Like silver?

[cubical]

*This is not investment advice, it is information only. If you follow my investments you will lose money!

And want to take a little paper risk? Check out these bonds. I recently got into some and think they are a great investment.

http://www.grancolombiagold.com/file...dNotes0811.pdf

The gist is this. The notes pay 5% yield and the principle is linked to the price of silver, with every bond(par $1000) being equal to 66.7oz of silver. So they are priced as if silver is $15. Since silver is $31 the principle is currently valued over $2000. It begins to payout in 2015, through 2018. As you can see from the pdf, the annualized rate of return is currently around 22% and will only go higher if silver goes higher(like most on here believe). I am not a huge fan of silver any longer, but some diversification at such an attractive rate is very nice.

The company has been operationally cash flow positive for the last several quarters. They recently did a gold linked debt offering and now have a lot of cash on their balance sheet. The insiders own a big part of the company, both equity and debt(these notes specifically). The note is a senior note, but unsecured. Per the prospectus they will store up the silver and sell it to pay off the loans.

I own this in my 401k, so there is no foreign tax withholding on interest, so holding it outside of a tax deferred account might be tricky. Keep that in mind.

Let me know what you guys think.

[Adrock]

Mind if I ask why you don't like silver now?

[cubical]

It's not that I don't like it, but I don't think it is or will be seen as money/wealth in the future the way gold will. I think the next financial transition will involve gold, not silver. So the revaluation of money will affect gold in a big way, not so much for silver. I view silver as a commodity, which will go higher as the dollar hyper-inflates.

[Adrock]

Thanks, I am just trying to learn about all this.

So pretty much you think that silver will go up as the dollar devalues, but gold is going to go up too and be safer once they try to correct everything. My coin guy was talking about how the ratio between gold and silver makes silver the better buy right now.

[Zippyjuan]

If you look at the last 20 years, the gold/ silver ratio is about its average these days.

http://goldprice.org/gold-silver-ratio.html

The last time it got anywhere near what some claim is its "historical" ration of 1:16 was in 1980- when the Hunts Brothers tried to corner the silver market which caused the price to spike and the ratio to fall.

http://www.mineweb.com/mineweb/conte...3394&sn=Detail

Author: Lawrence Williams
Posted: Friday , 15 Jun 2012

LONDON (MINEWEB) -

Much is made by commentators of the historical gold:silver ratio (GSR) being around 16:1, while the current ratio is more like 55:1, with the implication being that silver will return to its historical ratio to gold. If this were to happen overnight it would put the current silver price at a little over $100 an ounce - in the writer's view this won't happen, even in the long term, although there is definitely room for silver to appreciate more than gold in percentage terms in the days, months and years ahead, particularly if the gold price makes a rapid climb towards the $2,000 level which many do expect.

The reason we do not see the GSR returning to 16:1, is that silver is nowadays an industrial metal with an important investment element, while historically it was, like gold, a monetary metal. But true silver-based coinage is long behind us, while the world's Central Banks do not see silver as forming a part of their reserves. True gold coinage, where the face value represents the metal content, does not exist either, but at least Central Banks continue to maintain gold as a key element in their holdings - although interestingly it is mainly the Western Central Banks which retain the high gold ratios in reserves, rather than the Middle Eastern and Asian ones where traditionally one might expect a greater propensity to hold gold as a monetary asset. There does seem to be a move to rectify this in the East, which is gold price positive, but there is huge ground for these banks to make up to bring gold percentages in their holdings anywhere near European and American ratios - perhaps itself a positive factor for the yellow metal.

More at link.

[Adrock]

It does look pretty average. I guess it just comes down to affordability then. Gold is scary at it's price right now.

[Zippyjuan]

As for the investment in the OP, a five percent yield is very nice. What happens if the price of silver goes down? Does the yield also decrease?

I guess if at $31 the face value is $2000 then would it go to $1,000 if silver went to say $15? You mention foreign taxes- is it also subject to currency risk (changes in the value of the currency of the issuing country vs the dollar)? That would increase your risk.

Just asking. I can't tell from the info posted. I don't know much about these types of investments.

[cubical]

As for the investment in the OP, a five percent yield is very nice. What happens if the price of silver goes down? Does the yield also decrease?

I guess if at $31 the face value is $2000 then would it go to $1,000 if silver went to say $15? You mention foreign taxes- is it also subject to currency risk (changes in the value of the currency of the issuing country vs the dollar)? That would increase your risk.

Just asking. I can't tell from the info posted. I don't know much about these types of investments.

Yield is fixed. It pays in USD. I am not in for the interest. I am in for the principle appreciation. You are paid out $1000 or 66.7oz of silver(though it is paid out in parts from 2015-2018), whichever is higher.

[cubical]

It does look pretty average. I guess it just comes down to affordability then. Gold is scary at it's price right now.

If it is affordability you seek, why not stick with copper?

Saying something that can be infinitely divided is too expensive makes no sense. Besides, it's not mom and pop that will cause the price appreciation, it is the central banks, sovereigns and wealth giants.

[Zippyjuan]

Yield is fixed. It pays in USD. I am not in for the interest. I am in for the principle appreciation. You are paid out $1000 or 66.7oz of silver(though it is paid out in parts from 2015-2018), whichever is higher.

Thanks for the info.