How to maximize your profits as silver prices take off againPosted on 31 January 2012 with 1 comment from readers
How to maximize profits from an escalating silver price is the topic du jour taken up in the latest issue of the ArabianMoney investment newsletter published in Dubai for subscribers only (click here).
Having tipped silver as going to be the top performing asset class for 2012 (click here) it is naturally the next step to consider best how to actually put your money into this precious metal. Readers of our newsletter will get this advice.
We can only note that from an investment perspective this makes our newsletter a very good buy. Even a modest investment in silver last month would have risen by more than enough to cover the subscription.
Gold is a far easier and better understood investment than silver. Dubai investors can buy physical gold in the souks of this city tax-free and for only a tiny percentage above the spot price. The gold ETFs are well known and there is one quoted in Dubai too.
Yet silver holds out the promise of higher returns than gold as the bull market for precious metals gains additional traction. Occasionally bearish analysts scare investors with stories of deflation and depression that would impact on gold and silver.
But these tracts always ignore money printing by the central banks and the huge creation of money by the global central banks. Consider this chart from our friends at Agora Financial:
If that is not monetary inflation staring you in the face then you have very bad eyesight. That is why silver prices are up tenfold in a decade and the gold price by a factor of seven. Both metals hit all-time highs only last year.
Recently the ECB joined in with $645 billion in a new credit line for the eurozone banks, and that is going to be extended to $1.5 billion in February. And meanwhile the Federal Reserve is well known to be lining up QE3 in readiness for a blow-up in the eurozone crisis. China is also easing up on its recent money tightening for the same reason. The UK and Japan are big money printers.
Anybody who thinks this is going to end well for paper money just has to be joking. We have seen the debasement of the past decade and its impact on precious metals. This is only going to get worse, or rather better for gold and silver.
Silver outperforms gold in an upswing, so it is only logical to consider how best to leverage up in silver.