Friday, 22 April 2011
Is it too late to Invest Your Money In Silver Stocks , Bonds, Bars, and Bullion? Why investing in silver makes sense.
As I write, silver American Eagles and Canadian Maple Leafs sold out in their respective mints. Buy India has gone through the roof, especially notable in a town with strong historical preference for gold. Demand in China continues unabated. Silver stocks have shouted up.
So, as an investor seeks to maximize my profits, I have a natural question: Is the trade of silver becoming too crowded, which means that we are near the top? The masses have finally joined the party so that we should consider quitting? After all, not a profit until they take, and you definitely want to sell at the top.
There are several ways to measure how crowded the market for silver could be. I prefer to look strictly at the big picture and not get caught in the bush. This means that I'm looking for signs of depletion of the mass market or running pulgadasNada says "peak" rather than an investment in everyone is buying.
So how is full of silver investment now? Let us look first to the ETFs.
At $35 silver, all exchange-traded funds backed by the metal amount to $20.7 billion. You can see how this compares to some popular stocks.
All silver ETFs combined are less than a quarter of the market cap of McDonald’s. They’re about 10% of GE, a company that still hasn’t recovered from the ’08 meltdown. ExxonMobil is more than 20 times bigger. And this isn’t even apples-to-apples, as I’m comparing the entire silver ETF market to a few individual stocks.
This is even more interesting when you consider it’s the ETFs where most of the public – especially those who are new to the market – first invest in silver. So while the metal has doubled in the past seven months, total investment in the funds is still far beneath many popular blue-chip stocks.
Okay, maybe all this money is instead going into silver mining stocks. How does the market cap of the silver industry compare to other industries?
While you bring your magnifying glass, I will say that the market capitalization of the silver industry is $ 73.1 billion. That barely registers when compared to a range of other industries took on everything to chance.
The newspaper industry is dying more than 26 times larger. Drug manufacturers are 213 times larger. Heck, even the gold market is 19 times larger. And here's the fun one: The market capitalization of the silver industry, complete with all-record prices and stock screaming highs, represents only one third of one percent of the oil and gas.
To be fair, there are a number of sectors that are smaller than silver. radio stations (43.2 billion), video stores (10.9 million), and sporting goods stores ($ 2.5 billion) slice of the market have limits, too. But again, that is the purchase of DVD or baseball gloves to protect their wealth from inflation to come?
Silver just looks like the image of an investment that is too crowded.
I'm not saying you have to rush to buy silver at this time. After all, it has doubled in seven months. Unless this is the beginning of mania, prudence would certainly be discussed at this juncture. The price will always ebb and flow in a bull market, and a flow of delay.
The question, of course, price level is what happens. What if a correction does not occur until, say, a month from now, and the price falls back to ... where is he now? I remember some articles in January that insisted silver fall as low as $ 22, and, well, still waiting and meanwhile have stopped going to big profits. For silver to fall to $ 22 now requires a 40% reduction, if not impossible, but I hold my breath.
Focus attention on market timing has its attention on the ultimate goal. In my opinion, instead of worrying about what will happen next week or next month, focus on how many ounces you have, then buy at regular intervals until you reach your desired allocation. This has the added advantage of softening its cost base. And do not forget to buy more of their assets and increase revenue.
This is a market you want to be well ahead of the pack. Someday in the not too distant future, average investors tripping over themselves to join in. This will make the market capitalization of silver investments are more like some of the others in the previous tables.