Comment: Stocks vs. the gentleman's PM : the case of silver & case for it

(See in situ)


Cyril's picture

Stocks vs. the gentleman's PM : the case of silver & case for it

I made the following point recently to someone complaining about silver and its relatively disappointing performance as a good store of capital value (savings) over the last two years...

"See, I don't see silver as strict investment per se. It's not about yield as with stocks where you gamble - in the strict sense, for the latter.

You complain about silver, manipulated or not, over the last 2 years, somehow disappointing and as an "eroding" investment. Granted, it could have been better, if only in support, after its promising surge of 2011.

But see, AFAIC, I don't contemplate my future within a 2 year window. That is more in the decade ballpark - at minima... So, shall we see, for silver? But let us take just the last 5 years.

Yes, let us gauge. Take the official CPI average from the Bureau of Lying Statisticians... who reports a 2.5% inflation per year, tops, thanks to the Fed policies. Or take the shadowstats equivalent, with a 5% CPI-like average instead...

Let us consider the latter, first. 5% inflation / year over 5 years = an outrageous 27.6% total, after those 5 years.

Now, silver... Say you decided to stack just $100 worth of it per year, since 2008.

In 2008, 2009... Avg. AG price = $13/oz, so you'd have got 14 ounces by 2010.

Then, 2010: at $15/oz, you got 6 more.

Then 2011: $33/oz (avg.) you got 3 ounces only, and idem in 2012, at $30/oz.

Thus, in 5 years, you spent $500 (in fiat USD) to get your 26 ounces total.

You decide to dump it all, now... At $30/oz: 30 * 29 = $870.

Then you compute: 1.276 * 500 = $638... Then 870 - 638 = $232.

And finally 638 - 500 = $138 : that's what inflation would have eaten if you hadn't stored your wealth in silver.

(an item that'd have cost $500 in 2008 would cost $638 today, and $232 would be the extra left from storing value in silver, prior to using its purchasing power later on)

Still, disappointing, silver? Well, depends, certainly not over the last 5 years or more, past the Hunt brothers story of 1980.

And here is the sweet spot: would you believe what the BLS says with 2.5% inflation / year... You're even more of a winner, at 13% inflation "only" since 2008:

500 * 1.13 = 565, and 870 - 565 = $305."

(an item that'd have cost $500 in 2008 would cost $565 today, and $305 would be the extra left from storing value in silver)

Hence, bottom line questions:

do you see any clue of an inverted slope for long term silver?

If you don't, then you can see immediately the only reasonable thing to do, not to become "rich", but at least escape the banksters' large scale theft.

Could you say the same about putting your fiat dollars in stocks... for an overall yield expected 5 years later?

AFAIC, I am really NOT sure anyone could... EVER.

'Makes sense?

Enjoy re-doing this friendly 12 year old Math for yourself... Say, since 2000...

:)

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius