Advanced Silver and Gold Tips... for Beginners
Read through the entire guideline? Congratulations! You just about covered the basics of gold and silver investing and portfolio building. You are pretty well equipped to start already. However, we decided to give you a little bit advanced
Many of the info on this page are pretty intermediate and advanced. Silver and gold enthusiasts will be familiar with when they have a bit of experience. But we don’t see any problems introducing them here. They’re still some pretty useful knowledge to know.
1. Common terms for silver and gold investing.
Here some terms that would be advantageous for you to know. Many of these terms are very useful not just for silver and gold, but also for investment in general.
AU – The Periodic symbol for gold.
AG – The Periodic symbol for silver.
XAU or XAG – The stock market exchange symbol for gold (XAU) and silver (XAG). ‘X’ is the abbreviation for “exchange”.
Bullion – Gold, silver, or other precious metals in the form of coins, ingots, or bars
Some common terms for silver and gold enthusiasts.
Once, Oz – In gold and silver, “ounce” refers to Troy ounce, a system of units of mass customarily used for precious metals and gemstones. However precious metal can also be measured in grammes.
Bull, Bullish – A positive trend or a positive outlook for a particular asset ie prices are going up.
Bear, Bearish – A negative trend or a negative outlook for a particular asset ie prices are going down.
Dinar and Dirham – Gold and silver coins that recently have somewhat of a revival in the Muslim world. It is based on the Islamic dinar and dirham traded during the time of Islamic Prophet, Muhammad.
No, they don’t look like origami.
2. Paper Silver/Paper Gold: Tradable contracts of Silver and Gold
Silver and gold are great assets to have in any kind of wealth portfolio. However, they can be cumbersome and impractical in an age where mobile technology rules. Hence, paper gold and silver has become a more popular alternative to bullion.
These are financial instruments that essentially represents gold and silver. There are many types of paper gold/silver and are created as a way for investors, traders and speculators to easily trade gold and silver assets in the open market.
The critical aspect of this class of assets is that they may or may not be backed by actual physical gold and silver. However, the advantage is that they have much lower premiums than physical bullion and are thus easier to profit from. They are also convenient to liquidate so cashing them out is a breeze.
Among the types of paper gold/silver include:
- Exchange Traded Funds (ETFs) aka Exchange Traded Products (ETPs).
- Close Ended ETFs which may have 100% bullion backing but are still bound to
exchange,premium, and liquidity risks. Examples include PSLV, CFC.
- Unallocated Bullion Programs (Perth Mint, Unallocated Bullion Bank Accounts, etc.)
- Mining Shares which basically means you are investing in a gold and silver mining company.
- Leverage Accounts which essentially uses loans to trade large values of trading instruments and assets with little money. Examples being Futures Options.
We are refraining from giving further info for this type of investments as these are pretty high risks and are not a good option for people who are just starting out. But it’s good to for you to know that they exist.
3. Forecasting silver and gold prices
Yes, you can forecast the movement of silver and gold prices, much like how meteorologist forecast weather (and perhaps with more accuracy).
Silver and gold prices forecasting is an advanced skill that many economists have equipped themselves with. The forecast is done by analysing patterns and moods of the market and looking out a for possible repetition that can be taken advantage of. Basically, if you know that something is highly likely to happen, you can use that information to decide on what you are going to do in anticipation.
There are two types of analysis used to forecast prices: Fundamental and Technical.
Forecasting prices with the right tools and techniques.
Fundamental analysis involves analysing the underlying information about the market. In stocks, investors would analyse things like the potential behind the product and service of the business, funds and income streams, the management team, the history of the company, as well as the revenue and profits made over a period of time.
With silver and gold, the fundamental information that is usually looked at is global politics, especially those belonging to the economic superpowers of the world, which is currently the US, China, EU nations, Japan and the Middle East. These countries often influence the movement of the global economics based on their political decisions and/or economic decisions. Here in Silver Coins Singapore, we like to summarise the political/economic relationship in this sentence: “Follow the politics, and you will follow the money”.
Technical analysis involves analysing the price charts of an asset. Certain additional tools are used to help give better and more accurate analysis. Technical analysis needs the practice to master. But once you get the hang of it, it is an incredibly useful way to forecast (and ultimately gain an advantage of) the market.
How accurate can forecasting be?
Accuracy can never be guaranteed. This is especially true with commodities like gold and silver. Even the best economists will find it hard to predict prices because gold and especially silver are extremely volatile instruments. That is why in the beginning of this guide, we set the thesis for this guide very clearly: Silver and gold is never meant to be a wealth generating asset.
That being said, we have relative success in forecasting market direction, so it is not completely impossible to forecast silver and gold prices. Constant practice and being in tune with economic news is a critical aspect of this.
Forecasting can greatly help you make great buying and selling decisions for your gold and silver portfolio.
4. The Advantage of Dollar Cost Averaging
For some, the above information may be overwhelming. And we can truly understand. It’s great to be able to make money from silver and gold (and it’s possible). But many of us are busy individuals with not much time to thoroughly analyse the market.
That is why we usually recommend most of our clients to approach their silver and gold portfolio through dollar cost averaging: simple, less risk, and decently profitable.
Watch the video on the left to fully understand the concept.
Master the Metals
So what’s next?
Now that you have some great and important knowledge to help you decide, you can get yourself some silver and gold already!