Political Metals

Sharing some thoughts about gold & silver with KH of InvestSilverMalaysia.

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KH (InvestSilverMalaysia): Hi CK Diong. Can you share with us how you started investing in Precious Metals?

CK (PoliticalMetals): I have been staring at this question for quite a while, not knowing how to respond. Fact is, I’ve not invested, and if I did, certainly not in Precious Metals.

I happen to be planning for early retirement around the time of the global financial crisis of 2008. It was so violent and swift that I quickly realized it was no ordinary crisis. That was when I decided to invest considerable time into understanding what actually was going on.

My research convinced me that what happened in 2007/08 was not another of those boom and bust economic cycles which will soon come to past, and that we will all be happily riding the next wave up again. I realized for the first time that what’s ahead of us in the next few years will be unlike anything we’ve seen in the past. The global debt-based monetary system is like a house of cards whose time has come.

Hence, I wanted to play safe and decided to take my retirement savings OUT of this precarious monetary system. I converted paper & electronic money into gold and silver, not as an investment, but as a store of value. I view them as Monetary Metals or Political Metals rather than Precious Metals.

KH: What do you think of investing in silver today?

CK: I don’t understand why anyone, save for the most die-hard speculators, would want to invest in something as volatile as silver. Why would anyone invest in something whose price can drop from $40 to $26 in less than 72 hours? And, if you know who’s behind the curtain making the silver prices so volatile, you’d want to stay away from this investment.

Having said that, I hold a substantial portion of my assets in the form of silver. I don’t invest in it, I just own it, and yes, that makes a lot of difference. I believe it’s a good asset to hold because like gold, it is a monetary metal that is a good store of value and it has no counter-party risk.

KH: What made you start PoliticalMetals.com?

CK: Going by what I’ve just said above, maybe I should just answer “to explain the difference between investing in and owning gold & silver”!

More seriously, PoliticalMetals was set up to educate and prepare readers for the trying times ahead. Being aware of the impending financial turmoil unlike anything we’ve experienced, I wanted to highlight that owning gold and silver is a flight to safety more than a fight for profits, especially for people under similar circumstances as myself.

I also wanted to help expose the political nature of these 2 monetary metals. Understanding that gold and silver are Political Metals (whose prices have been and still are being manipulated and suppressed by governments through their central banks) rather than Precious Metals makes all the difference. If I had viewed buying gold and silver as investments in Precious Metals, I don’t think I would have taken the step to invest my hard earned savings back then when gold was in its 3 digits and silver in its low teens. Why? Because they looked very expensive at that time! As an investment, they looked so risky to me, especially at the nadir of the 2008 crisis.

After I understood them for what they really are – Political Metals and Monetary Metals, there was no turning back, and I just wanted to share this with the wider audience.

KH: What is your view on having physical metals vs paper metals?

CK: Again, if it’s for investment or short term speculation, paper metals are great, provided you are prepared to do battle with professionals. But if you’re buying gold and silver for the reasons I mentioned above, paper metals are the last things you’d want to touch.

KH: What methods would you recommend on buying silver?

CK: That’s a tough one in Malaysia! Bullion (not numismatic) coins or small bars are must-haves despite their high premiums. I think you’ll just have to bite the bullet and pick up some well recognized brands from your trusted dealers. Alternatively, get a few friends to pool together your funds and make a larger order directly from online US dealers who offer much more competitive prices.

For larger amounts, you could consider buying professional-grade bullion bars directly from the London Bullion Market and storing them in private vaults outside the banking system, ie not vaults belonging to banks. You get them at spot price plus a small commission by the dealers and you don’t have to worry about theft. For example, if you’re looking at RM100K, that’s about 30kg of silver. Would you risk storing that at home considering the high break-in rates in Malaysia? Ramp that up and you get the picture.

KH: From your blog, you have done comparison on Precious Metals investment with a few countries. What are the differences you find among these countries?

CK: Generally, premiums are much higher in Malaysia, especially for silver. Since the market is relatively young, many of the dealers are new and small. They may not be able to handle large orders (especially silver) and even if they do, would you trust them with large upfront payments?