2009 Recession Investment - Love Over Gold and Silver

Battle with Gold:

The situation has been changed. Investment in this safe zone is now a complicated and a risky task for business enterprises and individuals. Employment is rather more complicated than past years. And this is all happening because the plague of financial crisis is all around the globe.

The crisis started to show its impact from the middle of 2007 and 2008 when many stock markets crumbled and several other financial institutions collapsed bursting out the unemployment as the major issue in the country. Many wealthiest Nations were compiled to seek a rescue package to bail-out their financial systems. In this volatile financial condition it is obvious that investors are more concerned about safe investment so to survive in this thorny period of crisis. So what can be as simple as solution?

Today, it is the foremost question hovering in ever ones mind.

Invest In Gold & Silver:

Gold and silver has always been a better solution in the crucial period of financial crisis. Even in the great depression period (1932-1936) when the price of the gold was fixed by the government, the value of silver doubled rewarding its investors with good return. Similarly, in the next long bear market which was 1968-1980. Silver rose from around $2 in 1968 to a peak near $50 in 1980. It is the Economical trend that Gold stock will raise during inflation and during deflation. Investing in gold is good inflation protection. Where gold rises as the value of the dollar falls. And as the government lowers the interest rates significantly and wildly prints money creating inflation to offset that deflation. So, this leads to substantially higher gold prices. Thus, investing on gold coins lowers risk in our investment portfolio.

Reasons to Invest over Silver:

Silver is a precious metal that is used and valued as money. Because the supply of Silver can not simply be printed or supplies increased with a simple computer data entry, it retains its purchasing power over time. Expanding the supply of silver is a methodical, enduring process which requires significant human effort, investment, exploration, discovery, production, transportation and storage of a physical item. The precious metal element of an investment is very attractive when other currencies are losing their purchasing power.
Silver has unique characteristics that are nearly invaluable for commercial use. Silver is used and consumed by all modern societies. It is used in medical supplies, photography, computer chips and in ever increasing aspect of our lives. Because most products such as a computer require a very small quantity of the metal in the finished product, the users of the metal will pay nearly any price for silver in a potential shortage. With great up and coming nations such as China and India with billions of new consumers, commercial demand for silver is yet one more extremely bullish factor to consider.
Another key reason to invest in silver is the acknowledgment of "paper silver" and its negative impact on the price of real silver. Paper silver is a paper contract representing silver that may not necessarily be backed by an actual physical silver bar. E.g.:
Financial institutions currently sell silver certificates for pooled silver accounts. We understand these pooled account certificates may be well in excess of actual silver available anywhere in the world. Any short position held by institutions is potentially a huge suppressant to the free market silver price.
The futures markets are another example of a paper contract representing physical silver. It is believed there are more short contract positions in the silver futures markets than can be physically delivered if required. This unnatural condition may be another price appreciation inhibitor.
In silvers price spikes exceptionally like in 1970's when silver climbed from under two dollars to over fifty dollars. This is an aggressive appreciation of about 2700%. We believe we are currently in similar market conditions and could potentially have a repeat of this significant growth.

Reasons to invest over Gold:

According to the World Gold Council, members of the Central Bank Gold Agreement sold 297 metric tones of gold so far in this agreement year. This suggests that the full 500 tone quota will not be released to the markets this year. Less supply usually means a higher price.
Production from the world's gold mines remains flat. The big gold price increases seen over the past few years has not stimulated any significant global gold production increase. Indeed, output may well show a small decline over the next few years. Production is already falling off a cliff in South Africa, formerly the world's biggest gold producer.
Jewelry demand in India, the biggest fabrication market on Earth, is beginning to pick up again while emerging markets like China and Vietnam are having a sharp impact as their populations get more money and therefore buy more gold.
SPDR Gold Shares (GLD) formerly known as Street Tracks Gold ETF, which exchange-traded fund holds physical gold and tracks the metal very closely. As inflation takes off and the value of the dollar goes down, gold should go up.

Author: Kiran Bista