Tuesday, May 31, 2011

Hidden Silver Discounts

There are some hidden silver discounts that are not immediately apparent to the casual silver investor.

For example, if you had owned Swiss Francs for a few months and decided to buy silver with those Swiss francs, due to the gain in value of the Swiss franc over the past year, you would have been able to buy silver at a 10 percent discount regardless of the price of silver at any one time.

This is a secret that some professional precious metal investors are familiar with. Of course it requires some research and work to understand the variables and changes between currencies and be able to take advantage of these discrepancies.
It also hinges on the fact that silver is a commodity and has an intrinsic value quite apart from currency or paper money. This is best illustrated by knowing that an ounce of silver today will buy almost the same value of product or service as it did 10, 20 or 30 years ago. One cannot say the same for currency. While currency, regardless of the nation, continues to be worth less each year, the value of silver continues to remain stable and, dare I say it, even increase.

In this example, any investor who bought Swiss francs a year ago can today by an ounce of silver for 30 or so francs. When you compare the relationship between the Swiss franc and the US dollar you can see that it is possible to buy silver at a discount this way. The US dollar has fallen, or should I say plummeted, against the Swiss franc 50 percent since 2001 and there is, currently, no end in sigh to further falls.

With some research one can come up with other currencies that have this advantage over the US dollar. The point here is that just buying silver with US dollars is not the only game in town. There are some advantages to using other currencies if one is prepared to work and do some due diligence and research.

According to Doug Casey of Casey research, LLC, "holding precious metal outside the U.S. allows you to not only capture the metal's price advance, but when the value of the metal is converted back to dollars, an additional gain on the currency conversion will likely be captured as well."

This sort of strategy is quite valuable and can add value to your silver holding whether you decide at any point to sell or not.

There are probably many other ways of getting hidden silver discounts and with a little effort these can be easily found.

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