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4	Ask Julie The surprising value of silver. read more...
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Latin Forum

Ask Julie

All that Glitters is not... Silver?

No, it’s not a typo. Silver seems to be the new gold of the 20th century. For thousands of years, this elusive precious material has evolved from its practical use as money into a modern industrial commodity. Silver is considered by experts to be a miracle metal.

Silver’s amazing properties began to be recognized by industries that capitalized in its powerful conductivity of electricity—just about every electrical appliance uses silver. Plus it has antibacterial qualities; even the ancient Greeks used silver to line their jars and vases that held food and wine. Today, silver is used in medical instruments, such as catheters, for the same reasons. Offi ce buildings are gift wrapped in energy-saving glass sheets that are tinted with silver and all forms of alternative energy, including wind power, use silver in their collection and transmission process. Your washing machine has at least 18 parts that are made up of silver and the car in your garage needs to use silver in more than 40 places to do its job. But the fact that makes silver stand out from other metals such as gold is that most of the silver that has been mined up to now has been used, and once used, it’s gone forever.

The increasing demand for silver as an industrial material, along with the tendency of investors to gravitate towards hard assets in times of uncertainty and possible inflation, have contributed to a five fold increase in its price between 1971 and 1981, while the dollar has lost more than half its value during the same period.

The price for an ounce of silver is called the London Fix, and it is determined each weekday by three market making members of the London Bullion Market Association at approximately noon, London time. For the latest silver prices, visit www.kitco.com/ gold.londonfix.html.

Although nobody knows for sure what the future holds for silver, many experts suggest that investors consider a small portion of their assets—approximately 10 percent of their net worth—to be invested in silver. So as an individual investor, if you wish to diversify assets and help preserve your money from the eroding effects of inflation and you are looking to own a part of the physical silver market, but do not want to possess the metal bars or coins, buy insurance or secure proper storage, Exchange Traded Funds, or ETFs, may offer a convenient alternative.

This hybrid vehicle of a basket of securities has some of the characteristics of a mutual fund—because it trades as a group of
stocks rather than individual companies— and of a stock, because it is bought and sold as a security throughout the day.

In April 2006, iShares launched a silver exchange-traded fund called the iShares Silver Trust (SLV), which as of April 2008 held 180 million ounces of silver as reserves. SLV is traded on the American Exchange.

The value of your investment in this ETF will equal your proportional owner-ship value of the silver, minus the expenses and fees of the trust. This translates into an investment choice with great volatility
since the value of your account will fl uctuate in direct proportion to the price of silver at any given moment. It is not for the faint at heart.

A historical look at a price chart from SLV shows that the price of its share is down after reaching an all-time-high during March of this year. For a long-term investor who is looking for an aggressive investment choice, this may be a good time to begin research in silver. Do not invest without carefully reading the prospectus, consulting with a fi nancial expert and defi nitely asking a tax advisor about your personal situation since some investments in silver are classified as collectibles and are subject to higher taxes. For more information on SLV, go to www.us.ishares.com.