Silver has better dynamics than gold from an investment perspective

In This video silver investor David Morgan interviews Jim Pavlakos of Golden State Mint. Silver has better dynamics than gold from an investment perspective



David Morgan said in a recent interview :... There are more factors at work. At least two to three decades ago, there was an article that came out with the headline, "Silver is Gold's Poodle." I laugh, because that is really a metaphor for silver. If I ever wanted to increase my newsletter subscription, I should probably change my title to www.gold-investor.com. Silver has better dynamics than gold from an investment perspective, but fewer people are willing to invest in it. It's a smaller market and therefore more volatile. But the dynamics of silver are better, because it has every attribute of classical money that gold holds—that safe haven status—and it's better recognized as money on a global basis, not just a North American basis. On top of that, it has industrial demand, and most of those applications are price-inelastic, meaning demand will be there regardless of silver's price. So, long term, silver really does have a better investment profile than gold does.I'd say that more people are waking up to that fact, and I'll say it from empirical evidence as well.

Robert Kiyosaki : our school system teaches virtually nothing about money

Robert Kiyosaki: ..... it is a value system, and it's something we learn as kids. So that's what "Rich Dad, Poor Dad for Teens" is about because our school system teaches virtually nothing about money. Why, I don't know. I studied calculus for two years at school, and I never use calculus. But whether we're rich or poor or stupid, we're all going to use money. But our school system seems to treat money the way my poor dad treated money--was that money was an instrument of evil, it corrupted you and made you greedy, so they just didn't talk about money.

How to take advantage of rising gold prices

The troubles in North Africa and the Middle East that drove up oil prices, prompting investors to seek refuge again in gold. However, gold stocks did not follow the pace. Wrongly or rightly?
After undergoing a correction earlier this year the gold price has again topped $ 1,400. Any investor arises the same question: "How to benefit?". The most common alternatives are buying physical gold (bullion or coins) and trackers (index funds) on gold. In contrast, gold mines shares are less known. And yet: the rising price of gold should be a good deal for the mining companies too.

The Problem of The Volatility :

The volatility is characteristic of gold stocks. This volatility is a major cause: the price of gold. Suppose the price of gold rises from 1300 to 1430 dollars (+10%). For a mining company whose cost of production amounts to 1,000 dollars, the same increase should generate earnings growth of 43%. In theory, because profit margins are not only the price of gold. That said, this leverage also echoed in the share prices of "gold diggers". Since 2001, the date of the beginning of the upward trend of the gold metal price has quintupled. Gold Bugs Index The index is almost three times better over the same period and is 14 times higher today. Investors, however, have endured the effects of the crash in 2008 (-30%).

Risks of Investing in Gols :

The major mining groups are Barrick Gold, Newmont and Goldcorp Goldminings, "senior", or values ​​established in the sector, which produce gold in abundant quantities. And then there are the "junior", the smaller mines or the real gold diggers: companies looking for operating sites, which are developing promising projects but only a handful actually succeed in extracting gold from the earth.

The potential gains are enormous in this third category of activity, measurement of risk. Find a junior position to keep its promises, however, the challenge is to evaluate the potential of these businesses, we need to seek a network of experts of all kinds, including geologists. The area is complex and evolves with divergent factors. For the individual investor, analysis essential information is difficult toget and is burdensome.

Diversification good or bad :

For investors seeking broad diversification, ETFs on an index of mining companies can provide an initial response. The Market Vectors Gold Miners ETF (GDX) consists for example of the largest gold mines in the world. There are also a junior version (GDXJ). Helped by rising gold (+28%), these two ETFs have gained last year's 33 and 55% respectively