WHY INVEST IN GOLD AND/OR SILVER

WHY INVEST IN GOLD AND/OR SILVER

Stes de Necker

INVESTING IN PHYSICAL GOLD AND SILVER IS THE ONLY OPTION LEFT TO INVESTORS IN ORDER TO PROTECT THEIR ASSETS FROM THE DEVALUATION OF CURRENCIES AND A POSSIBLE ECONOMIC MELTDOWN

Why Invest in Physical Gold

Gold is the only form of money that has not been destroyed through 5,000 years of History.

Gold is becoming money again :

For 2000 years, money was made of gold and silver coins. Since 1971 and the end of the Gold Exchange Standard by President Nixon, we have been living a currency experience of paper money.

 As all previous experiences in the past, this experience will fail.

Gold is undervalued :

Adjusted from the real rate of inflation (not the one published in the media), gold should be much higher, some say around 10 000 dollars, to take into account the trillions of dollars that have been printed since 2008. The Dow/Gold ratio is a good indicator of the fact that gold in undervalued.

The current gold price (as on 28/8/2015) is $1133.80

The end of the dollar as the world reserve currency is unavoidable. In view of the inflationist monetary policies of all the governments, the purchasing power of the dollar is destroyed. Countries with big dollar reserves know that, and are literally fleeing the dollar and investing in tangible assets to protect themselves.

Other international currencies (euro, yen, swiss franc) are no alternatives. All these currencies are based on “paper money” and follow the same long-term fate as the US dollar, which is going back to its intrinsic value of zero.

The true impact of the derivatives has not yet been experienced.

Warren Buffet called the derivatives “weapons of mass destruction” and, in the coming years, this market will implode, triggering a domino effect that in turn will destroy our monetary system based on fiat money.

Investment demand from investors is just starting to rise. Few people own gold today so it’s impossible to speak of a gold “bubble” when this asset is under-owned.

Investors are realizing that Gold ETFs are not the safe haven they're supposed to be.

Gold ETFs are not backed by 100% physical gold. Owning Gold ETF shares doesn’t necessarily mean investors own physical gold.

ONLY invest in physical gold.

The production of gold by mining companies can’t rise, because the credit crunch made structural investments nearly impossible and gold is becoming harder to mint. So  physical gold offer is stable and thus is not pushing the price down.

Central banks are not selling gold any more. To the contrary, a lot of Eastern and Middle East central banks are actively buying gold in order to limit their exposure to the devaluation of their dollars and Euros reserves.

The gold market is very small. All the gold ever produced during History represents a 20 (66 ft) on a side (equivalent to 8000 m3).

Gold has proven during centuries its capacity to hold value and to protect against inflation.

Why Invest in Silver

Silver is even more undervalued than gold. 

Throughout History one ounce of gold used to buy 15 ounces of silver. Today you can buy around 43 ounces of silver with one ounce of gold, meaning that silver is extremely undervalued based on historical valuation against gold.

Silver shoud be at 120 dollars an ounce today just to catch up with this ratio of 1/15.

The latest silver price (28/8/2015) is $14.66 per ounce

Silver is driven by monetary and industrial demand :

Silver is used in many products as well as in the industry for a lot of applications. When silver is used it’s merely destroyed.

Silver is the second commodity in the world in terms of uses and applications.

Industrial demand is not going to fade when silver price skyrockets because silver is used in very small quantities in all these different products (computers, cameras and so on).

Even If the price of silver goes very high, industrial demand will still be there.

As gold is becoming more and more expensive to buy, people are turning to silver to protect themselves against inflation.

In Asia for instance, people only have the option to buy silver in view of their salaries. This huge demand for Asia didn’t exist during the last bull market in the late 70’s.

On the silver paper market, huge short positions will have to be covered one way or another by the bullion banks. This short covering will send the price of silver to very high levels.

Besides, it’s said that for each once of physical silver in existence, bullion banks have sold 100 times more silver in the form of paper certificates.

Now when all the silver investors will try to convert their silver certificates into physical silver, ETFs will go bust and physical silver will skyrocket.

This huge offer of “paper” silver has driven the silver price down for many years by creating a fake offer in the market.

People are now waking up to this fact and are investing more and more in physical silver.