Gold has been making news recently. It has set new highs repeatedly over the past many years. And, it is a hedge against inflation and deflation. So and so blah blah blah. The above is simply sales talk. To me, gold is a precious metal that is very scarce. Because of its scarcity, it commands a high store of value as compared to the other metals or precious stones. In gist, this is all about storage of value. When government prints more paper money, supply exceeds demand. When supply exceeds demand, the value drops. When paper money drops in value, people prefer to hold what they earn in other forms such as gold, silver etc. When demand for gold exceeds supply (and this is easily achievable since the entire reserve of gold on Planet Earth is only about the size of one or two swimming pools), the price of gold will fly. If you want to read more interesting articles about gold, please refer to my past postings.
As for silver, this is a second class citizen to gold. However, silver has more industrial usage as compared to gold. Silver can also tarnish and we lose silver to the environment through time. So, silver can run out too. However, as we have more reserve and supply of silver, the value of silver is about 30 to 40 times lesser than gold. Some months ago, this gold to silver ratio was about 60 to 70 times. However, it has narrowed to 39 times as of today. It could even hit lower than 30 like what it did in late 1970s. To invest in Silver, there are many ways. You can either get a Silver certificate or purchase a Silver ETF (only available in the US market at the moment) or open an UOB Silver saving account.
However, please take note that the prices of precious metals are very volatile. It can drop 5% or more on a single day. So, in a way, it is a very risky investment. Be very careful with your money.
Happy Investing.
Disclaimer: The content in this blog contains purely my personal opinion and it is in no way a substitute for professional financial advice. You should seek advice from a professional financial advisor with any question regarding your financial matters.
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