It’s strange to already be thinking of 2010 as last year.

However, “last year” I decided to make an honest comparison of gold and silver as investments by comparing them with popular shares.

Admittedly my reason for choosing these particular shares was very unscientific and the accuracy could also be suspect as I relied on information from Google Shares website. I chose:

British Airways (BA) being a high profile very respected and flagship British Company (2,809 shares);
Apple Macintosh, seeing as we all use Macs here (121 shares);
Barclays Bank who we unfortunately bank with (2,454 shares);
Aviva, formerly Norwich Union and one of the biggest employers in Norwich where our offices are based (1,053 shares);
Google being the most high profile and successful of the dot.com companies in an internet dominated decade (160 shares); and of course
Gold (58 troy ounces) and
Silver (3,204 troy ounces).

I based the study on what £10,000 would have bought on the 4th April 2000 (my birthday), and then what those same shares were worth on the same date in 2005 and then again in 2010.
We were firstly very surprised to see that British Airways shares had consistently lost value and ended up worth less than £7,000. Apple Macintosh had initially lost value but ipods, iphone and the like have helped to make those shares worth close to £19,000 so not bad.

Like BA, Barclays shares had also dropped (to around £9,000). Aviva fared even worse with their £10,000 investment now worth only slightly over £4,000, a drop of around 60%.
By comparison gold had risen over 43% to a vale of £43,211 and silver had risen similarly to nearly £38,000. Both only being outdone by Google at £60,000.

Last month I was pleased to finally be able to attend the World Money Fair (WMF) in Berlin. It’s a show that highlights what’s new in the refining, minting and numismatic industries. From new mining techniques, security issues and of course the “Coin of the Year” awards.

I was particularly impressed with the hologram technologies being used by the Polish and Khazakstani Mints in particular. These are not only used for security and identification purposes but also for some stunningly beautiful effects. In fact talking of beauty, the Gold Coin of the Year Award went to the South African minted 1 oz Gold Rhino coin (see pic), while the Most Popular award went to a 10 euro Silver coin from the Basilisk of Vienna, featuring a legendary monstrous creature that was part snake, part toad and part cockerel.

What this really signifies, and what the show confirmed, is that there continues to be an absolutely huge demand for both bullion and artistic coins from both within the UK and around the world.
Perhaps most significant for Ayn Gold is the deal we managed to seal a deal which allows us to offer both our Dealers and our Investors a range of Silver 1oz coins at very competitive prices. These include American Gold Eagles, Austrian Philharmonics, British Britannias and also a limited supply of Chinese Silver Pandas. Perhaps most impressive are the limited edition Australian Silver Koalas (pictured). These are a limited edition produced especially for the Berlin show and carry the “Berlin Bear” symbol as well as all the other popular markings.

This deal also means that once we exhaust our current supplies we will no longer be stocking silver bullion bars of below 100 grams. However we will continue to order them in, if specifically requested by any client.

Let us first take a look at gold which for thousands of years has been a source of desire for mankind for it’s practical uses, its beauty and it’s scarcity. As pointed out in a previous article gold is, and has always been, the most logical and practical currency ever used in the world and looks certain to resume that position at some point in the not to distant future.

Both gold and silver are commonly sold at a premium above spot price (set twice a day in London). The premium is normally a percentage but can also be quoted in monetary terms. Bars normally carry a lower premium than coins, while coins normally carry a lower premium than jewellery. Also the bigger the bullion bar the lower the premium.
In the UK gold bullion bars are normally sold without VAT and some coins such as the krugerrand (but not the dinar) are also VAT free. Unfortunately, silver coins AND bullion bars both carry VAT.

Many of the arguments put forward for buying silver centre around the documented link between the prices of gold and silver.

Historically over many centuries the ratio has been 16:1 (16 oz silver cost the same as 1 oz gold). We also know from the traditional position on Zakat that around 1400 years ago in the time of the prophet Muhammad (peace be upon him) the gold dinar to silver dirham value ratio was 10:1 meaning a gold/silver ratio of about 14:1
In more recent times the yearly average moved from an approximately 20:1 ratio in 1970, to as wide as 89:1 in 1991. Today, at the time of writing, the ratio is a little over 36:1. This means that an immediate doubling of the silver price would still not quite bring it back to historical par.
The thought by many is that the wide disparity that exists today is artificially manipulated and will at some time regain it’s natural balance through a series of rapid rises in the silver price.

INSIDE:
Review of world Money Fair (WMF

Buyers Guide: Coins vs Bullion Bars

The inaugural issue of the Ayn Gold newsletter.
Inside:
What has been the best investments of the opening decade of the millenium?
How to buy krugerrands