Buying the poor man's gold

During the get-a-life-day (WoW maintenance day) on 1 March, I went out for a steamboat dinner at Ang Mo Kio central with Jia Lun. As usual, the topic was on how bad our job sucks and the doom and gloom in the world.

So it eventually boiled down this. With all the bad stuff happening in the world, is there anything we can do to take advantage of the situation? It wasn't long that the topic shifted to gold and silver, and particularly silver.

While trying make comparisons between FX, commodities, gold and silver, I found myself selling the idea of investing in silver more and more.

Why buy shiny rocks?
1) But shiny rocks are not sexy! Nobody buy rocks! They have limited industrial uses, and do nothing but shines! Gold and silver are the REAL money acknowledged by civilisations across the world for thousands of years. Fiat currencies are not, which lead us to...

2) While you can mine gold and silver, you can print paper currencies even faster. In the age of computers, you don't event need paper to print "money". Some broke central banks can go to a computer and add a couple of zeroes. Can you do that with gold and silver? Nope. Ever heard of quantitative easing? Money supply? Or the scale of the rampant money printing? US, UK, China, Europe and Japan...just to name a few are printing money out of the air faster than ever. Hyperinflation will come, it's a matter of time.

3) While the golden brother is obviously the most popular choice for investment, silver price movement is closely correlated with gold. This correlationship lead us to ...

4) Silver has more upside to it. The gold silver ratio will send it higher. Silver is a lagging brother behind gold, and the pull towards gold is not over yet.

5) And of course, I cannot afford to buy gold. At USD$1400+ per ounce, it's way beyond my means. The poor man's gold, still shiny without the golden halo works well at USD$34ish.

6) Nay, putting my $$$ in the bank is safer...until you realise that due to inflation and the useless saving rates, you are actually losing money by doing so. By the power of inflation, for every $100 you have in the bank, you automatically lose $2.80 annually (2011 projected 2.8% inflation rate for SG). Ouch? Or put it the other way, if you don't get at least a 2.8% pay raise this year, you are actually working for less. Everything you own, cash in bank, property etc loses value in the same way. What else can you do? Demand a pay raise! Bang tables, flip tables, smash something!



Finally the next day, I ran out of reasons not to buy silver. I went to UOB and opened a silver savings account with some of my savings which were rotting in my POSB account. So enjoy the chart below of my journey with the shiny rock.