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.
ANSWER:
As mentioned by the author, precious metals, such as gold and silver, have proven to be profitable investments for the firm. The author claims that the demand of these metals is expected to increase, driven by the economic growth of large emerging markets like China, India, and Russia. Hence, the investors of the firm should increase their exposure to precious metals and take advantage of the whole scenario. Though this claim may well have merit, the author has reasoned poorly to arrive to the conclusion based on several premises and assumptions. Hence, we cannot accept this fractured argument presented by the author as a valid one.
The primary issue with the author's reasoning lies in his unsubstantiated premises. The author claims that the demand for the precious metals is expected to increase because of the economic growth of large emerging markets. Although this can be true, the author fails to provide evidence that the economic growth of these nations will trigger a stronger demand for the precious metals. Also, the author mentions that the investment in these precious metals is one of the most profitable investment strategies for the firm. He fails to provide more information about other investment strategies of the firm that might bring even more profitability as compared to investment in precious metals.
In addition, the author also makes several assumptions to arrive at his conclusion, which remain unproven. Firstly, the author assumes that these emerging markets are not capable of meeting their demands for precious metals like gold and silver. He assumes that the emerging markets will require the services of his firm to meet their demands. Secondly, the assumption that the firm will provide the most reasonable price for these metals is baseless. There might be other competitors offering a better price for the same commodity, hence increasing exposure to these metals wont really help in increasing the profitability of the firm. The author weakens his argument by making assumptions and failing to provide links between them and the argument.
While the author has made assumptions, the argument he makes is not entirely baseless. The author could provide an insight to his firm, by stating facts, which qualifies it to become a major gainer due to the increase in demand of the precious metals. He could provide information regarding similar previous trends that have furnished similar opportunities to increase the firm's profits. If the author somehow could also equip us with information which point to fact that the various countries of the emerging markets are not capable of meeting their own requirements of these metals, the argument could be strengthened. Though there are several issues with the author's reasoning at the moment, he could improve his argument significantly.
In sum, the author's argument is based on unsupported premises and unsubstantiated assumptions that render his conclusion invalid. The author should restructure his argument, providing sound reasoning to convince people to accept his point of view.
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.
ANSWER:
As mentioned by the author, precious metals, such as gold and silver, have proven to be profitable investments for the firm. The author claims that the demand of these metals is expected to increase, driven by the economic growth of large emerging markets like China, India, and Russia. Hence, the investors of the firm should increase their exposure to precious metals and take advantage of the whole scenario. Though this claim may well have merit, the author has reasoned poorly to arrive to the conclusion based on several premises and assumptions. Hence, we cannot accept this fractured argument presented by the author as a valid one.
The primary issue with the author's reasoning lies in his unsubstantiated premises. The author claims that the demand for the precious metals is expected to increase because of the economic growth of large emerging markets. Although this can be true, the author fails to provide evidence that the economic growth of these nations will trigger a stronger demand for the precious metals. Also, the author mentions that the investment in these precious metals is one of the most profitable investment strategies for the firm. He fails to provide more information about other investment strategies of the firm that might bring even more profitability as compared to investment in precious metals.
In addition, the author also makes several assumptions to arrive at his conclusion, which remain unproven. Firstly, the author assumes that these emerging markets are not capable of meeting their demands for precious metals like gold and silver. He assumes that the emerging markets will require the services of his firm to meet their demands. Secondly, the assumption that the firm will provide the most reasonable price for these metals is baseless. There might be other competitors offering a better price for the same commodity, hence increasing exposure to these metals wont really help in increasing the profitability of the firm. The author weakens his argument by making assumptions and failing to provide links between them and the argument.
While the author has made assumptions, the argument he makes is not entirely baseless. The author could provide an insight to his firm, by stating facts, which qualifies it to become a major gainer due to the increase in demand of the precious metals. He could provide information regarding similar previous trends that have furnished similar opportunities to increase the firm's profits. If the author somehow could also equip us with information which point to fact that the various countries of the emerging markets are not capable of meeting their own requirements of these metals, the argument could be strengthened. Though there are several issues with the author's reasoning at the moment, he could improve his argument significantly.
In sum, the author's argument is based on unsupported premises and unsubstantiated assumptions that render his conclusion invalid. The author should restructure his argument, providing sound reasoning to convince people to accept his point of view.
