How To Get Rich

How To Get Rich

February 13, 2020 By Machinist

Most people want to be rich.  A smaller portion of those actually want to get rich.  If you are one of the enlightened few who are willing to actually do the work of getting rich, then you are in luck, because this article contains pretty much everything you need to know about money and how to accumulate a great big pile of it.

There are really only three ways to get rich, but one of those is dumb luck, and you either have it or you don’t.  That leaves only two ways to get rich that you have any control over.  You can work for your money or you can put your money to work for you.

Actually, you are going to have to work either way.  So, it would be more accurate to say that you can work for you money or you can work for your money AND let your money work for you.  Whether or not you choose to participate in that second part will largely determine how long you’ll have to work.

Let’s start by talking about money.

What Is Money?

Money is just a means of transferring value from one person to another.  If I am a candle maker, I could trade my candles for things that other people want.  I would probably be able to find a butcher and a baker willing to trade a steak and bread for candles.  I may even find a financial advisor who wants a candle, even though I am not interested in his services. 

By trading my candles for money, rather than trading directly for the goods I want, I can still get something of value from the advisor.  Furthermore, I could eventually hope to make a trade with a car maker, even though he will never have a need for the twenty thousand candles his car might be worth.

Where Does Money Come From?

Because money is just a representation of value, money can be created whenever value is created.  Value is created through production, and production typically comes from work.  So, even though there is only so much money in circulation, there is no limit to the money that can be created.  There is no limit to the work that can be done, so there is no limit to the money that can be made.

Creation of money through production is not to be confused with inflation, which is pretty much the antithesis of production. That’s a topic for another day.

A Note About Productivity

To continue reading, please go to the original article here:

https://perpetualmoneymachine.org/how-to-get-rich/

The Curse of a High Income

The Curse of a High Income

February 20, 2020 By Machinist

The Income Curse

Regardless of income level, the vast majority of people spend very nearly everything they earn, if not more.  Most people know that living paycheck-to-paycheck is a problem.  What they may not realize is that the higher their income, the bigger this problem actually is.  Common sense tells us that more income is always better, but that’s not always true.  If you have a high income and are spending it all, then you might be in serious trouble with limited options.

Consider the following scenario and think about who is financially more secure?  Who is wealthier?

Introducing Bob and Bill

Bob earns a salary of $50k per year.  He owns his 10-year-old Toyota Camry outright, makes the mortgage payment on his comfortable home, and is still able to save $5k each year in his 401(k) account.

Bill earns $250k per year and leases a new Land Rover every two years.  He lives in a very nice house with a pool and a beautifully landscaped yard.  Bill is also saving $5k per year toward retirement.

Bob and Bill both consider themselves responsible personal financiers.  Neither one has any credit card debt and both are careful to keep some money saved for unexpected expenses.  In fact, Bob has $10k in the bank, and Bill has $20k.

So, who is doing better financially?  Obviously, Bill’s and Bob’s kids know who is richer.  It’s not even close.  They all prefer to play over at Bill’s house.  Bob’s kids complain about having to mow the lawn, and whine about why they can’t have somebody take care of it like Bill does.

Everyone knows Bill is richer than Bob, but everyone is wrong, as they are about to find out.

What Lies Beneath

By all outward appearances, Bill is absolutely prospering, keeping his expenses in check, and even securing his future, but the car, the pool, the house and the fancy life are obscuring a ticking financial time bomb which explodes with surprising devastation as recession hits causing both Bob and Bill to lose their jobs.

Bob is disappointed to lose his income, but he figures that if he cuts the cable and his cell phone and all restaurant meals, he can cover his mortgage, utilities, and groceries for four months.  While he’s looking for a new job, he takes on some odd jobs around town.  In this way he is able to make his savings last for 6 months.

Bill is also bummed about losing his job, but within days he has started to panic.  He realizes that his $20k savings will last little more than a month at his current burn rate.  Even after cancelling his kids camps and sports and the bouncy house for Billy’s birthday party, he’ll be flat broke within two months.

Luckily the gardener lets bill out of his contract without a penalty, but now Bill has to figure out how to maintain his yard all by himself.  Things don’t go as well with the Land Rover dealership. 

They let him return the car, because that’s easier than sending out the repo man next month, but they also charge Bill $10k for early lease termination.  Bill decides to just let that go to collections for now, because he has a bigger problem.  He kind of needs a car to look for a job, but he also needs to hold onto as much of his cash as he can.  Maybe Bob will let him borrow the Camry.

So, who was really wealthier?  Who was financially more secure?

To continue reading, please go to the original article here:

https://perpetualmoneymachine.org/curse-of-a-high-income/

The Market is Falling. What Should I Do?

The Market is Falling. What Should I Do?

March 10, 2020 By Machinist

In a Free-Fall

Falling markets are a normal and expected part of investing.  The proper reaction to an ugly period in the market is to hold.  In fact, the only logical response to a discounted market is an increased motivation to buy more.  Selling may seem right emotionally, but it’s absolutely illogical and wrong.

Explanation

Timing the market is a fool’s errand.  Timing only works if you know where the market is going.  You can’t know where the market will be tomorrow or next month.  But luckily, we can say almost with certainty that the market will be higher ten years from now.

Markets will recover, but you will only benefit if you are invested when they do.  You are not investing for next week.  You are investing for decades, so you’ll realize your best odds of success when you buy and hold for decades.

Investing involves risk.  That means that the value of your stocks can and will drop from time to time.  You should expect to lose several percent twice a year or even more. 

A 10% correction typically occurs every few years.  In fact, there have been 27 corrections (10% or more) and 12 bear markets (20% or more) since World War II.  You know that these corrections will happen, so your master plan shouldn’t change when they do.

Remember, when the market drops you may lose net worth, but you won’t lose money unless you sell.

Exceptions

All bets are off if you are invested in a small number of individual stocks.  I recommend investing in broad-market index funds like VTI or VTSAX, because a very broad portfolio of stocks reduces the risk that your portfolio will be damaged by relatively isolated factors.  If you are invested in one company and the stock drops, then there is no guarantee that it will ever regain its value.  Sometimes a stock never recovers.  That has never happened with any major index fund.

My first job after I graduated from college in 2000 was at Intel.  I was given stock options at the current price on the day I started of $69.69.  Within a month INTC stock had lost half its value as the dot com bubble burst.  It was down as low as $12 within a few months.  Twenty years later, INTC has still not quite recovered.  Meanwhile the major indexes are up by multiples.

Current Events

I am writing this article on March 9, 2020.  In the past two weeks we have seen an epic market correction.  Today alone, the major indexes were down 8% in the biggest one-day point loss in history.  I lost more than $100k of net worth.  That’s a huge hit, but there have been times like this before.  And, as a matter of fact, markets recovered even stronger – every single time.

Coronavirus is going to impact the economy, but we don’t know how much.  So far, the market reaction looks pretty emotional.  It’s the perfect time to remain calm.

To continue reading, please go to the original article here:

https://perpetualmoneymachine.org/market-is-falling-what-to-do/

How Many Companies Are Worth Less Than Zero?

How Many Companies Are Worth Less Than Zero?

Notes From The Field By Simon Black   May 26, 2020  Bahia Beach, Puerto Rico

By 1920, former New York Yankees outfielder George Halas’s baseball career was finished.

Halas had only played 12 games as a professional when a hip injury abruptly ended his dream of making it big. Being a baseball player was all Halas really knew, and with his career finished, he had limited prospects. Eventually he was able to find steady work in Decateur, Illinois, a small town about 3 hours from Chicago, where he took a job with the A.E. Staley Company.

The company’s founder, Augustus Staley, loved sports, and he recruited some of his employees to play on a company team that competed in a regional gridiron football league.

The team was known as the Decateur Staleys, and Halas became the manager.

Halas didn’t have much football experience, but he did well as team manager. The Staleys earned a 6-1 record in their first season and won the central Illinois Football Championship.

But Augustus Staley lost a ton of money.

Game attendance was pitiful, so his football team brought in almost zero revenue. But he had to pay the players, pay for the equipment, pay for team travel, etc.

Staley knew if things continued that way that he’d lose a fortune. He didn’t want to shut down the team that he loved, but he didn’t want to continue losing money.

So in 1921, Augustus Staley PAID George Halas $5,000 (which was a lot of money back then) to take the team off his hands.

George Halas jumped at the chance. He took the team (and the money) to Chicago, and eventually renamed it the Chicago Bears.

Today the team’s estimated worth is nearly $3.5 billion. But its remarkable to think that a century ago the team actually had NEGATIVE value.

This isn’t incredibly common, but it does happen from time to time: businesses can be worth less than zero. And most of the time they don’t have such a remarkable turnaround story.

Case in point: Hertz, the rental car company, has $14.4 billion worth of vehicle loans according to its most recent financial statements.

But the company estimates that its vehicles are actually worth LESS than the debt they owe. This means that Hertz’s rental cars have negative equity.

Including the company’s other assets and liabilities, Hertz has NEGATIVE $2.8 billion in net tangible assets… so the entire company is worth less than zero.

They’re also quickly burning cash with no end in sight. Unsurprisingly, Hertz filed for bankruptcy a few days ago.

Similarly, the retail chain JC Penny also recently filed for bankruptcy. According to its financial statements, JC Penny has an accumulated deficit of MINUS $3.7 billion, and negative net tangible assets (including interest rate derivatives).

WeWork hasn’t declared bankruptcy (yet). But the company barely has any assets at all despite having an unbelievable $47 billion in lease liabilities.

So WeWork is probably also worth far less than zero.

Frankly it’s not unreasonable to think that a LOT of companies are in this position right now.

Stock markets around the world are surging higher because investors are looking for any excuse to believe that everything is about to be back to normal.

That’s human nature; our ‘normalcy bias’ warps our brains into completely ‘misunderestimating’ obvious threats and full-blown disasters.

Right now as I write these words, in fact, the US stock market is worth roughly the same amount as it was in early 2019.

That strikes me as completely ridiculous.

In early 2019 there weren’t tens of millions of unemployed, countless businesses shuttered, and unfathomable looming bankruptcies.

Plus today we have to contend with the obvious risks of subsequent virus outbreaks, more shutdowns, travel and trade barriers, the looming Cold War between the US and China, and higher tax rates to pay for all the bailouts.

It’s fair to say that economic conditions and earnings prospects today are completely different (and a lot uglier) than they were in early 2019. So how can stocks possibly be worth the same amount?

And again, if you dive a little bit deeper, you might find that a number of big companies are actually worth less than zero.

In normal times, investors typically value a business based on a certain multiple of its cashflow… or at least its future cash flow.

But these aren’t normal times. And valuing a business based on pre-Covid projections is just silly.

A lot of companies will have a long-term hit to their revenues and profits. Some might not be able to operate at all.

So a safer bet is to value a company based on its assets; in other words, how much are the company’s business assets worth, minus the liabilities?

If the answer (like Hertz) is less than zero, then you might just want to consider avoiding the investment altogether.

Hertz is definitely not going to be the last big company to file for bankruptcy. There are a lot more retailers, travel companies, etc. that are on the brink.

At this point, any highly leveraged (i.e. heavily indebted) business might just be worth less than zero. So be cautious before following the crowd and rushing back in.

Remember this if you’re thinking about buying an index fund; there are literally hundreds of companies in that index, many of which might be worth less than zero.

Longer term, great businesses, both public and private, will do very well and be in much better shape than before Covid; economic downturns and financial crises actually help solid businesses rise to the top.

Companies with high quality products or services, talented management, and sensible finances are able to navigate the challenges and emerge stronger than ever. They eventually consolidate market share from weaker competitors who don’t make it, and they end up becoming even more profitable.

To your freedom & prosperity, Simon Black, Founder, SovereignMan.com

https://www.sovereignman.com/trends/how-many-companies-are-worth-less-than-zero-27803/

How Should I Save For My Kids’ College?

How Should I Save For My Kids’ College?

April 2, 2020 By Machinist

Priorities

One of the personal finance questions I receive most often is about saving for college.  What am I doing to pay for my kids’ college?  The simple answer is that 529 college savings plans are the way to go.

A better answer has to include a consideration of how college funding works in harmony with your other financial priorities.  In other words, to adequately determine how to pay for your kids’ college you first need to determine what you are really trying to accomplish.

What Are Your Priorities?

It is a noble goal to raise your children to become responsible, well-educated adults that will play a meaningful and productive role in society.  Sending your child off for a college education can be a fantastic way to cap off your efforts as a parent toward these goals.  It may also improve Junior’s earning potential.

However, college is a major expense that can absolutely derail otherwise responsible personal financial strategies.  Therefore, it is important to consider how paying for college works with or against with your other financial priorities.

Secure Your Own Mask First

On airplanes, the flight attendant instructs you to secure your own oxygen mask first before helping others with theirs.  The same philosophy is appropriate with regard to funding your child’s college education.  There are myriad ways to pay for college including grants, loans, scholarships, work/study, and the military. 

Options to pay for retirement are much more limited. And believe me, your kid would rather figure out how to put himself through college than take on the responsibility of supporting you through retirement.

So, if you are not on track to finance your retirement, then the first step is to forget about paying for Junior’s college and get your own finances in order.

529 College Savings Plans

Assuming your finances are on track for retirement, then the best way to help someone save for a college education is through a 529 savings plan.  These accounts are typically managed by the state you live in.  You deposit money that you have already paid taxes on. Then, the money grows and can be withdrawn for education related expenses without any further taxes. So it works like a Roth IRA or Roth 401(k), but for college.

You can use your 529 money for tuition, books, fees, and even room and board at any legitimate college or university and even trade schools and vocational educational programs.  529 accounts also offer ample flexibility to transfer funds to another recipient if your kid decides not to pursue higher education.

In addition, there are other concessions that allow you to get your money back in case your educational dreams just don’t work out as you imagined.  In the worst-case scenario, you can withdraw the funds for non-education purposes and lose no more than a 10% fee.

Other Things to Consider About College

To continue reading, please go to the original article here:

https://perpetualmoneymachine.org/how-to-save-for-college/

15 Typical Life Problems And How To Solve Them

15 Typical Life Problems And How To Solve Them

Tim Denning   Jul 17, 2018  

All of our problems are the same. This is the 156th time I’ve written this fact (for those of you counting).

Problems are forever and we can’t avoid them. You’ll wake up tomorrow and have problems for breakfast. You’ll jump on the train and read a problem in your email inbox.

You’ll get to the office and get a problem smack bang in your pretty face!

The typical problems we face can be solved.

Here are 15 typical life problems and how to solve them:

You Didn’t Reach Your Goal.

Just because you set a goal, doesn’t mean you’re going to get it. Many of life’s toughest goals take lots of attempts. Some of the goals I missed are:

• Dream careers

• Girls I wanted to date

• Saving enough money to build a school in Laos

• Reaching 100k followers on LinkedIn

People who talk about success and personal development (and even write for a site called Addicted2Success like me) also don’t reach their goals.

The best feeling about reaching a goal is the journey it took to get there. If all your goals were easy, then you’d feel nothing at the end of the process.

Image Credit: Manly Caves

Solution:  Take the goal you didn’t achieve and try a different approach. Doing the same thing over and over to achieve your goal is the definition of insanity.

Your heroes miss their goals too. What makes them stand out is that they don’t give up. The fun of goal-setting is knowing that you’ll fail.

Someone Criticized You.

If you want to make a dent in this world, then the critics will come out of the closet. The bigger your aspirations are, the more you’ll be criticized.

To continue reading, please go to the original article here:

https://medium.com/the-mission/15-typical-life-problems-and-how-to-solve-them-c56838f49738

It’s Easier to Be Rich If You Don’t Have to Look Rich

It’s Easier to Be Rich If You Don’t Have to Look Rich

January 30, 2020 By Machinist

Wealth is a fascinating paradox.  People who look rich, especially those who really care about looking rich, usually aren’t actually rich.  On the other hand, as we learned from The Millionaire Next Door, there are millions of incognito millionaires all around us.  I have had my own experiences with perceptions of wealth, and I’ve discovered that it’s easier to look rich than to actually be rich. 

More importantly, I’ve learned that it’s much easier to get rich if you don’t care about looking rich. The choice is yours.  Would you rather look rich or be rich?

Misadventures with the Perception of Wealth

As I prepared to graduate from business school, I traveled to several interviews with prospective employers.  One of these was Union Pacific Railroad in Omaha, Nebraska.  My host in Omaha was a relatively high-ranking manager at the company and an alumnus of my university. 

This guy, who was probably about twenty years older than I, tried to help me feel comfortable and provide an authentic impression of life in Omaha.  On the evening before my interviews, he and his wife met me and my wife at the airport and took us to dinner.  The next day, he picked us up again (in his own car) and drove us to the office for the interviews and then took us out to show us the neighborhoods where we might want to live.

The dinner was fantastic.  You can’t beat an Omaha steak followed by a piece of chocolate decadence drizzled with fresh raspberry puree.  It was all down hill from there.  I’m sure that the overall impression I left Omaha with was not what my host had intended. 

You see, I had spent the previous two years working hard to earn a degree that would propel me into a high-salary job.  I was anxiously anticipating the lifestyle that the average starting salary for my program would entitle me to.  As I mentioned here, I had a ski boat all picked out and naturally assumed I would have a house on the lake.  My brief but candid glimpse into my host’s lifestyle was an affront to my carefully cultivated avocational aspirations.

What I am trying to say is that my host drove an older Toyota, and he made a reference or two to making choices based on scarcity of resources.  I was ready to be rich, not to be concerned with making ends meet.

To continue reading, please go to the original article here:

https://perpetualmoneymachine.org/be-rich-or-look-rich/#more-891

Look Forward

Look Forward

Jonathan Clements  |  May 23, 2020

IT’S BEEN AN UNHAPPY few months. Stepping outside means risking our health. One out of six U.S. workers is unemployed or soon will be. The stock market has suffered its worst decline since 2007-09. And while we can take steps to help ourselves, the situation is largely out of our control.

Feeling glum? One of my abiding interests is happiness research, and that research offers ideas that can make our current situation a little cheerier. But how?

We can think of any occasion—perhaps it’s a fun experience we’re planning or a purchase we want to make—as having three elements: the time before, the event itself and the time after. Each offers the opportunity for happiness, but it takes effort on our part.

1. Before. I’ve stopped asking friends and family whether they have any plans for the weeks ahead, because the question seems almost silly. Many folks are reluctant to, say, eat at restaurants or go to the beach—and, depending on where we live, these things may even be prohibited. But if we can’t make plans, what’s there to look forward to? The fact is, one of life’s great joys is anticipation.

My suggestion: Create two wish lists, one for today’s world and one for our post-pandemic life. The current list might include things like restaurants we want to order from, hikes we’d like to take and items we want to purchase online.

Yes, I realize there’s currently a debate about the ethics of online shopping—and whether we should limit ourselves to ordering essentials, so we don’t put fulfillment and delivery workers unnecessarily at risk.

I’m not going to weigh in on that. But if you are inclined to buy online, I’d spend time scouring the internet and considering different items, so you add to your anticipation.

And if you decide to make some purchases, lean toward items that can be shared with others, such as kitchen utensils that’ll allow you to make a special meal for your family or games that require multiple players. Most things in life are better when they can be shared with others.

Meanwhile, even if we can’t imagine climbing on an airplane today or going to a concert, we should make a second wish list that includes, say, places we’d like to visit and performers we’d like to see. We might do some research online, and then hatch plans with friends and family.

To continue reading, please go to the original article here:

https://humbledollar.com/2020/05/look-forward/

Does Frugal Have A New Normal?

Does Frugal Have A New Normal?

 May 24, 2020 Mr. Tako 

Do you consider yourself a frugal person?  I used to think Mrs. Tako and I were pretty frugal people.  If you remember our backstory, the two of us were good savers in our 20’s and 30’s which allowed us to reach financial independence by age 38.

We saved, but we didn’t suffer.   We traveled internationally quite a bit, ate delicious meals, and generally had a very luxurious life — all while saving a good chunk of our income.

That was the past, and this is now.  Today I’m not feeling nearly as frugal as I used to.  A lot of it has to do with changes happening in the world with response to COVID-19.  All the little things we used to do to save money are now being done by A TON of people.

For example, instead of eating out, more people are cooking meals at home.  Many of the same people are making coffee at home instead of going out for a daily latte.  They’re also cutting their own hair, working-out at home, and DIYing housework instead of hiring it out.

Does any of this sound familiar?  It’s because many of those frugal behaviors are things I’ve written about on this blog.  The same little tricks that Mrs. Tako and I used to save up to our multi-million status.

Now, everybody’s doing it!  It has me wondering: Are we still frugal if everyone else is doing the same thing?  Maybe it’s time to step-up our frugal game!

Stepping-Up Our Frugal Game

As mentioned in my last post, one of the best ways to keep compounding during a recession is to tighten your belt, spend a lot less, and plow money into investments.

It doesn’t matter if you thought of yourself as frugal person in the past.  Now is the time to really “get ahead” by saving and investing when the markets are down (or flat) for the year.

What makes this the perfect time to make lifestyle changes, is there is no social pressure right now.  With so much of the world social distancing, and many of our societal “norms” being disrupted, absolutely nobody is going to judge you if you start doing things a bit differently.  It’s the perfect time to push yourself out of your comfort zone and find ways to save!

These new methods might seem a little strange by “the old rules”, but they will certainly pay off in the long-term, when the economy recovers.

Yes, I have complete faith that the economy will eventually recover, but it is going to take some time.  How long?  I have no idea… but for now, all we can do is focus on what we can control.  Namely, our spending.

The New Frugal

Knowing that we needed to tighten our belts a little, I’ve been brainstorming ideas on how to save cash in this new COVID world.

Some of these ideas might seem a little outlandish, but in order to really save money, altering your behavior is the single fastest way to save.

Here’s a few of the more interesting ideas to save I’ve come up with:

To continue reading, please go to the original article here:

https://www.mrtakoescapes.com/does-frugal-have-a-new-normal/

Would You Risk Months Of Prison To Set Your Kids Up For Life?

Would You Risk Months Of Prison To Set Your Kids Up For Life?

By Financial Samurai

Every parent can attest they are willing to do everything in their power to give their children a good life.

Once you have kids, the money will come because you become so motivated to work harder. Not only will you work harder and pay better attention to your finances, you’ll also likely get in better shape because you want to increase your chances of seeing your kids grow up!

Given the desire to give our children a better life, it’s understandable why wealthy families try to bribe their children into various universities every year. We live in a hyper-competitive world.

When Lori Loughlin and Mossimo Giannulli’s plea bargain deal was announced, I was shocked.

Loughlin and Giannulli allegedly paid $500,000 to Rick Singer — the man at the center of the college admissions scandal and the founder and CEO of the company The Key: A Private Life Coaching and Counseling Company — to falsely designate their daughters as recruits to the USC crew team, though neither actually participated in the sport.

Despite evidence from the FBI showing they were guilty, Loughlin and Giannuli held out and stated they were not guilty. Meanwhile, many parents, including Rick Singer, admitted they were guilty. Things were not looking good for this celebrity couple.

For example, Napa Valley winemaker, Agustin Huneeus was sentenced to five months in prison for his role in the college admissions scandal. Prosecutors said Huneeus paid $50,000 for a proctor to sit with his daughter and correct answers as she took the SAT exam.

He also paid $50,000 to a University of Southern California athletic department official and agreed to pay $200,000 more when his daughter was accepted to the school as a water polo player.

In another example, LA business executive, Devin Sloane pleaded guilty to fraud and conspiracy for paying $250,000 to get his son admitted to USC, also as a phony athlete. Sloan was sentenced to four months in prison.

Given Loughlin and Giannuli defied the government and paid much more in bribes, the general consensus was that they would ultimately receive a more severe punishment. Lucky for them, that was not the case.

Based on the plea bargain, Loughlin will be sentenced to only two months in prison, a $150,000 fine, two years of supervised release, and 100 hours of community service.

To continue reading, please go to the original article here:

https://www.financialsamurai.com/would-you-risk-months-of-prison-to-set-your-kids-up-for-life/

Silver Readies For Biggest Monthly Gain In Nearly 7 Years

Silver Readies For Biggest Monthly Gain In Nearly 7 Years

May 22, 2020  By Myra P. Saefong

Silver’s rise may be ‘overdone’: analyst

Silver futures have climbed by 50% from their March settlement low AFP/Getty Images

Referenced Symbols  SIN20 +1.87%    GCM20 +0.74%

Silver has far outperformed gold so far in May as improving demand has set the metal up for its biggest monthly percentage climb in close to seven years.

“Silver has a well-documented habit of coming late to gold’s party, only to then dramatically outperform the yellow metal,” said Brien Lundin, editor and publisher of Gold Newsletter.

The most-active July contract for silver futures SIN20, +1.87% settled at $17.693 an ounce on Friday. It trades about 18% higher month to date, which would mark the strongest monthly percentage climb for a most-active contract since August 2013, according to FactSet data.

By comparison, June gold GCM20, +0.74% has seen a more than 2% monthly rise, based on its Friday settlement at $1,735.50 an ounce.

“Once gold has somewhat run its course and starts to look expensive, a lot of people turn to the cheaper counterparty, namely silver, which has attracted fund and investor money,” said David Govett, head of precious metals at commodity brokerage Marex Spectron.

Quarter to date, silver futures are up around 25%, while gold pales in comparison with its nearly 9% rise.

Prices for silver have seen a “supply side tailwind” because of the amount of supply that temporarily came offline, said Rohan Reddy, analyst at global exchange-traded fund provider Global X.

An estimated two-thirds of the world’s silver mining supply was affected by COVID-19 related shutdowns, with large silver mining countries like Mexico and Peru shutting down for an extended period, he said, adding that Mexico is only now beginning the reopening process for mines. The “supply-demand imbalance” challenge may persist until “governments and private companies feel comfortable in beginning full scale mining reopenings.”

The tighter supplies fed higher prices, with silver up by 50% from their March settlement low, when prices dropped to $11.772, their lowest finish January 2009.

To continue reading, please go to the original article here:

https://www.marketwatch.com/story/silver-readies-for-biggest-monthly-gain-in-nearly-7-years-2020-05-22?siteid=yhoof2&yptr=yahoo