From:The Australian
March 27, 2012 12:00AM
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| Do you stack? |
Le Brocque is ABC Bullion's chief investment officer. He is very bullish on silver.
Gold will preserve one's wealth, the boyish Le Brocque proclaims, but "silver will make you rich".
"In the next four to five years," he predicts, "silver will outperform gold like it did in the 1970s."
Between 1971 and 1980, the price of silver skyrocketed 39 times. That was largely due to the Hunts. Nelson Bunker Hunt and his brother William Herbert Hunt tried to corner the silver market. Their efforts boosted the price from $US11 to $US50 an ounce. The silver price collapsed on March 27, 1980, on a day known as "Silver Thursday".
There were lawsuits against the Hunts, who borrowed heavily to finance their silver purchases.
The Hunts, the inspiration behind the soap opera Dallas, were forced into bankruptcy and barred from commodity trading by the US government. Le Brocque is happy to write off the Hunts as an aberration.
Silver is 415 per cent below its proper inflation-adjusted price, he claims. It "should be" $US164 an ounce, Le Brocque says. Silver is trading about $US32 an ounce.
Moreover, Le Brocque says, the price of silver historically has been linked to gold at between 10 ounces to 16 ounces of silver to one ounce of gold.
Today it takes about 51 ounces of silver to buy one ounce of gold.
Eric Sprott, who runs Toronto-based Sprott Asset Management LP, reckons silver is due for a bull run. Sprott says silver will reach its all-time high this year because of widespread nervousness about the fundamental health of the world economy, prompting many to hold precious metals.
Few investment vehicles offer silver exposure, but there is a pure silver exchange-traded fund, iShares Silver Trust.
Listed on the New York Stock Exchange with the ticker SLV, it has a market value of about $US11 billion.
SLV owns 60 per cent of all the silver bars above ground, says Savneet Singh, chief executive of New York-based Gold Bullion International.
But Singh believes ETFs aren't transparent, insured or have geographic diversity or the option to hold the physical asset. Investors can buy silver futures contracts through CME Group. But there is a risk that a call for the physical metal may not be met in times of market disruption, according to Singh. Gold Bullion International has a platform that allows investors to gain exposure to silver.
Singh says his company offers investors transparent pricing, liquidity, a place to store the metal, the ability to buy it online and to have their holdings insured.
One of the world's big four accounting firms, Singh says, counts each bar of silver. KPMG audits the count. Investors can pick the location and delivery of the metal.
Gold Bullion International has more than 1000 clients and is on the platform of one of Wall Street's most recognised brokers.
"There is always a huge fear of how much silver there is above ground," Singh says. Silver "is a play on gold more than anything else". Le Brocque agrees. "We're in a commodity cycle," he states. Stocks are "buy, hope and hold" he says. Now firmly into his pitch, Le Brocque says every currency, except one based on silver or gold, has fallen to zero across time.
During the past eight years 77 currencies, including the US and Australian dollars, the yen and the euro, have fallen in value compared with gold and silver, according to Le Brocque.
"What's in your wallet is not a store of value. If you want to buy money, buy silver."
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