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Intern
Joined: 03 Mar 2013
Posts: 6
Location: United States
GMAT 1: 740 Q50 V40
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07 Mar 2013, 20:33
Hello Forum,

I have only a week left for my GMAT and now is the time to focus on AWA section which I have been ignoring all the while. I would be grateful, if anyone could rate my essay or at least suggest me how to improve it. I wrote it as a part of Manhattan practice test. Thanks a lot in advance. If anybody has the rating software, is it possible to check how much this essay can get me in the real GMAT?

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.”

In this argument, the author concludes that the firm should invest more in precious metals in order to take advantage of the expected rise in demand for these metals. To strengthen the argument, author states that over the past several years, investment in precious metals has proven to be one of the most profitable investment strategies of the firm and economic growth of large emerging markets indicates a higher demand for these metals over the next decade. While the argument does have some merit, it omits some important concerns which must be addressed to substantiate the argument. The argument is based on two underlying assumptions (1) Economic growth of large emerging markets will continue over the next decade, causing a strong demand for precious metals, and (2) Investment in precious metals is a unique profit-making opportunity.

First, the argument assumes a direct relation between economic growth of emerging markets and the demand for precious metals. However, the growth of emerging market alone does not constitute a logical argument in favor of strong demand for precious metals. It assumes the same growth pattern for emerging markets over the next decade, while ignoring the possibility of unexpected events such as economic downturn or a war-like condition in these countries. The author fails to consider other economic factors that need to be considered to substantiate the argument, such as population growth and inflation which can cause growth of emerging markets to slow down over the next decade.

Second, The argument never addresses the other opportunities that firm must look for, in order to reach the conclusion that investing in precious metal is unique profit-making opportunity. Growth of emerging markets may cause other opportunities as well which can have more rate of return than precious metals do. For example, investment in real estate can be more profit making than investment in precious metal. Since, the gold and silver prices has been rising over past several years, it is possible that the prices become stagnant now and this investment may not be as profitable in the next decade as it has been in past.

Finally, The argument does not establish a relationship between economic growth of emerging countries and the high demand for precious metals. Neither does it provides any logic to support the projection of supposed growth of emerging markets over the next decade.

In conclusion, the argument leaves out several key issues, so it is not sound and persuasive. The author could bolster the claim by presenting evidences in favor of projected economic growth in emerging countries in the next decade and comparing the investment in precious metals with other types of profit making investments. Ultimately, the argument would have been more thorough and convincing if it included the items discussed above instead of solely establishing a cause and effect relationship between growth of emerging markets and demand for precious metals, to conclude that investment in precious metals is the most profitable investment strategy for the firm.
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