Hello,
Can you please rate this essay? Thanks for your help
Best Regards,
Sri
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ESSAY QUESTION:
The following appeared in a strategy memorandum of an investment company:
"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:
In this argument the author is saying that for the past several years, investment in precious metals such as gold and silver has proven to be the most profitable investment strategy for his investment company. The author is expecting the demand for gold and silver to be strong during the next decade mainly due to the economic growth of large emerging market countries like China, India and Russia. Hence, the author is arguing that the investors of his investment firm would be best served if their exposure to metals such as gold and silver are increased so that they can make a lot of money from their investments.
Though the author does have a valid point that precious metals like gold and silver have a good growth potential largely due to the above mentioned emerging market countries it might not be such a bad idea for the investment firm's investors to diversify their portfolios a bit so that they don't have all their eggs in one basket and are therefore spreading their risks.
In his opening argument the author mentions that over the past several years metals like gold and silver have proven to be one of the most profitable investments for his firm. Is it possible that these were due to economic turmoils in developed countries and currency devaluations in developing/under developed countries which contributed to this increase in the value of gold and silver? What if the instability posed by these external conditions have now subsided or have gone away altogether? In such a case though gold and silver might still be a profitable investment due to growth in China, India and Russia it might not be the most profitable one.
Precious metals like gold and silver have historically been used as a hedge against inflation and in the recent past against currency devaluations. The author does not mention how investment in metals like gold and silver provided the firm with the most profits. Is it because of the firms investment strategy, in which case it might not be such a bad idea for the firms investors to increase their exposure to these metals. If it has less to do with the firms investment strategy and more to do with external factors, then it might not be such a great idea for the firms investors to significantly increase their exposure to gold and silver. Unless it is known how the firm has fared compared to it's benchmark for precious metals or compared to other firms that also invest in precious metals, it is hard to conclude that just because during the past this strategy was successful, in the future too this strategy will work.
The author is also mentioning that economic growth of emerging markets will increase the demand for gold. Though this might be true given the rise of the moneyed class in these countries, it can also happen that instead of precious metals the people living in these countries might pour their investments in real estate and property markets which usually appreciate more in value than gold. Also, one of the main goal of this investment firm might be to protect investor's wealth. Hence, though gold and silver might be profitable over the next decade, just investing only in gold and silver can be a risky and possibly a dangerous strategy for investors.
Hence, though this is a valid argument in conclusion it's never a bad idea for the firm to have its investors invest in multiple assets and not just gold and silver.
Can you please rate this essay? Thanks for your help
Best Regards,
Sri
-----------------------------------------------------------------------------------------------------
ESSAY QUESTION:
The following appeared in a strategy memorandum of an investment company:
"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:
In this argument the author is saying that for the past several years, investment in precious metals such as gold and silver has proven to be the most profitable investment strategy for his investment company. The author is expecting the demand for gold and silver to be strong during the next decade mainly due to the economic growth of large emerging market countries like China, India and Russia. Hence, the author is arguing that the investors of his investment firm would be best served if their exposure to metals such as gold and silver are increased so that they can make a lot of money from their investments.
Though the author does have a valid point that precious metals like gold and silver have a good growth potential largely due to the above mentioned emerging market countries it might not be such a bad idea for the investment firm's investors to diversify their portfolios a bit so that they don't have all their eggs in one basket and are therefore spreading their risks.
In his opening argument the author mentions that over the past several years metals like gold and silver have proven to be one of the most profitable investments for his firm. Is it possible that these were due to economic turmoils in developed countries and currency devaluations in developing/under developed countries which contributed to this increase in the value of gold and silver? What if the instability posed by these external conditions have now subsided or have gone away altogether? In such a case though gold and silver might still be a profitable investment due to growth in China, India and Russia it might not be the most profitable one.
Precious metals like gold and silver have historically been used as a hedge against inflation and in the recent past against currency devaluations. The author does not mention how investment in metals like gold and silver provided the firm with the most profits. Is it because of the firms investment strategy, in which case it might not be such a bad idea for the firms investors to increase their exposure to these metals. If it has less to do with the firms investment strategy and more to do with external factors, then it might not be such a great idea for the firms investors to significantly increase their exposure to gold and silver. Unless it is known how the firm has fared compared to it's benchmark for precious metals or compared to other firms that also invest in precious metals, it is hard to conclude that just because during the past this strategy was successful, in the future too this strategy will work.
The author is also mentioning that economic growth of emerging markets will increase the demand for gold. Though this might be true given the rise of the moneyed class in these countries, it can also happen that instead of precious metals the people living in these countries might pour their investments in real estate and property markets which usually appreciate more in value than gold. Also, one of the main goal of this investment firm might be to protect investor's wealth. Hence, though gold and silver might be profitable over the next decade, just investing only in gold and silver can be a risky and possibly a dangerous strategy for investors.
Hence, though this is a valid argument in conclusion it's never a bad idea for the firm to have its investors invest in multiple assets and not just gold and silver.
