In touch with reality.
Never before have precious metals offered a better investment opportunity as they do now!
There is a growing disquiet amongst many today. Financial turmoil, political strife, civil unrest and the mushrooming sovereign debt have brought the world to the brink of a collapse. Some say we will see a repeat of 2007-2008, and others believe it will be much worse. A few believe that those in control will be able to avoid the financial collapse, runaway inflation or severe depression, through stop-start, push-pull policies that rely more on manipulating financial instruments and increased debt.
The key challenge is to maintain and increase one’s own financial immunity to whatever befalls us. We have observed and studied all the options. It certainly is not the time to be part of the increasingly restless herd; to be crushed in a stampede of frenzy and abandon that have marked all major economic crises.
The money myth.
A key consideration is the state of money itself. To most of us, it represents wealth; that has an underlying and intrinsic value that enables us to exchange things now and in the future. But what about the state of money itself – its stability and credibility? If that disappears or is even threatened, then the foundation of everything economic and most standard investments one has made will surely crumble.
Few realise that paper money, or fiat currencies can simply be printed or issued at the whim of politicians or central banks acting on behalf of vested interests, is based on debt, a promissory note or an I.O.U. whose reliability is based on the trustworthiness of the issuer. As this debt grows and multiplies to unprecedented levels the fidelity, upon which our entire economic system is based becomes more suspect. Just one fact should scare us: global annual trade in financial instruments such as government bonds, derivatives, futures and options, is now about twenty times more than the value of world production of goods and services.
In this frightening milieu, NuCapital offers alternatives and challenging views on its website and options to navigate those stormy seas.
Silver: A Forgotten Asset
One of our basic activities as humans is to store. It is an attribute of our instinct of survival and our need to have something of value that can be preserved and increase in value over time.
In ancient times, when transactions were based on barter, hoarding was restricted to goods of everyday use, such as food, wood or basic commodities. When the need for a more manageable means of exchange was developed, precious metals were introduced which were then followed by paper certificates representing those metals, until that link was also broken in modern times. Today, paper money issued and managed by governments through the banking system, is the most common means of exchange.
And that’s all it has retained – a means of exchanging things of value. The value of money itself is dependent totally on the credibility and reliability of fallible human institutions and money is simply an I.O.U. or promissory note based on debt. In that process it has lost an important function that was a reason for its creation in the first place – a store of value. To achieve this, one must do something else with money, invest it. But the value of most of those investments themselves is still dependent on paper money maintaining its integrity. The only investment that then makes sense is one where the asset hedges against money itself.
With a mounting assault on the integrity of paper money, people will naturally revert to those precious metals that formed its base in years gone by, specifically gold and silver. Gold has maintained its aura and attractiveness throughout, and in the minds of many still has a role as money, perhaps even to be reintroduced in future as a backing for paper money. So the gold price has adjusted over time to become a very expensive item, although not a fraction of what it could reach if there is a flood out of paper money.
Silver, however, has for the most part been left on the side lines. Silver will inevitably be drawn in as the precious metal used for money and will far exceed gold.
Already there are many industrial and other uses for silver where demand exceeds supply. Supply has not kept pace with demand for more than 12 years and current annual demand of 800m ounces exceeds supply by 150m ounces. There are no more dedicated silver mines left. Investment demand, which in less than a year has more than doubled to 100-million ounces, still forms only 10% of demand. In 1997 Warren Buffet became one of those investors, buying 130m ounces. Silver is still severely under-priced. The historic silver/gold price ratio has dropped from about 16:1 to about 75:1.
Silver represents the ultimate opportunity for any investor – A neglected asset with obvious qualities that will be recognised again when fiat currencies no longer serve other functions apart from store of value, such as a means of exchange and a unit of account. As it has in the past, silver will fill those needs more naturally than gold.