GMAT Essays (AWA)

"Over the past several years, investment in precious metals, such as gold and silver, has proven to be one of the most profitable investment strategies for our firm. Over the next decade, the demand for these metals is expected to be strong, largely driven by the economic growth of large emerging markets--China, India, and Russia. Thus, our investors are best served by increasing their exposure to precious metals to take advantage of this unique profit-making opportunity."

The investment company suggests that investors capitalize on a profit-making opportunity expected by the precious metal industry, and switch their investments. The company backs its suggestion by referencing past successes along with future predictions and influences to the industry, however, the firms fails to consider several facts that might impact the precious metal industry.

To begin with, the firm talks about its past successes with the precious metal industry. The precious metal industry is notoriously known for its fluctuations in price/value. The investment company fails to mention the instability of the precious metal industry, which leads to me question how long the company has been in existence. The company provides no historical data on its firm nor does it mention how it has been investing in precious metals.

Most questionably, the firm argues that demand in emerging markets in expected to increase. This is only a prediction, which cannot be guaranteed. Let's assume for a moment that demand in emerging markets skyrockets over the next decade. Like with most new items, the demand in those countries could reach a plateau and will likely not be as profitable as expected. There's also a possibility that industry could fail miserably abroad. The firm fails to outweigh the varying outcomes of precious metals in emerging countries.

In granting all assumptions, we'll assume that the precious metals industry will thrive aboard in emerging markets. How will that profit domestic investments? How will that impact demand in the United States? What about the supply for these metals or fees associating with importing/exporting? There are various elements to attribute to how well any given product does in a market.

The investment firm argues that investors to invest in the precious metals industry based. The argument is based on limited historical data and predictions, and therefore is flawed.