Anyone who has been watching the silver price on a daily basis in recent months may have been surprised. After trading close to 130 USD at the end of January, silver is now back at around 60 USD per ounce.
For some investors, this may initially seem disappointing. But those who think long term and understand the fundamentals of successful precious metals strategies may see something very different: An opportunity.
RONALD STÖFERLE REMAINS OPTIMISTIC ABOUT PRECIOUS METALS
Ronald Stöferle, Managing Partner of Incrementum AG and publisher of the internationally renowned In Gold We Trust Report, recently reiterated his highly positive outlook for precious metals in an interview with Handelsblatt. Elementum International AG has been a Premium Partner of the In Gold We Trust Report for many years.
Despite the recent pullbacks, Stöferle emphasises that “there are still several good years ahead for gold”. By the end of this decade, he even considers gold prices of around 8,900 USD per ounce possible. Among the key drivers he identifies are high levels of global debt, structural inflationary pressures, continued central bank gold purchases and the growing monetary importance of gold within the international monetary system.
Particularly noteworthy is his observation that gold has now gained greater importance in central bank reserves than US Treasuries and that numerous emerging-market countries are seeking to reduce their dependence on the US Dollar.
WHAT DOES THIS MEAN FOR SILVER?
Historically, silver has often reacted much more strongly than gold, both to the upside and the downside. This is precisely why silver investors regularly experience periods of high volatility.
But this is also where many investors make a common mistake: They focus on the current price and the present value of their portfolio.
Successful precious metals investors focus on something entirely different: The amount of metal they own. In the long run, it is not the current daily price that determines success, but how many grams of gold and silver are actually in your possession.
The most important question is not: “What is my silver worth today?”
The more important question is: “How much silver do I own today compared with a year ago?”
Anyone who buys precious metals monthly or at regular intervals benefits from the cost averaging effect. Falling prices do not automatically represent a disadvantage. On the contrary, the same amount of money buys more silver than before.
While many investors fear falling prices, long-term savers can use such phases to build their holdings particularly efficiently.
A simple example: At a silver price of 120 USD, 1,000 EUR buys significantly less silver. At a silver price of 60 USD, the same 1,000 EUR buys twice as much silver. This allows the investor to increase the amount of metal owned more quickly while also improving the average purchase price.
THE TRUE STRENGTH OF A PRECIOUS METALS STRATEGY
Precious metals should not be viewed as short-term speculative assets. For thousands of years, gold and silver have served as stores of wealth and purchasing power. Once investors embrace this idea, their perspective begins to change: Not in euros, not in dollars, but in grams.
The key metric is no longer: “What is the value of my account?”
Instead: “How many grams of gold and silver do I own?”
This is precisely why many Elementum clients follow a long-term strategy of regular purchases and deliberately use market fluctuations to their advantage.
MORE METAL, LESS EMOTION
Financial markets are driven by emotion. Euphoria in rising markets and fear in falling markets often lead to poor decisions.
A precious metals strategy should achieve exactly the opposite: Calm, discipline and a long-term perspective.
Anyone who watches prices every day will inevitably experience emotional swings. Those who instead focus on the growth of their physical metal holdings often see something very different: Their wealth continues to build over time, regardless of short-term price fluctuations.
THE GOLD-SILVER RATIO AS AN ADDITIONAL LEVER
At Elementum, many investors also follow the established gold-silver ratio strategy. Historically, periods of relative strength in gold and silver have repeatedly alternated. Investors who use these cycles intelligently can potentially increase the amount of precious metals they own over the long term without investing additional capital.
The objective is not to own as many euros as possible. The objective is to own more gold and silver over time.
BOTTOM LINE
At first glance, the current correction in silver may seem disappointing. For long-term investors, however, it could represent exactly the opposite: An opportunity.
Ronald Stöferle continues to view the broader precious metals bull market as intact and points to a number of long-term drivers for gold and silver.
Investors who buy regularly can benefit from the cost averaging effect during weaker market phases and build their precious metals holdings at more attractive prices.
That is why it can be worthwhile to change perspective: Do not focus on the price every day. Focus on the amount you own.
Because over the long term, it is not the current market price that determines how your wealth develops, but how much gold and silver you actually own.
How can you buy precious metals cheaply and store them safely?
Elementum Deutschland GmbH, based in Sindelfingen (Germany), specializes in trading physical precious metals. Customers who purchase precious metals from Elementum Deutschland (or one of the other national Elementum companies in five European countries) can store them in the renowned high-security vaulting facilities in the St. Gotthard Massif in Switzerland at Elementum International AG.
Of course, you also have the option of purchasing gold and silver directly and having it delivered to your desired address. However, storing silver in the so-called open duty-free warehouse (“offenes Zollfreilager”) at St. Gotthard offers decisive tax advantages:
- The 19% value added tax customary in Germany is completely waived on purchases and sales – a considerable price advantage that effectively secures you 19% more silver for your money.
- If you store your silver in this high-security vault, you can sell it back to Elementum Deutschland GmbH at any time – without any bureaucratic hassle and also without VAT, as the trade takes place within the duty-free warehouse. You will receive the funds via bank wire.
- VAT is only payable when you physically remove the stored silver – either by picking it up in person (after prior notification) or by having it shipped to your address.
More silver, more return
Thanks to duty-free storage, you receive 19% more physical silver when you buy. This additional amount also participates in the performance of the silver price if it rises – a leverage effect that significantly improves your return opportunities.
About Elementum
Elementum is a second-generation, owner-managed family business. Trust, consistency, and long-term thinking are at the heart of our philosophy. The Board of Directors of Elementum International AG is composed of internationally renowned experts in the money and precious metals markets, including economists, analysts, university professors, and precious metals specialists. This in-depth expertise forms the backbone of our actions – for your security, your assets, and your future.
About the Author
Stephan Bogner
CEO of Elementum International AG
Stephan Bogner, who holds a degree in business administration, studied economics at ISM Dortmund (Germany) and wrote the university’s first thesis on precious metals as a hedge against inflation. After studying in the UK and Australia and gaining professional experience in Dubai, he took over as CEO of Elementum International AG in Switzerland in 2012. His expertise in precious metals has had a significant impact on the company’s development.
Contact
Rockstone News & Research
Stephan Bogner (Dipl. Kfm., FH)
Müligässli 1, 8598 Bottighofen
Switzerland
Phone: +41-71-5896911
Email: info@rockstone-news.com
Disclaimer: This article reflects the personal opinion of the author. Elementum assumes no responsibility for the accuracy of the content and accepts no liability for its use. This article may contain links to external third-party websites. Elementum is not responsible for the content of these external sites and expressly distances itself from all information provided there. At the time the links were created, no unlawful content was identifiable. This article does not constitute a recommendation to buy or sell. Elementum International AG is a Swiss company that specializes exclusively in the storage of physical precious metals in a high-security vault facility located in the St. Gotthard mountain massif in Central Switzerland. The Board of Directors and Executive Management of Elementum International AG have been selected solely based on their professional expertise and long-standing experience in precious metals markets. As these individuals may also be professionally active outside their roles at Elementum International AG, the company has no influence over their external activities and respects their right to freedom of expression. Therefore, the views expressed by persons working with or for Elementum do not necessarily reflect the opinion of Elementum International AG. Investments in precious metals are subject to risks, including those specific to the structure of this market. Please read our full risk disclosures and consult a licensed financial advisor before making any investment decisions. Neither the author, Elementum International AG, nor Elementum Deutschland GmbH assume any liability for actions taken based on the information provided. Past performance is not indicative of future results. The cover picture has been obtained and licenced from shutterstock.com.
