GMAT Essays (AWA)

hello Experts,
This is my second attempt at AWA Essay - could some expert/members please comment/rate this:

==============================================================

ESSAY QUESTION:

"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."

Discuss how well reasoned you find this argument. Point out flaws in the argument's logic and analyze the argument's underlying assumptions. In addition, evaluate how supporting evidence is used and what evidence might counter the argument's conclusion. You may also discuss what additional evidence could be used to strengthen the argument or what changes would make the argument more logically sound.

==========================================================

YOUR RESPONSE:

The investments in precious metals such as gold, silver, since time immemorial, has always been one of the open secrets of investment. The strategy memorandum of the investment company is only seems to be encouraging the same trend. But with the changing time, for the investors the investment horizons, investment corpus and investment reasons have undergone a radical change; so without having a sound analysis/reasoning it will be unwise to send out the advisories to investors to invest in precious metals. We will analyze and further dissect the investor companies' argument and will arrive at a conclusion by the end of this article.

The premise of the investment company is that any investment which is good for the company will necessarily be good for the investors as well. This is not correct. A company can diversify its portfolio across countries and continents to hedge against risks which is not true for an average investor. Besides a company regularly makes a buy/sell decision based on the evolving market scenario. An average investor doesn't have the time, tools and technique to do the same. So it will be risky to promulgate that all investors of the investment company invest in precious metals.

Additionally, there are several assumptions based on which the investment company has reached an incorrect conclusion. Firstly, it is assumed that the past profits are guarantee for future profits as well. The argument fails to consider the theory which some other investment companies put forward that the bull run in precious metals have come to an end now, and it might be the beginning of a bear run. So this company might be lucky to have ridden a bull phase which may or may not run for next decade. What it also assumed is that political/military stability will prevail for the next decade in China/India/Russia and/or other emerging markets. Political/Military instability is always followed by the drop in metal prices.

However, the argument can be strengthened if more data is supplied on the future trend in terms of demand/supply of precious metals, the political/military outlook for the emerging countries for next decade, and the risk appetite of investors.

Overall, the argument starts off well, but veers off course primarily in absence of further data and unsubstantiated assumptions. With all this data at hand and with smart assumptions we can, within the boundaries of arguments, accept that the investment in precious metals can be profitable for next decade.