Crunching The Numbers

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.

    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.


    About the Author

    turd [at] tfmetalsreport [dot] com ()


    Nov 27, 2012 - 6:18pm

    DPH - *Based on $28 silver

    I had read that ZH article a few weeks ago. What doesn't make sense to me, is if you have to use your stack during a time of high inflation, presumably, the S has already HTF. If that's the case, I don't see silver being anywhere close to $28./ozt. In a period of high inflation, everything, including silver, will be going up.

    So, if you need $3000 per month for expenses, for a duration of 18 months.... $3K x 18 -= $54K

    @ $28/ozt: 54K/28 = 1928 ozt.... but if silver is $75/ozt, then you only need 54K/75 = 720 ozt. If it's $125/ozt then you only need 54K/125 = 432 ozt. If you were smart enough to buy that silver when it was $28/ozt then you are way ahead of the masses. So, it all depends on the price of silver when the SHTF, and where it goes thereafter.

    I hope that's helpful to someone.

    Nov 27, 2012 - 6:21pm

    wuda ya know....

    Warren Buffett has endorsed JPMorganChase CEO Jamie Dimon to succeed Timothy Geithner as Treasury secretary.

    Nov 27, 2012 - 6:26pm

    Depth Perspective

    CME Declares Force Majeure Due To “Operational Limitations” On NYC Gold Depository

    Someone was mentioning earlier about the link above and MTB's inability to deliver gold and it's proximity to the NY Fed and how deep the vaults were etc. So I dragged out a post I did the weekend of 'Sandy' giving some perspective on depth in NYC.

    Video unavailable

    The Federal Reserve Bank of New York maintains a vault that lies 80 feet (24 m) below street level and 50 feet (15 m) below sea level,[8] resting on Manhattan bedrock.

    Stock Footage - Gold and the Federal Reserve


    The Key to the Gold Vault - Federal Reserve Bank ...

    New Yorkers go about unaware of what is happening just beneath their feet: Power pulses, information flies, and steam flows. The city’s infrastructure starts just below street level, but it doesn’t stop there. (click the tiny link at bottom for scale)

    Nov 27, 2012 - 6:28pm

    adjustment of lifestyle

    During a period of catastrophic inflation you also have to take into consideration the fact that everyone will have to adjust their standard of living. For example, you may start out by eating the food you have stacked. Then, when that is gone maybe you have to eat less meats or less qaulity meats. You might have to eat a lot of beans maybe and just an oz or 2 of meat every day. Folks will have to move back in with parents. We will be forced to share expenses. Family's will have to get rid of extra cars and any luxory's that are not deemed necessary. If this event happens it will be very inconvenient. And, the event you will want to avoid is having to cash in your stack of silver unless it is absolutely necessary. Hopefully this won't happen for awhile.

    Nov 27, 2012 - 6:40pm

    StackaSaurus... Says Stand By

    StackaSaurus... Says Stand By For Advanced Math...

    FIAT * Infinity = Zero

    Silver * Time = To Da Moon Alice...

    Fearful Symmetry.... !

    ...............StackaSarus Is Sending this Math To The Nobel Committee In Sweden and waiting patiently for the FedEx truck to arrive with his package........... :o)

    Nov 27, 2012 - 6:49pm

    I did something similar to

    I did something similar to disprove a troll some time ago on ZH. He made a big deal about how much money I had lost people based on my "calls" where I told people to "buy at the top". Of course, when I went back to when I first started advocating that people purchase physical silver every month, using his metrics, I showed that anyone doing what I had ACTUALLY SAID would have made some ridiculous amount of money, like $8 million or something.

    Sucks to be Turd, where his cost average is hovering around break even. My cost average still maintains a 20 handle. We advocate the exact same thing.

    Eric Original
    Nov 27, 2012 - 6:55pm

    Hello bucktooth!

    Hello bucktooth!

    Frankly I don't even remember making that post. But it's hard to remember all of some 10,000 odd (perhaps very odd) posts since blogspot. But hey, if I helped, I'm glad.

    Nov 27, 2012 - 7:14pm

    You can't look at future dollar values,they are nonsense...


    I think you missed the point.

    Silver and Gold will likely not increase your real wealth at all, it will just protect your wealth across the next transition....

    It is a non productive asset whose real value is unchanging.

    If a car equals 1oz of gold... then does it matter if the car 10,000,000 dollars and gold is 1,000,000/oz

    or that a car is $10 and gold is $1 an oz.

    The gold and silver are there to protect your wealth as the term "dollar" represented by paper money looses all meaning.

    I bought a Zimbabwe 100 billion dollar bill on ebay, in old Zimbabwe dollars I'm a billionaire....

    If we see dollar hyper inflation you might be a billionaire and still not be able to afford to eat....

    So when you say hey but when I need to spend it it will be 75/oz you missed the point, if its 75/oz (ie double) food and everything else will also be double. You can't assume that silver will double and the other expenses will stay the same.

    So if your current standard of living costs are $5000 a month and you want to maintain that standard of living for 4 yrs (48 mo) you need to have saved/stored 240,000 dollars of today's value.

    Now while that bar is set pretty high you may find that if you only saved 24K and everyone else saved nothing you may be far better off than everyone else, but you will still likely see your standard of living fall.

    Read some of the first person accounts of the collapse in Argentina or Czechoslovakia, everyone's standard of living fell precipitously, just less so for the prepared.... the prepared were not forced to rent out their wife in trade for a canned ham, so their kids did not starve.... (I'm not making this up, its an actual example)

    Silver and gold really are non productive assets, they are also about the only vehicle other than farm land I see for preserving the wealth you have across whatever comes next....

    If you are without much real wealth then one should also probably plan on acquiring skills that will be universally useful in all situations... much as Katie has done with learning to farm.

    Nov 27, 2012 - 7:24pm

    I'm a 49er as well with this

    I'm a 49er as well with this bad boy and some others. What ever happened to personal responsibility. I bought the hype, my fault. Lesson learned.

    Mr. Fix
    Nov 27, 2012 - 7:31pm

    A few words on Manfra, Tordella and Brooks

    Manfra, Tordella & Brookes, Inc. | Palladium Bars, Collector Coins ...

    I have been to this particular establishment on several occasions over the past few years.

    I'm not sure why it didn't occur to me earlier,

    but as I was reading the story on zero hedge,

    I realized just how familiar the name sounded.

    Since I take “if you can't coach her hands on it you don't own it" seriously,

    I feel uneasy sending such a vast sums of hard-earned Fiat to somebody on the Internet and then patiently wait to see if I get anything back.

    (A although I do this often enough with silver).

    Their offices at 90 Broad Street are at least a couple of floors below street level

    when you walk in the street, there is an armed guard standing at the only door in the hallway.

    You enter the door, and there is one telephone on the desk, and you have to call to get the next door opened.

    They will ask you why you are there,

    I replied for the purpose of purchasing gold eagles.

    The door buzzes, you walk in to another room that has nothing but an elevator in it.

    The elevator only goes down,

    and he goes down quite a ways, I am only guessing , but from what I can recall, it travels down at least two stories.

    When you leave the elevator, there is a small room with two doors, each leading to a bulletproof transaction room that has locks on the doors.

    Upon entering, you are in a room that is about the size of a closet, and not a big one at that. The wall at one end, has one inch-thick bulletproof glass,

    with an amazingly small cubbyhole at desktop level for the exchange.

    On the other side of the glass, is a very large room that looks like a modern office, with lots of people walking around, and you can see video screens on the walls

    with charts and graphs that keep the people current on the spot price.

    When I researched them years ago, I found that there premiums were far lower than what I could find online.

    As an extra added advantage, there is no shipping, since I just hand them the money and they hand me the Eagles.

    They ask you what I want, and I replied with the number of eagles that I was purchasing.

    He added up the price, and asked for payment in cash in full. On the other side of the glass was also a counting machine, where large stacks of $100 bills could be quickly counted.

    Upon receipt of my Eagles, the door buzzes, and it allows me to return to the elevator.

    When I finally get to street level, it's handy having a getaway car warmed up and ready to go at curbside.

    The street where my getaway car would have been waiting for me was under at least 8 feet of water at the height of Sandy.

    I can't imagine how much work it would entail to drain the basement of this particular building, especially after a week of no electricity.

    So from my particular perspective, the damage done to this business was catastrophic,

    but that is certainly no excuse for the COMEX reneging on their contracts.

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