Rastislav Trecák (G&S SOLUTIONS)
Investor's window  |  24.1.2013 10:04:30

Paper vs. physical silver market


Today I will focus mainly on the use of silver as gold, siblings, ie store of value, insurance against high inflation or the degradation FIAT fiat money because of their ever-increasing balances held by central and commercial banks.

Silver as a unique commodity with the second highest use for oil (from nanoparticles, despite the presence of the drugs to use in space shuttles) will, it seems, are increasingly in short supply. The potential of silver in the future, I already wrote in his article "The potential of silver is undervalued" . A situation I seem to be underestimated and I, because the demand is higher than I expected.

Last correction silver prices at the beginning of December 2012, when the spot price for three weeks fell from 33.5 USD / oz below 30 USD / oz unleashed literally "hell" Investment demand for physical silver. Of course, not in the Czech Republic or Europe, but in the U.S. and Asia. U.S. Mint in mid-December announced that until the end of the 1st Decade in January 2013 suspended the acceptance of orders for the most popular silver coin investment currently American Silver Eagle. Much time elapsed and again January 18, 2013 announced that it was suspending receiving orders for Silver Eagle until the end of January 2013.

What is the market for physical silver investment going? What are the reasons for this?

Price correction on the stock market
Each new price correction "paper" silver on the stock market causes a growing concern about his physical buying as an investment asset in ensuring the financial distress. About the possibility of price manipulation of real assets (oil, agricultural commodities, gold, silver, LIBOR) over virtual financial markets is no longer about doubt therefore predominantly left-wing and left-wing politicians, economists focus increasingly pushing for more government regulation of financial markets and commercial (investment) banks, which are the largest players in these markets. I do not know if this will help, because regulators are ultimately only human and known as the father said "modern" banking Mayer Amschel Rothschild "Give me control over a nation's currency - then I will be completely indifferent to who writes the laws", So it just happens even if the approved new stricter regulation in banking. Bankers paths to circumvent regulation always be found. And if not, then through a formal policy lobbyngu improve the morals.
Most ideal solution would be if all the money supply was limited and scarce any real estate (such as gold again), which would be sufficient and an automatic anti-money creation out of nothing, that are "fuel" for a financial market speculation, which eventually lead to bubble formation, increased inflation, deflation, sometimes hyperinflation and ultimately to the collapse of the monetary system based on debt.

Budget ceiling in the U.S.
Fear of disagreement Democrats and Republicans to increase the budgetary ceiling of 16.4 trillion USD on any higher number is again a great motive to make purchases of physical assets. The fear that the situation will be repeated in August 2011, when even the rating agency Standard & Poor's downgraded the U.S. from AAA to AA + would risk of default of the U.S. Treasury and will increase pressure on other U.S. dollar depreciation, is about a great driving force for investors and savers in the U.S. to buy physical silver. And when you will have a problem as the U.S. still the largest economy in the world, will have a problem the rest of the world. In Asia it has been determined and secure as well. When we find it in Europe?

Increasing demand in China
Interest in buying physical silver in China has been growing every year and will continue to grow as both gold and silver in China is considered a traditional store of value and a few hyperinflationary disaster of the past in China already learned that the promises given to the ruler or politician that uncovered the currency is stable, can not be taken too seriously. The chart below is shown the production of silver investment coins minted Chinese nationality Mint from 2002 to 2012. This chart us beautifully illustrates how growing demand for silver investment in China, the assumption for the year 2013 is more than 10 million one ounce silver coins Panda. It will also have a significant impact on the price of physical silver in 2013.

India and 50% import tax on gold
Gold is the tradition in India, it is a store of value, it is simply an asset that is highly valued. The Indian government is failing to compel the population, whether exchange gold for paper rupee and thus introduced in the new year 50% import duty on the import of gold. He wants to reduce the demand for gold and the foreign trade deficit. In opinion of leading economic experts on India's more lead to the rise of the black gold market and to focus attention on the Indian silver savers, which are already in the viewfinder.And because India is considered to be the real wealth only physical metal demand from India will mainly affect the market for physical silver.

Industrial production
Initial estimates of the needs of silver in industry are such that demand should be higher than in 2012 by 6 percent. These assumptions are based on facts and assumptions, the IMF, the world economy will grow in 2013 by 3.5%. I do not think it will be the growth of the global economy in 2013 to a hot, rather inclined to predictions M. Faber or J.Rogerse that the global economy will stagnate this year respectively. growth will be slight. But even if industry demand will be higher than in 2012, as investment demand it can once again after a long time to overtake and strain on the growth rates will definitely be great.

It will help increase demand for physical silver to the increase of its price on the stock exchange?
It's kind of a tricky question because the price of physical silver is somehow derived from stock prices, so it's hard to imagine what it might work.
My answer is very simple, that is to say YES. How can physical silver? Simply, use the oldest economic regulation and the law of demand / supply.

Already registered a slow increase in the premium to spot silver price ticker, which odzrcadluje increasing demand. We register also problems with availability of physical silver market (for example, U.S. Mint, or delays in production of the new 21.5 "Apple iMac in China due to lack of silver).We register the increased interest silver ETF, iShares Silver where eg Trust bought it from the beginning of the year 605 tons of silver and increased its reserves by 6% compared to the end of 2012 to a total of 10,689 tons.

This plus demand drives the price of silver slowly upward and the stock market, for example, the price of silver on Wednesday, 23 January 2013 strengthened, while the price of gold declined. And those days were in 2013 already a few. This gives us a boost, even if slowly, but finally increased demand for physical silver market may move and the quoted market price, even if it is under the control of big banks (JP Morgan is the largest global player in the paper silver market and its share is up to a whopping 25%).

Silver, gold to the poor, has this year seems to be exceptional growth potential and we would not have him in the formation of their investment portfolios and savings in mind. In the long run actually has in the 21 century opponent in appreciation when its price is now, compared to 2001, more than 8 times higher, even in April 2011 was more than 12 times higher. For example, Dow Jones price index is now compared to 2001, only 2-fold higher.

Probably does not make sense to repeat endlessly, but rather I do, because I follow the motto "repetition is the mother of wisdom." Have physical silver in the portfolio in 2013 is not just a security investment, it will definitely also good appreciation of available funds, even from the shorter-term, annual perspective.However, it will need to buy silver as soon as possible, as long as the price is still relatively low. Level 40 to 45 USD / oz during 2013 is not unattainable.

Ing. Rastislav Trecák

vystudoval Univerzitu Mateja Bela v Banské Bystrici. Po škole pracoval jako obchodní manažer v petrolejářské branži a mimo jiné zabezpečoval i finanční hedging ropných produktů. Od roku 2010 začal působit jako poradce a zprostředkovatel služeb spojených s finančním zabezpečením fyzických obchodů s komoditami a od roku 2012, kdy založil společnost G&S Solutions, se věnuje informačně-edukační a obchodní činnosti v oblasti investic a spoření.

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  • zabezpečení fyzických komoditních peněz, zlata a stříbra, pro své klienty za konkurenční ceny ,
  • napomáhání prohlubování relevantních znalostí současného finančního systému a tím ochranu finanční svobody svých klientů do budoucna prostřednictvím seminářů, přednášek a debat s významnými ekonomickými experty z České republiky, ale i ze zahraničí.

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Papírový vs. fyzický trh se stříbrem (18)

Diskuze a názory
07.02. 20:48  Odhad vývoje (Rastislav Trecák)
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