Australian Bullion Company

Investing in gold is popular these days. People are investing in gold like never before, but a little known fact is that silver bullion investment is also gaining in popularity. Watch this short 5 minute YouTube video that explains the differences between gold versus silver investment.

VIDEO TRANSCRIPT

Hi, I’m Dr Marc Dusault, I’m here with the Managing Director of the Australian Bullion Company Mr Peter August and we’re sitting here with gold, and this is 105 ounces of gold bars and this is another ounce of a coin.  And I just wanted to show you what it actually looks like; and it’s actually as heavy as it sounds.

Now just so you can see, this is a regular blackberry mobile phone and we have a series of YouTube videos that explains why you should invest in gold.  But what I wanted to do in contrast, and I’m just gonna move the phone over here just so you can see the difference in size.  Again this is just a regular, this would be about the size of a 20 cents piece wouldn’t it?

Yes.

Okay, so a 20 cent Australian piece, and it’s actually you know very attractive because once again it’s a coin, whereas these are bars which have a little bit more of a rough texture.  But the contrast I want to show you is with silver.  Now this is 1 kilo which is about, it’s about all of this isn’t it?

One kilo is that.

Is that.  So this, is that.

It’s a dramatic difference isn’t it?

Yeah, it’s a huge difference.  Now this is silver and I, you have to sense how heavy this is and when you look at it it’s got that rough texture we talked about in the other YouTube video about bullion, and it’s stamped, and it’s actually when you touch it it’s got a really nice feel to it.  I want to show you another one, this one is how much, 5 kilos.

That’s correct.

Now I’m not gonna drop it from too high up okay, but…

Just do that to my table, yeah.

Yeah, you can, and I do that so you can actually get a sense of how heavy it is.  So this is 5 kilos; now in today’s pricing, we’re actually in November in 2009, how much is a kilo of silver?

A kilo today is round about $680, a kilo.

So $680 for this.

Just to give you a contrast between price of gold and price of silver, it takes 63 ounces of silver to buy 1 ounce of gold.

So 63 to 1.

That’s the ratio.

Right now?

Right now.

What was the ratio historically; cause it’s changed hasn’t it?

Absolutely.  Now because silver was used as currency right up until the 1960’s,and 1970’s in some countries, the historic ratio was 15 to 1.

And now it’s 63 to 1.

Now it’s 63 to 1.

Wow, that’s incredible. So here you have silver, here’s the other one.

He likes silver.

Yeah, I love silver because it, I mean it just, it just makes the point doesn’t it?  Now this kind of volume of silver is worth how much?

That kind of volume of silver, what have we got, 12 kilos so you know it’s just under 12 times 7, so it’s 8,000, a bit over $8,000.

So this is 8,000, this is what 8,000 in silver looks like; and how much is 8,000?

8,000 in gold, well we can’t actually get it; one of those is 12½ thousand.

Yeah.

So you’ve got about 6,000 there.

So this would be about 6, so if we had 2 more gold bars like this…

7 actually.

So 7,000.  So this is almost what this is.

Yes.

So that gives you, look at the difference in contrast.  Now we’ve been talking about gold as a safe haven asset investment for all the reasons that we’ve already covered…

Sure.

Why would someone looking at investing in bullion, because there’s gold and silver bullion, why would they invest in silver versus gold?

Okay.  Well it’s a good question that you ask, and this is my answer to that; silver has been looked upon as basically an industrial metal whereas it is also a monetary asset such as gold.

Yeah.

Okay.  Now with silver you’ve got a number of dynamics occurring in the marketplace; one of those dynamics is silver is mainly produced as a byproduct of base metal production.  So you have mines that are…

That are mining for something else.

For copper, whatever.

And this ends up being part of it as a small percentage.

Correct.  So when commodity prices go down that becomes a deterrent for mines to produce those base metals.

Yes.

And as a consequence silver goes down; it goes down in production.

Now is that safe to say, or actually maybe the question should be better phrased; what’s the percentage of mining for silver that takes place as a direct mining metal versus as a secondary metal, that is…

It’s about 25%.

25%; what would it be for gold?

Well gold, there are specific gold mining companies and…

And what would be the percentage?

The byproduct, I don’t know, I don’t know specifically what he percentage of gold as a byproduct metal…

But if you were to guess, it would be small, right?

It would be small, it would be very small.

5 or 10%.

Because that ratio of 63 to 1 is worthwhile…

Correct.

Being able to open up just a gold mine for, provided you met all the criteria.

Correct.

Okay; so that’s not the case with silver.  Other factors that are…

I’m gonna stop you there.

Okay.

We’re gonna do another YouTube video on those other factors.  So you can just click on this link, right over here and get to that video.  Thanks for listening.