Why Platinum?
Platinum has been widely known as “white
gold” and “rich man’s gold” for a long time. The value of platinum is
historically higher than gold but in the past few years, market
speculation and global economic imbalances have contributed to the
higher trading value of gold when compared to platinum. In eventuality
however, platinum will again have a higher price than gold.
Today, Platinum is still considered far more valuable than gold due to these facts:
- The annual supply of platinum is around 130 tons. This is about 6% of annual gold production and less than 1% of silver production. Platinum is among the rarest metal in Earth's crust and has the lowest availability in un-mined reserves and it is nonetheless a very precious commodity.
- Relative to volume mined, platinum has many more industrial uses than either silver or gold. In fact, more than 50% of yearly production of platinum has been consumed in contrast with 85% of global gold demand being used for store-of-value adornment.
- The supply/demand dynamics of platinum is very tight and getting tighter over time as emerging economies of the world increase their demand for this rare element. In the long run, supply will be unable to meet the demand and this will result in long term appreciation of Platinum price in the spot market.
While no one should speculate that
platinum price is to double or triple within the next few years,
platinum investment is more conservative and a safer strategy compared
to gold and silver.
Virgin Gold has decided to hold stakes in Platinum mining ventures since the beginning of 2012 and we are pleased that we are now able to offer this similar investment opportunity to all our shareholders.
The management is confident that the CPS-Platinum investment will yield a higher return for its shareholders in monetary value. When we first offered CPS-GOLD in January 2010, spot gold price was about USD1, 100 per troy ounce. Now, at the same time in October 2012 that we are offering CPS-PLATINUM to our shareholders, the spot price for platinum is about USD1, 500. With that said, current shareholders will benefit more from this offering as dividend per investment is higher in comparison to the initial offering of CPS-GOLD.
When CPS-PLATINUM gets listed in 2016, shareholders will certainly enjoy the appreciation in assets.
Virgin Gold has decided to hold stakes in Platinum mining ventures since the beginning of 2012 and we are pleased that we are now able to offer this similar investment opportunity to all our shareholders.
The management is confident that the CPS-Platinum investment will yield a higher return for its shareholders in monetary value. When we first offered CPS-GOLD in January 2010, spot gold price was about USD1, 100 per troy ounce. Now, at the same time in October 2012 that we are offering CPS-PLATINUM to our shareholders, the spot price for platinum is about USD1, 500. With that said, current shareholders will benefit more from this offering as dividend per investment is higher in comparison to the initial offering of CPS-GOLD.
When CPS-PLATINUM gets listed in 2016, shareholders will certainly enjoy the appreciation in assets.
Why Gold?
For centuries, gold has been coveted for
its unique blend of rarity, beauty, and near indestructibility. Nations
have embraced gold as a store of wealth and a medium of international
exchange; individuals have sought to possess gold as insurance against
the day-to-day uncertainties of paper money.
Perhaps more importantly, in the past few years, gold has finally been treated as an asset class that investors must keep as part of their portfolios. Investment in gold can be in the form of physical gold bars (nuggets), paper gold, gold company shares, gold investment funds (mutual fund), gold futures and options.
Perhaps more importantly, in the past few years, gold has finally been treated as an asset class that investors must keep as part of their portfolios. Investment in gold can be in the form of physical gold bars (nuggets), paper gold, gold company shares, gold investment funds (mutual fund), gold futures and options.
Monetary authorities such as Central Banks
and International Monetary Fund (IMF) have long held gold in their
reserves. The public takes confidence from knowing that its Central Bank
holds gold - an indestructible asset and one not prone to the
inflationary worries overhanging paper money. Some countries give
explicit recognition to its support for the domestic currency. Moreover,
rating agencies will take comfort from the presence of gold in a
country's reserves.
Gold is sometimes described as a non income-earning asset. This is untrue. There is a gold lending market and gold can also be traded to generate profits. There may be an "opportunity cost" of holding gold but, in a world of low interest rates, this is less than is often thought. The other advantages of gold may well offset any such costs. The opportunity cost of holding gold may be viewed as comparable to an insurance premium.
As for private individuals, nobody is suggesting that one should put 100% of their assets into gold investment. In any asset portfolio, it rarely makes sense to have all your eggs in one basket. Obviously the price of gold can fluctuate - but so too do the exchange and interest rates of currencies held in reserves. A strategy of reserve diversification will normally provide a less volatile return than one based on a single asset. Most investment consultants suggest exposure ranging between 10 and 35%.
Gold is sometimes described as a non income-earning asset. This is untrue. There is a gold lending market and gold can also be traded to generate profits. There may be an "opportunity cost" of holding gold but, in a world of low interest rates, this is less than is often thought. The other advantages of gold may well offset any such costs. The opportunity cost of holding gold may be viewed as comparable to an insurance premium.
As for private individuals, nobody is suggesting that one should put 100% of their assets into gold investment. In any asset portfolio, it rarely makes sense to have all your eggs in one basket. Obviously the price of gold can fluctuate - but so too do the exchange and interest rates of currencies held in reserves. A strategy of reserve diversification will normally provide a less volatile return than one based on a single asset. Most investment consultants suggest exposure ranging between 10 and 35%.
The European Central Bank (ECB), for example, holds around 15-20% (depending on the market value) of its reserve in gold.
The question is not why, but rather how and how much.
The question is not why, but rather how and how much.
Why Silver?
Silver is a precious metal that is most
widely used in industrial productions. Experts' reports have identified a
global shortage of silver and this shortage will only get more
significant with time. Annually, supply of silver is about 10% short of
demand in the past 10 years. This has driven the price of silver to
increase from USD4.50 /oz. in 2003 to the current price of USD30/oz.
The all-time high price for silver peaked on the 18th of January 1980 at USD49.45 per troy ounce. Three days later, on 21st January 1980, gold price reached USD850 per troy ounce. Gold / Silver price ratio was approximately 16 times.
The historic gold to silver ratio was set to approximately 1 to 16. That is, one ounce of gold is worth 16 ounces of silver. The average price for gold in the past two years was about USD1, 650 while silver sat at around USD30 making the Gold / Silver ratio approximately 50 times. Market analysts and experts said that the 1 to 16 ratio will return again as it always has throughout history. When this happens, silver will be worth a great deal more than it is today.
Therefore, many market analysts have concluded that the correct price/value for silver should be around USD100 per troy ounce.
The all-time high price for silver peaked on the 18th of January 1980 at USD49.45 per troy ounce. Three days later, on 21st January 1980, gold price reached USD850 per troy ounce. Gold / Silver price ratio was approximately 16 times.
The historic gold to silver ratio was set to approximately 1 to 16. That is, one ounce of gold is worth 16 ounces of silver. The average price for gold in the past two years was about USD1, 650 while silver sat at around USD30 making the Gold / Silver ratio approximately 50 times. Market analysts and experts said that the 1 to 16 ratio will return again as it always has throughout history. When this happens, silver will be worth a great deal more than it is today.
Therefore, many market analysts have concluded that the correct price/value for silver should be around USD100 per troy ounce.
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Of course, nobody can
forecast the future market with a 100% certainty but the trend is
pointing towards a higher price in silver. Within the past 10 years,
silver price has increased 6 folds. There is no reason not to believe
that the price of silver will double or triple within the next 10 years. While Virgin Gold is a conservative corporation when it comes to investing in profit generating operations, the management is strongly optimistic that our future investments in Silver Mining and Exploration ventures will proof to be very beneficial to our shareholders. |
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