Whilst the silver price might have fallen along with other industrial commodities, because its non-monetary, industrial facility is being emphasised by the market, the flip side is that its significant use by industry is making it scarcer and scarcer relative to gold. This should cause the silver price to rise in the medium term, I would have thought.

I understand that the industrial use of gold does not make any difference to the above ground stocks of gold, because gold is easier to mine than silver. Since the stockpile of gold remains constant year after year, it, in essence, has no role other than to be a fiat-money-substitute.

As a fiat-money-substitute so much more than silver, it is not an investment but a money that rides higher on the back of a devaluing dollar – over time.

Silver, on the contrary, is an investment because it is constantly diminishing in quantity above-ground on account of its significant industrial usage.

This is consistent with Ed. constantly advising that silver investment is volatile in comparison to gold. It also explains to my mind why Maloney could well be correct when he says that silver might, one day, be worth more than gold, which is just money in fact.

where can you buy quality silver bullions in dubai?

Ed Note: Old Gold Souk

The gold-silver ratio has slipped from 32 in April to 45. One wonders why it has fallen behind. Is it because the market has only just woken up to gold and still doesn’t recognise silver?

Gold is now more expensive than platinum. A few years ago it was less than half the price.

The main reason why silver has “sold down” over the past two weeks is due to the manipulative schemes of silver by JPM. Heavy shorting of silver futures, during each day (to drive the price down hard), followed by covering their massive short positions (in far greater numbers than their “new” silver shorts), in order to reduce their net short position.

JPM is once again caught in a silver short squeeze, as they were back in April 2011, when the orchestrated a spectacular fall in silver’s price in only a few days.The CFTC’s latest COT reports reveal JPM’s dirty tricks once again, yet the CFTC refuses to take action against this egregious manipulation game.

Additionally, a big factor in silver’s rise on 10 Aug was due to short covering by the big commercials (esp. JPM). For all practical purposes, the so-called “price discovery” system is broken; looking ahead, significant price volatility of over 2% to 3% (upward as well as downward) is likely to be the norm for silver now.

I have not purchased any silver in my life time.I want to ask one simple question.Will silver be better option than keeping money in fixed deposits.Will the price increase more than the yearly inflation rate.What about liquidity.Is it possible to resale it easily.Do banks give loans on silver.I want to buy physical silvers than silver bonds.Is it a better option.Please advice.

Ed Note: Read the articles on this website and make your own mind up.

Vinay, I am heavily invested into silver and so I would like to try and help you. I do like your “one simple question”!

However, the Editor is quite right about reading the articles on this website. There are many good articles on this subject so I recommend you look through the archives as well. There’s also the Editor’s books seen in the left hand panel of this page.

I heard this morning on the BBC that stock markets rise about 5% pa on average, and this fits with what I recall the Editor writing that shares returned 67% on average between 2000-2010. Can your fixed deposits even get anywhere near 5% pa in the current financial situation? I doubt it very much!

That 5% pa for shares is when the stockmarkets are doing well. They are doing very badly at the moment and will continue to do so in my opinion.

Bonds returned, on average, 94% between 2000-2010 so they doubled what you invested over 10 years. That’s a long time to double your money in my opinion. They are a risky investment, I understand, because banks may go bankrupt and governments may default on the date of repayment or they may pay you back fully but with valueless fiat money (such as happened in Wiemar Germany).

However, gold went up about 450% and silver 500% between 2000-2010. Beat that!

In the calendar year of 2010, my silver and gold (mainly silver) rose by 55% in value beating any other form of investment last year. Since bullion prices are a little less than last year on average (I think), my gain might be about 45%, which is still fantastic.

Silver is an investment whereas gold is a hedge against devaluing fiat currency particularly the dollar. Silver is decreasing in above-ground amount constantly whereas gold is not, so as demand for silver rises and supply decreases, it will rise greatly in price over, say, another decade or over a shorter time span too.

Silver is liquid in the sense that you can sell it back again easily as long as you don’t take delivery of it at home. I am with GoldMoney, which is an online retailer of bullion. At a click of a mouse button, you can sell your silver whenever you want and receive the money back into your GoldMoney account within about 4 days. Easy! http://www.goldmoney.com/

Physical silver is a must rather than any paper equivalent, so I’m told on this website.

GoldMoney does have the facility to pay anyone in gold or silver as long as your payee is willing to accept this method of payment and has a GoldMoney account.

I am bullish/optimistic about silver and about silver relative to gold, as is the Editor as I understand from what he has written. I am totally frightened of fixed deposits, shares and bonds of any sort. The beauty of online silver purchasing is that you can get it out so quickly if you want to do this.

The fact that you can write in here and state that you want physical silver as opposed to anything else shows that you very far along a very sensible road, which I am also on.

Best wishes!

Once again someone posses a question as the name of the article and fails to ever address it or answer it in the article. No wonder, it was written by Im A. Dumas.

Vinay has a definite problem with punctuation. Maybe he can’t read either?

bought several years ago at $12.00 an ounce…today at $39.00…enough said

@ Vinay, the Procrastinator:

The Answer to Your Question:
The regular readers on this web site, along with Peter, the Ed., believe that silver will be well over $100 in a few years.

With the US FED and Bernanke keeping rates at Zero (ZIRP), fixed income investments such as bonds, CDs, etc. are dead. Completely dead.

So your question is easily answered: BUY SOME SILVER COINS!
American Silver Eagles, or Canadian Maple Leafs, or Vienna Silver Philharmonics. Buy them from a reputable dealer; the price is generally what the silver spot price is + approx. $2.50 premium.

Those types of silver coins are very liquid. Here in the US, a reputable dealer will buy the coins back from you at the spot price + 3%, but this can vary, depending on where you live. Before you buy, you need to ask your dealer what price he is willing to give you (approximately!) if you wish to sell them back to him (and you shouldn’t sell them back to him, even if the price goes from $40 to $60 in a short time!).

Don’t buy a silver ETF, such as SLV, since it’s a fraudulent scheme, which is managed by JP Morgan, the King of the Silver Fraud Manipulation game. You can buy PHYS, which is the Sprott Physical Silver ETF.

I never heard of “silver bonds”; if there is such a thing in your country, then it’s likely to be just a piece of paper, without any physical silver backing.

D, I thought that the question was answered. If you expected a date, then D must mean Dumb.

“When will silver catch up with gold’s stunning $100 advance?” was a question allowing for the PROCESS whereby this could come about to be discussed. It was a good article and well written.

Does your D stand for Dumas?

I hold some silver and no gold. Most of the arguments for gold and silver also hold for oil, scarcity, dollar hedge, industrial consumption. Unlike gold, oil is way off it’s recent highs and likely to move higher – at some point in the future.

I would suggest buying an oil services ETF like iez oih or xle. Buy half the amount you intend to as it may may go down in value in the short term. If it doesn’t go down, great your in the money, if it does go down, use this as an opportunity to buy more for less with the second half of your investment amount and that’s key. Don’t go all in to anything, ever, keep some funds in case your wrong or to take advantage of a dip in price.

I am long iez.

See what else I am trading at canitrade.blogspot.com

canitrade: shameless self-promotion but nice site nonetheless!

@ Sara you can buy silver at several places in the Old Gold Souk. Probably the best known is Lakhoo Jewelry Trading. You can either buy 1kg bars or Indian coins. Unfortunately the well-known silver coins are not available in Dubai. You can buy these by post but I am unsure how well this works for international purchases.

1Kg silver bars are bulky, but at least they are cheap: AED200K ! Buy a kilo or two a month and it doesn’t take long to build up a holding.

If you buy silver in the UK there is 20$ VAT to pay (ouch!) but you may be able to claim this back at the airport.

The Old Gold Souk in Dubai also fails to sell the well-known gold coins: Krugerrands, US Eagles, Maple Leafs, etc are not available. You can get these at the Dubai Airport Duty free but expect to pay a $200 premium for a 1oz coin! On the other and you can use you credit card for no extra charge and get 3% cashback.

However the Old Gold Souk does offer bullion bars in different sizes and the prices are very good. The dealer will promise to buy back at a small spread. I have never tested this promise so I hope it will hold true!

@ philcu and others. The question has popped up a few times on this post, so I’m keen to get some advice from someone if possible. I had the whole ‘where to buy silver in dubai’ conundrum 6 months ago. Eventually bought a few kilos of silver (emirates gold refinery) from a reputed jeweler in Dubai who also promised he could buy back if need be. Buying online has the hastle of shipping and import duty, buying silver in the UK and Switzerland has the hassle of tax. Am I carrying big risk by not buying from a world reknowned refiner and buying here locally, are there better options out there for someone who is based in dubai and wants to buy here…?? Thanks in advance.

Sara, why buy your gold in Dubai or from any retail place in the world? Why not buy it online so that you don’t have the worry of being robbed as you walk away with gold on your person nor the hassle of having to store it safely at home?

There are a couple of internet bullion dealers I know of, and the one I use is goldmoney.com

Of course, it does depend on how much you want to purchase. If, as Marc Faber infamously said on Bloomberg recently, you want to swap copper ear-rings for gold ones, then the souk in Dubai is the right place. But if you want to spend thousands on hedging against inflation, then gold or silver ingots are best, particularly when they can be stored in London, Zurich or Hong Kong for you.

Wherever they are, in fact, stored, they remain your personal property and not that of the bullion dealer who is keeping them in a vault for you. There is no counterparty risk with gold and silver.

I too like Goldmoney & BullionVault, but obviously there is some counterparty risk, and also confiscation risk from the country of storage. Both unlikely of course. Balance that against the inconvenience of holding bullion physically. Best to do both, in my view.

The best remote storage option in terms of minimising counterparty risk is the Perth Mint, as recommended by our editor. That however involves some inconvenience and temporary counterparty risk in that you must go through a broker.

What exactly is the counterparty risk with GoldMoney, for example? You say “obviously there is some counterparty risk” but it is not obvious to me. To use the word “obviously” does sound as if you are making an off the cuff assumption rather than actually knowing.

When I buy, say, 450 ounces of silver through GoldMoney, that silver does not remain the property of GoldMoney as 450 shares remain the property of the company or 450 bonds the property of the sovereign nation. The company can go bust and the nation can default so that I lose the value of my 450 shares or bonds by means of what the counterparties to me have done badly.

However, the 450 ounces of silver is my property so that if GoldMoney goes broke, say, the administrators cannot look at my silver as if it was GoldMoney’s nor does what is my silver lose its value (as a share would) or delayed payment (as a bond would).

Confiscation risk by the country of storage is zero, in my opinion, and the Editor has already expressed his view that since silver is so spread about the planet, it would be impossible to confiscate it.

Furthermore, GoldMoney has chosen not to be based in the US (it’s in the Channel Islands) because of Roosevelt’s confiscation once in the past of gold, and it does not store any of its clients’ bullion in US vaults, for the same reason.

I have purchased upwards of 3000 ounces of silver and I cannot possible store all that at home. I need a vault and I may as well use GoldMoney’s facility as go to the hassle of using a vault local to me.

Will become the only safe investment in the future http://www.bbc-antiques.co.uk

You have paid Goldmoney for silver. Counterparty risk is the risk they will not give you your silver. You cannot get more obvious than that.

Confiscation risk cannot be zero because it has happened before.

No, counterparty risk is NOT that they will not give me my silver!

If they don’t give me my silver, then that is THEFT because the silver belongs to me and is kept in the vault as belonging to me and not to GoldMoney.

@ John Mark:

Philcu is correct! Either you are holding the physical silver, or you are not. If you hold the physical silver you purchased, then there is no counter-party risk.

If you are not holding the physical silver, then, by definition, “someone else” is holding it, and there is counter-party risk. Period.

P.S. It’s always in your best interests if people respect those who are gracious enough to respond to your questions, even when you don’t appreciate a truthful answer.

What is truth?

There is one crucial question in this thread, and that is what percentage of one’s portfolio should one hold in silver and gold? Of course you have the zealots on ZeroHedge, and our very own Mr Mark, who insist there can be no other position than 100% or thereabouts.

Yes, these guys will be sitting pretty when Gold & Silver multiply in value, as is highly likely. Conversely, they might be wiped out if fate is unkind. Some of us value our family and retirement planning, and prefer to hedge our bets.

The Titans of Precious Metals, the Sprotts, Morgans, Maloneys etc are all fully invested, but with due respect they all have many 000’s of ounces and bought in decades ago at thruppence ha’penny or so. If metals decline by 75% they will still be sitting fine and dandy. So they can be our inspiration but not our role models.

So what is the ideal percentage? 5 to 10% is the old saw. Even Peter Schiff conservatively proposes that. Marc Faber recommends 20-25%, and that is what he holds personally. 25% is also the magic number proposed by Harry Browne in his remarkable 1998 book Fail Safe Investing. I am beginning to think 25% is the right figure, with perhaps 20% physical and 5% in stocks.

What are the views of the esteemed contributors to the forum?

Ed Note: If you bought a set percentage a few years ago that is now a much bigger portion of your portfolio. It is all about your own risk profile and only an individual can judge that.

If you watch the progress of bullion prices AND you have an easy way of selling your bullion in the event of a downturn in bullion, then you won’t be wiped out if fate is unkind.

The easy way is through an internet dealer; the hard way is digging it up from your garden and taking it to someone who can sell if for you.

If you invest only 10% in bullion, then where do you put the remaining 90%? In shares and in bonds and cash. But are these any safer if fate is unkind. If you watch Maloney’s video, there is going to be a collapse in stock and bond markets. He reasons well so isn’t bullion safer?

Cash always seems to be inflating and losing value, so isn’t bullion safer – especially if you can sell it easily.

Basically, I think we’re all on to a loser, so what investment will we lose less in? For my money, it’s bullion so I’ll put 100% of my investable wealth into that.

Ed Note: John are you a rep for these Internet concerns? You must know that a government-owned, triple-A mint is much safer. They are also cheaper.

@ philcu:

As Peter, the Ed. has said, we all have a different tolerance for risk.

About two months ago on this blog, I provided some general info and advice from other precious metals gurus like Marc Faber, etc. So here’s what Doug Casey recommends:

Doug Casey: 33% in gold (and silver); 33% in stocks, with emphasis on gold/ silver mining stocks; and 33% in cash (to take advantage of opportunities, such as the bargains today in gold and silver mining stocks).

Ironically, Marc Faber talks about “5 Money Moves” in today’s MarketWatch.
REF: http://www.marketwatch.com/story/5-money-moves-dr-doom-is-making-now-2011-08-18?siteid=nwhpf
Notice that he recommends some allocation to stocks, and very little to cash.

Over the years, I’ve experimented with different allocations and have found Doug Casey’s allocation to be very good. The 30% or so “in cash” doesn’t stay there for long; every 3 to 6 months, there are other opportunities that pop up, and so I can put the cash to good use (dropping my cash position to 7% or so). But when the current parabolic move in gold starts to ebb, I’ll be shifting my allocation by selling some paper gold, thereby adding to my cash position.

Ed Note: Doug Casey was a complete disaster on exploration juniors but I suppose now might be the time…

Ed, I’m just an individual with a bee-in-the-bonnet about internet bullion retailers! Probably other bees in other bonnets.

I am hoping that the difference in price will become infinitesimal as gold (and possibly) silver move upwards towards Maloney’s $20000 per oz. If I have to pay for convenience in buying, selling and storing, so be it.

My problem with Perth is that I would have to telephone and speak to someone in Australia, so I’m content to accept the insurance that the non-governmental dealer provides for bullion in the MAT vault. I think my bullion is as safe as can be or needs to be under such circumstances.

Ed Note: It would be very surprising if you hit any problems with GoldMoney.

what you obviously meant to write was when will silver follow gold’s $200 move down

Article starts “Parabolic” there was no parabolic after m1764 based on Mr Sinclairs Sensationalism head line just another brick in the wall I guess

Looking to get headlines????

Ed Note: Look at the chart, the leap was enormous for a short space of time – and this is very far from over!