.

Demand for silver is high as demand has outstripped supply over the last one and a half decades. Only a tiny fraction of mined silver is used to produce bullion. Due to industrial demand, greater negative implications would be realized by a silver shortage.

Reference:
http://www.bmgbullion.com/document/933

Silver & Other Precious Metals For Pension Protection

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Taking into account the future payments required to make good on US public pensions, calculations indicate a projected shortfall of approximately $1.9 trillion. This increasing liability will eventually force both state and local government entities to dramatically reduce services and sell off assets, a trend which has already started. Approximately one-third of Canadian pension funds also face this dismal prospect.

The fiduciary responsibility of pension fund managers dictates that their investor’s hard-earned money must be responsibly protected by minimizing risk and maximizing performance. Typical methods of achieving this goal are portfolio diversification and asset allocation.

Traditionally, three asset classes are used to accomplish diversification. Most managers diversify between cash, stocks and bonds, while ignoring one of the best-performing asset classes. Precious metals do not always figure into a typical pension portfolio, due to their negative correlation to the aforementioned asset classes, but choosing asset classes that display only a positive correlation to each other or holding cash in the form of currency does not create either a diversified or balanced portfolio.

Forming An Investment Foundation With Silver Bullion

As risk rises in uncertain economic times, so too does the investor’s need for wealth preservation and protection of pension portfolios. Lower risk may be achieved by adding silver bullion to a long-term portfolio where secular growth is also a possibility.

As in the 1970′s, the ratio of precious metals to the Dow average is currently falling, indicating a buy signal for precious metals. A portfolio overweight in precious metals has been shown to perform best in these conditions, as their risk becomes less and the possibility of returns rises.

The reasonable price of precious metals, when above-ground supplies are adequate to provide smart investors with a reasonable price can be a savvy investment to protect pension assets.

Reference:
http://www.bmgbullion.com/lib.pl?rm=show_document&record_id=915

Market Swings Bring Silver Closer To The Buying Mark

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Leaders from the European Union met in Brussels today, expected to hammer out the details of a program to address Greece’s debt crisis. Nicolas Sarkozy and Angela Merkel were expected to form a unified position with regard to the Greek situation, while US lawmakers continue to stall on viable solutions to North America’s skyrocketing debt issues.

Washington’s “Gang of Six” put forth proposals which, although lacking in detail for health care spending, came with a promise to be specified shortly. President Obama didn’t seem to be holding as firmly today on short-term proposals to increase the limit on US borrowing, provided his contemporaries can come up with an adequate proposal for reducing the deficit.

As the deadline for resolution of US debt problems looms ever closer, fluctuations in international financial markets are showing signs of strain. Today’s market reflected a roller coaster ride in nearly every sector, from equities to precious metals and everything in between. Confusion seemed to reign across markets on both sides of the pond.

Losses in precious metals opened the day, along with rumors of a Greek default, possibly being given the potential blessing of the ECB. This could only happen if other EU members are willing to guarantee bonds issued by Greece as operating collateral for European markets.

The weakness in precious metals extended to silver as it lost fifty cents in early trading. Overnight silver sparring saw a fluctuation range of $1.25, as neither side gained much ground throughout the day. Gold encountered smaller losses in the tumultous market fray.

Given current world financial situations, continued decreases in the price of silver may signal a buying opportunity for those interested in silver for their investment portfolios.

Reference:
http://www.kitco.com/ind/Nadler/jul212011.html

Silver Appears Bullish

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Silver and gold prices stabilized with an uptrend after Thursday’s trading session in precious metal futures. A reported agreement between Germany and France has sparked hope for a new aid agreement to the belabored Greek marketplace. If no such assistance is forthcoming, precious metals are likely to rally, creating pressure on the Euro. Greek default is still a possible outcome with European leaders remaining undecided on the level of support to be extended to Greece’s economy to mitigate the potential outcome of unpaid debt obligations.

Despite uncertainty at the Brussels debt summit, which ends Thursday, US leaders appear to be closing in on a debt proposal that can pass both houses of Congress and escape veto by President Obama. Investor appetite for risk has increased, creating a bearish outlook in the near term for precious metals, like silver and gold. However, underlying this apparent bear market is a weaker dollar and potential movement to the upside for crude oil prices, which continue to rally this week. A rise in crude oil pricing above the $100 psychological barrier makes for a bullish market in precious metals.

Silver continues to hold both a long- and short-term technical advantage with a three-week-long uptrend boding well for December futures. Bullish investors continue to encounter technical resistance just a dime below $41 per ounce, but the bears are counting on achieving a closing price below the $38 mark. Overnight resistance is first seen at a high of $40.32 and support is encountered at a low of $39.38.

Jobless numbers and the housing price index, due out Thursday could encourage silver price fluctuations when coupled with a technically weaker dollar and near-term rising oil prices. The outlook for the silver sector appears bullish in the near-term.

Reference:
http://www.kitco.com/reports/KitcoNews20110721JW_AM.html

Silver Market Rise – Good Investment Opportunities

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A spike in market activity, late in the day on July 20th, saw precious metals prices rising after progress stalled on a bipartisan budget proposal to bring the nation’s $3.7 trillion deficit under control. Both silver and gold ETFs gained prior to the Brussells summit, a meeting intended to bring leaders together to take action to solve the sovereign debt crisis in Europe. As little progress has been made either here or abroad, traders gathered their metals futures profits as ETFs held their lead and futures rebounded after an early slump.

At the close of trading, iShares Silver Trust (SLV) showed a gain of 2.9% to end the day at $39.12 per share. IndexUniverse.com’s head of analytics, Matt Hougan noted that the price spike probably came later in the day as New York trading for precious metals futures closes 2.5 hours earlier than the standard stock and ETF session. He furthur commented that increased volume could have come from a single order or overall increased late day volume. Silver mining stocks like Silver Wheaton (SLW), Global X Silver Miners (SIL) and Pan American Silver (PAAS) also jumped more than 1.5% on the day.

Weakness in the dollar versus the euro and the unexpected drop in existing home sales likely helped precious metals keep their edge. Analysts from Commerzbank wrote that “In the medium- to long-term, support for gold and silver will come from production problems which are currently curbing the expansion of supply, in addition to the persisting sovereign debt issue.”

Short-term technical stock indicators show a bearish trend according to Barclay’s, but longer term indicators are still bullish. Barclay’s analysts suggest a buy recommendation when silver dips near the $37 mark to take advantage of an uptrend to near $43 in the longer term.

Reference:
http://blogs.barrons.com/focusonfunds/2011/07/20/late-trading-boosts-silver-gold-etfs-miners-rise-1-plus/