Crunching The Numbers

303
Tue, Nov 27, 2012 - 4:04pm

Lately, it seems that a day doesn't go by without me receiving a comment or an email from somebody complaining about how they're "still getting their butt kicked in silver because they bought in April of 2011". Since I've consistently advocated the regular stockpiling of physical metal for over two years now, I thought it might be fun, and worth the time, to crunch some numbers to see just how bad it could be for some folks.

First of all, I don't think that anyone whose only purchases of silver came in April of 2011 is still a regular reader of this site. Additionally, that this disgruntled, non-reader of the site would then take the time to email me seems a little far-fetched. Nonetheless, let's roll with it.

Below is the hard data. I began this blog/site on 11/11/10, so, let's measure two things:

  • A Turdite who decided, based upon my strong convictions, to purchase a tube of eagles every two weeks, regardless of the cost.
  • A Turdite who decided to take $500 out of his/her paycheck every two weeks to purchase as many Eagles as $500 would buy, based upon the current price.
  • I have not included premiums or sales tax. I'll let you adjust and figure that out for yourself.
  • DATE PRICE TUBE COST OR OUNCES BOUGHT COST

    11/12/10 25.94 $518.80 19 $492.86

    11/26/12 26.70 534.00 18 480.60

    12/10/10 28.58 571.60 17 485.86

    12/24/10 28.88 577.60 17 490.96

    1/7/11 28.66 573.20 17 487.22

    1/21/11 27.42 548.40 18 493.56

    2/4/11 29.06 581.20 17 494.02

    2/18/11 32.30 646.00 15 484.50

    3/4/11 35.32 706.40 14 494.48

    3/18/11 35.06 701.20 14 490.84

    4/1/11 37.74 754.80 13 490.62

    4/15/11 42.57 851.40 11 468.27

    4/29/11 48.58 971.60 10 485.80

    5/13/11 35.01 700.20 14 490.14

    5/27/11 37.86 757.20 13 492.18

    6/10/11 36.33 726.60 13 472.29

    6/24/11 34.64 692.80 14 484.96

    7/8/11 36.54 730.80 13 475.02

    7/22/11 40.11 802.20 12 481.32

    8/5/11 38.20 764.00 13 496.60

    8/19/11 42.43 848.60 11 466.73

    9/2/11 43.02 860.40 11 473.20

    9/16/11 40.78 815.60 12 489.36

    9/30/11 30.04 600.80 16 480.64

    10/14/11 32.14 642.80 15 482.10

    10/28/11 34.07 681.40 14 476.98

    11/11/11 34.67 693.40 14 485.33

    11/25/11 31.01 620.20 16 496.16

    12/9/11 32.17 643.40 15 482.55

    12/23/11 29.04 580.80 17 493.68

    1/6/12 28.65 573.00 17 487.05

    1/20/12 31.65 633.00 15 474.75

    2/3/12 32.73 654.60 15 490.95

    2/17/12 33.20 664.00 15 498.00

    3/2/12 34.48 689.60 14 482.72

    3/16/12 32.57 651.40 15 488.55

    3/30/12 32.47 649.40 15 487.05

    4/13/12 31.38 627.60 15 470.70

    4/27/12 31.35 627.00 15 470.25

    5/11/12 28.86 577.20 17 490.62

    5/25/12 28.37 567.40 17 482.29

    6/8/12 28.46 569.20 17 483.82

    6/22/12 26.66 533.20 18 479.88

    7/6/12 26.89 537.80 18 484.02

    7/20/12 27.28 545.60 18 491.04

    8/3/12 27.79 555.80 18 500.22

    8/17/12 28.00 560.00 17 476.00

    8/31/12 31.37 627.40 15 470.55

    9/14/12 34.60 692.00 14 484.40

    9/28/12 34.52 690.40 14 483.28

    10/12/12 33.63 627.60 14 470.82

    10/26/12 32.01 640.20 15 480.15

    11/9/12 32.59 651.80 15 488.85

    11/23/12 34.11 682.20 14 477.54

    If you had purchased a tube of Eagles every two weeks since this blog/site began, you would now own 54 tubes or 1080 ounces of silver. This would have cost you $35,524.80 and your average cost per ounce would be $32.89.

    If you had decided to, instead, buy $500 worth of Eagles every two weeks since this blog/site began, you would now own 810 ounces of silver at an average cost of $32.29.

    If you came late to the party and only began your tube-every-two-weeks extravaganza on 4/15/11 with the price at $42.57, you'd now own 860 ounces at an average cost of $33.50/ounce.

    What if you only bought a tube on 4/15/11 and 4/29/11 and then took the summer of 2011 off? You were then lured back in by the S&P downgrade of 8/5/11 but scared off again after the steep drop in September. Convinced we'd seen the lows by late 2011, you then bought a tube every two weeks in 2012. If so, you'd have 600 ounces of silver at an average cost of $33.23/ounce.

    Maybe you did precisely as above, buying only six times and on those exact same dates in 2011. Then you only restarted buying just as price peaked in late February of this year. You'd now own 520 ounces at an average cost of $33.49/ounce.

    And what if you're just the unluckiest sap on the planet. Dumb as a box of rocks and easily duped into buying only when ole Turd gets over-the-top excited. You made just 12 purchases and you bought on 4/1/11, 4/15/11 and 4/29/11, 8/5/11, 8/19/11 and 9/2/11, 2/3/12, 2/17/12 and 3/2/12, 8/31/12, 9/14/12 and 9/28/12? In that case, you'd be the proud owner of 240 ounces of shiny silver at an average cost of $37.78.

    Feel free to fiddle with these numbers as much as you'd like. Construct your own best case and worst case scenarios. Add in an acceptable dealer premium and your local sales tax. Whatever. Have fun with it. The point is this:

    Your best strategy is to be consistently buying physical metal, either gold or silver, regardless of price. Sometimes you'll buy high and sometimes you'll buy low. Most importantly, however, you'll be slowly accumulating a sizeable position in the only assets guaranteed to protect your savings and purchasing power against the constant devaluation of the dollar, brought upon us by our politicians and bankers.

    BTFD or BTFR, it doesn't matter. Just buy.

    TF

    About the Author

    Founder
    turd [at] tfmetalsreport [dot] com ()

      303 Comments

    Dyna mo hum
    Nov 27, 2012 - 5:41pm

    Turd

    DISCLAIMER: The charts and analysis provided here are not recommended for trading purposes. Trade at your own risk. The Turd provides knowledge not direction. Turd holds no liability for your trades and decisions but he's happy to take credit when credit is due, particularly through the "donate" button......... Some folks must just come here to gawk at the pictures.

    Bollocks
    Nov 27, 2012 - 5:43pm

    @Turd & all...

    I've just thought about how much I've been buying of the silver stuff, and how often, and it fits in really well with your Eagles-buying scenario (although I started stacking before your start date). I also made some big purchases in the low to mid 40's.

    You know, I've never really thought about it until now, because I've always been buying at any price over the last couple of years, and consistently - pretty-much every couple of weeks too, because I know it's the best investment I can make at these times (oh and I'm a gold stacker too).

    So it's quite strange to have read your post and not connected it to what I've been doing already, as a matter of course (over the last couple of years) - until now (I read your post about an hour ago).

    Having thought about it, well, I'm quite nicely up, and wouldn't give a damn if I wasn't as I don't want to keep my hard-earned in the clutches of the EE, so silver and gold are the perfect store of wealth for me. I'm in this for the long run, and in that I know I'll be a winner. As will everyone here who's stacking and isn't desperate to sell now.

    I guess those that are consistent buyers have a solid inner-sense that stacking at this time is by far the most sensible thing to do.





    ¤
    Nov 27, 2012 - 5:44pm

    Treasury: China is not currency manipulator

    Nov. 27, 2012, 5:37 p.m. EST

    Treasury says China is not currency manipulator

    By grobb[at]marketwatch[dot]com (Greg Robb), MarketWatch

    WASHINGTON (MarketWatch) — The Treasury Department on Tuesday again declined to name China a currency manipulator, citing progress in the emerging nation’s currency appreciation.

    In its semiannual report on exchange-rate policies, the Treasury said China’s currency remains “significantly undervalued,” and that “further appreciation of the [yuan] against the dollar and other major currencies is warranted.”

    President Barack Obama has argued that pressure from his administration has pushed the Chinese currency higher against the dollar.

    Treasury said that the yuan /quotes/zigman/4869230/sampled USDCNY 0.0000% has appreciated by 9.7% against the dollar since June 2010 and 12.6% when adjusted for inflation. Read the full report.

    Labeling China a “currency manipulator” would likely be more of a symbolic move, but it could have a trade impact. The designation would only trigger official talks between the United States and China over the value of the yuan.

    But analysts said the key impact of the label would be to give Congress a green light to impose tariffs on Chinese imports.

    Measures to slap punitive tariffs on Chinese products have long been popular in Congress, but have never cleared both chambers.

    Many U.S. manufacturers argue that China has held the value of its currency artificially low in order to lower the cost of its goods in the United States.

    Through September, America has run up a trade deficit in goods of $232 billion this year against China, according to Commerce Department data. That’s wider than the $217 billion trade gap through the same period of 2011.

    Supporters of free trade worry that the tariffs might violate World Trade Organization rules and could prompt Beijing to retaliate, as it has done so in other trade disputes.

    For this reason, a succession of U.S. administrations has argued that behind-the-scenes pressure was much more effective to get China to strengthen its currency.

    In a statement, Sen. Charles Schumer, a Democrat of New York who has complained about the impact of Chinese imports on manufacturers in his state, said he was disappointed in the decision. “It’s time for the Obama administration to rip off the Band-Aid, and force China to play by the same rules as all other countries,”..........

    https://www.marketwatch.com/story/treasury-says-china-is-not-currency-ma...

    silvercity
    Nov 27, 2012 - 5:45pm

    Dollar cost averaging

    This is a great strategy or has proved to be a great strategy for the last several years. But, this strategy isn't always great. We have been in a consolidation phase of this bull market since May of 2011. This has been a perfect time to dollar cost average. Is the consolidation over? It could very well be. At the least I believe it is almost over. I believe silver is going to creep higher going into 2013 and continue to do so. A period of rising prices is not a great time to dollar cost average. It is possible that every time you purchase you buy at higher prices. And, silver can explode higher in price. Very unpredictable. I continue to believe that we will have black swans coming in 2013 that will affect the price of silver to the upside and the moves will be violent. Things will happen that are impossible to predict that will blow our minds. At least that is my belief.

    Northern Border
    Nov 27, 2012 - 5:51pm

    How big should your stack be ????

    Till this day I cannot a find reasonable answer on how big of stack should 1 person have ???

    When do you finally say that you have "enough" of the shinny stuff?

    1,ooo oz's ?

    2,000 oz's ?

    5,000 oz's ?

    I would love to hear thoughts on this one.

    NB

    Dyna mo hum
    Nov 27, 2012 - 5:55pm

    Silvercity ?

    Perhaps violent moves like this? https://vidrebel.wordpress.com/2012/11/18/the-louisiana-sinkhole-the-new... This was an interesting read but the link will not work for me now..... strange

    ¤
    Nov 27, 2012 - 5:56pm

    Northern Border

    Check out the full article and vid at ZH...

    https://www.zerohedge.com/news/2012-11-17/guest-post-so-how-many-ounces-...

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

    Guest Post: So How Many Ounces Of Gold (Or Silver) Should You Own?

    "...Here are two tables -- one for gold and the other for silver -- Jeff offers in his newsletter to help investors calculate the requisite ounces needed to protect against rising inflation over time:

    The point here is that you're probably going to need more ounces than you think. Look at your bank statement and assess how much you spend each month – and do it honestly.

    The other part of the equation is how long we'll need to use gold and silver to cover those expenses. The potential duration of high inflation will dictate how much physical bullion we need stashed away. This is also probably longer than you think; in Weimar Germany, high inflation lasted two years – and then hyperinflation hit and lasted another two. Four years of high inflation. That's not kindling – that's a wildfire roaring through your back yard.

    So here's how much gold you'll need, depending on your monthly expenses and how long high inflation lasts.

    Ounces of Gold Needed to Meet Expenses During High Inflation
    Monthly expenses in US dollars Monthly expenses in gold, oz* Inflation Duration
    6 months 1 year 18 months 2 years 3 years 4 years 5 years
    $500 0.31 1.9 3.7 5.6 7.5 11.2 15.0 18.7
    $1,000 0.63 3.8 7.5 11.3 15.0 22.5 30.0 37.5
    $2,000 1.25 7.5 15.0 22.5 30.0 45.0 60.0 75.0
    $3,000 1.88 11.3 22.5 33.8 45.0 67.5 90.0 112.5
    $4,000 2.50 15.0 30.0 45.0 60.0 90.0 120.0 150.0
    $5,000 3.13 18.8 37.5 56.3 75.0 112.5 150.0 187.5
    $10,000 6.25 37.5 75.0 112.5 150.0 225.0 300.0 375.0
    $20,000 12.50 75.0 150.0 225.0 300.0 450.0 600.0 750.0
    *Based on $1,600 gold price

    If my monthly expenses are about $3,000/month, I need 45 ounces to cover two years of high inflation, and 90 if it lasts four years. Those already well off should use the bottom rows of the table. How much will you need?

    Of course many of us own silver, too. Here's how many ounces we'd need, if we saved in silver.

    Ounces of Silver Needed to Meet Expenses During High Inflation
    Monthly expenses in US dollars Monthly expenses in silver, oz* Inflation Duration
    6 months 1 year 18 months 2 years 3 years 4 years 5 years
    $500 17.9 107.1 214.2 321.3 428.4 642.6 856.8 1,071.0
    $1,000 35.7 214.3 428.5 642.8 857.0 1,285.6 1,714.1 2,142.6
    $2,000 71.4 428.5 857.0 1,285.6 1,714.1 2,571.1 3,428.2 4,285.2
    $3,000 107.1 642.8 1,285.7 1,928.5 2,571.4 3,857.0 5,142.7 6,428.4
    $4,000 142.9 857.1 1,714.2 2,571.3 3,428.4 5,142.6 6,856.8 8,571.0
    $5,000 178.6 1,071.4 2,142.8 3,214.3 4,285.7 6,428.5 8,571.4 10,714.2
    $10,000 357.1 2,142.6 4,285.0 6,427.8 8,570.4 1,2855.6 17,140.8 21,426.0
    $20,000 714.3 4,285.7 8,571.4 12,857.0 17,142.7 25,714.1 34,285.4 42,856.8
    *Based on $28 silver price

    A $3,000 monthly budget needs 1,285 ounces to get through one year, or 3,857 ounces for three years.

    I know these amounts probably sound like a lot. But here's the thing: if you don't save now in gold and silver, you're going to spend a whole lot more later. What I've outlined here is exactly what gold and silver are for: to protect your purchasing power, your standard of living."

    https://www.zerohedge.com/news/2012-11-17/guest-post-so-how-many-ounces-...

    Mudsharkbytes
    Nov 27, 2012 - 6:08pm

    Then you have the poor unfortunate souls…

    .…like my son who went all in on silver the last Saturday in April 2011 on his fathers advice and hasn't spent a penny on silver since, he's so disgusted. He swears the minute silver hits the point where he can break even he's selling it all. I'm going to try to talk him out of that but in his eyes I lack a certain amount of credibility.

    Northern Border
    Nov 27, 2012 - 6:09pm

    @ DPH

    Thanks ! I have read that article in the past. Yes it gives a good guideline but I don't think its a real world example. I know personally, I will not be "paying" my monthly fiat bills with my stack.

    I personally believe when it is re-monetized, I should be able to walk into my bank and pay off the note's on my land loans with physical metal. That will be the only instance I would trade physical for something else physical.

    Dyna mo hum
    Nov 27, 2012 - 6:12pm

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