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 ()


    The Watchman
    Nov 27, 2012 - 11:26pm
    thecoloredsky beardeus
    Nov 27, 2012 - 11:29pm


    I was under the impression a major component of hyperinflation wasn't necessarily the amount of dollars circulating, but the velocity of which those dollars circulate, which can be brought on by emotions; something that cannot be easily contained. The guy from shadowstats updated his prediction by the end of 2014 will be US hyperinflation. I'd say the timing is anyone's guess!

    S Roche
    Nov 27, 2012 - 11:31pm

    Nick Laird

    Nick Laird is great, he has been around forever and used to go toe-to-toe with "Another" back in the day. His web-site has a huge amount of information for detailed research and he is a really helpful, genuine low-key guy.

    treefrog Mudsharkbytes
    Nov 27, 2012 - 11:33pm


    sounds logical. the amount of silver that erodes (?) from the surface is at the nano - level (pico? femto?). it would take a long (very long) time to run out of the silver even in a plated pitcher.

    Nov 27, 2012 - 11:46pm
    Katie Rose
    Nov 27, 2012 - 11:54pm


    I just bought four sets of sterling silverware for the family for Christmas. That is all they are getting from me, and all that I can afford.

    We are going to be using it as our every day silverware. Before I bought it I asked the recipients what they thought of the idea, and they were all thrilled.

    I'd love to know where you got the silver pitcher, and how much it cost. It would be a great thing to have to keep my raw milk in.

    I keep looking back to medieval Europe. During the times of the plagues, the aristocrats who ate and drank off of silver dishes and silverware fared much better than the common folk. I'm sure there were other factors involved, but silver certainly had to play a part in their living and not dying.

    edit to add:


    I asked my silver seller about silver plated silverware. He told me the process of silver plating changes the composition of the silver. It was his informed belief that if I wanted the health benefits from silver, sterling silver is the only way to go.

    I learned an important lesson. I usually buy from one dealer and pay a higher premium. He often will hold back sending the coins to me till I have enough to justify the cost of actual postage.

    When I went looking for sterling silverware I first checked e-bay, amazon, etc. It was out of my reach financially.

    So I called up my friend/dealer and asked him to help me find some affordable sterling silverware. He found six very simple place settings, and because of my relationship with him, sold them to me at his cost. A friend is buying the extra two settings from me that I do not need. She is happy. I am happy.

    I made up, and then some, for the higher premiums in this one purchase.

    I found, for me, having a personal relationship with a dealer/LCS is really the way to go.

    El Gordo
    Nov 28, 2012 - 12:13am

    EG's Simplified Investment Policy

    If the price goes down, buy more. If the price goes up, hold what you've got.

    old tradesman
    Nov 28, 2012 - 12:19am


    silver dollar in a glass pitcher does fine, especially with raw milk

    Nov 28, 2012 - 12:31am

    Glad I didn't stack in the $40s

    Silver first entered my Joe Shmoe investing radar in 2010 when it hit the $40s. I was getting ready to jump on the bandwagon, but did a little research, saw how jacked up that price was compared to a few years previous and thought better of it.

    Finally got into silver at $28 late this summer. The only thing I wish I had done was buy more at that time.

    I thought investing was about buying low and selling high. Seems like on here most people just say buy buy buy. Interesting. I can see their logic and it feels logical. My Joe Schmoe indoctrinated CNBC investment training logic sends off alarm bells when I see those posts. Hyperinflation is still a maybe, even Peter Schiff meekly said that on Capital Account today after being called out about it not happening. I think hyperinflation won't happen until the endless black hole of debt called the banking system is over filled with fake money. I'm not holding my breath.

    I can't forsake what I see in my world. My business is doing well. My own personal economy is doing great. I have decided I will keep half my wealth in fiat and half in silver. If silver goes up, I win. If silver goes down, I still win because in that case the dollar may be stronger and the economy may be doing better.

    old tradesman
    Nov 28, 2012 - 12:38am

    @ sat charge

    Im with you . But the dominos will fall. Watch this

    El Gordo
    Nov 28, 2012 - 12:43am


    Sounds like you are discovering the difference between an investor and a stacker. An investor is looking for a return, measured in terms of dollars. A stacker measures is seeking preservation of value rather than a return. Besides, that investing concept is just too complicated for a plain old stacker like me.

    pbreed thecoloredsky
    Nov 28, 2012 - 12:43am


    Hyper inflation is not normal inflation on steroids, it s different beast ....

    IMHO Hyprinflation is an attitude event where people loose confidence in the symbolic value of paper money.

    In some cases this is driven by the need to feed external demands in other cases its because of greshams law.

    Id really like to see more discussion of how the loss of world reserve currecny status by the U.S. will look, inflation, hpyer or otherwise?

    I see that whats happening is mathematically unsustainable, but I don't have a clear picture of what the end game will really look like?

    Could be:

    China stops taking fiat and demands commodities for trade...followed by everyone else.. then what?

    OPEC starts preferring gold or other commodities over dollars everyone stops using dollars as we are exporting out inflation to them...

    Anonymous leaks a secret FED memo indicating that there is no gold in Ft Knox and then Chia announces a gold back yuan then....

    We just keep wildly printing until we get real money supply driven inflation of 25% a year forever.... all savers are wiped out all debtors are given a get out of debt free card....

    not sure what the end game looks like but would like to see some wild speculation like the above...

    old tradesman
    Nov 28, 2012 - 12:57am


    OPEC starts preferring gold or other commodities over dollars everyone stops using dollars as we are exporting out inflation to them... Are you not up to date (opec is gone)

    old tradesman
    Nov 28, 2012 - 1:14am


    old tradesman
    Nov 28, 2012 - 1:26am
    the_circle beardeus
    Nov 28, 2012 - 2:03am


    Hyperinflation is an absolute certainty, it is happening at the moment. The dollar has already hyperinflated. The issuing of more currency (and attemp to induce an increase in velocity, which someone else mentioned) is the remedy centrals banks use to try to maintain stability.

    The fed is the principal buyer of the money it issues now, and it has ran out of short term treasuries to purchase. Russia, China and Japan don't use dollars anymore.

    Whenever foreign CB's stop holding dollars in reserve, the game is up. But the EE will string this baby out as far as they can, and try to take everyone down with them.

    old tradesman the_circle
    Nov 28, 2012 - 2:16am


    lost seven more asian countries on the obama tour Does anybody wonder why they want there gold reserves back?

    Because they dont need the dollars in there war chest. No trade no gold. So they bring it home. Check out the dry index....Wow sure is a big surplus of cargo containers.. Made by cheap labor in a foreign country. Apartments for everyone. Protect yourself now btfd

    Nov 28, 2012 - 2:29am

    GSR- up with silver price

    GSR- up with silver price down, some consolidation going on here, may move up a bit before further decline- in few days time max.

    Nov 28, 2012 - 2:36am

    HI happens after US$ loses its reserved currency role

    What's preventing HI in US$ from happening so far is its reserved currency role. When Weimar and Zimbabwe happened, neither had a global currency so when they printed like crazy the effect was concentrated in their local market to blow it up. US$ OTOH still plays its reserved role so the printing is shouldered by the entire world to spread the inflation pressure abroad.

    The day US$ loses its privilege will inevitably arrive probably after Euro collapses, and that's when all hell will finally break loose.

    old tradesman Rui
    Nov 28, 2012 - 2:57am

    HI happens after US$ loses its reserved currency role

    agreed but in all actuality didn't the dollar already loose its reserve status? Per bailing out Europe? And most of that is hidden with electronic transfers, In which they cant stop (in which case fraud is legal) so there can not be justice or criminal charges! If fraud or justice came into play at this time? (I'll let you figure that one out) Catch 22 (so far gone)

    currency wars and inflation between the G20 nations has ben going on for years. on an average of 12% since 2002, its just now coming into play. By my calculations in the last 3 months 22%. All of this will catch up!! Without manufacturing and job(700 million new jobs to catch up) This trend has just came to light. Do what turd says btfd

    Nov 28, 2012 - 3:05am

    @silver66 and others.....

    To follow up on 401k's/pensions from previous thread. Just got in from work and caught up. This has been in the works for some time.....(the ghiralducci lectures attest). This is a time buying robbery of citizens savings under the ruse of "we know better how to handle your money, look what happened to everyone's money when the markets crashed." Done before..... From the dollar vigilante.... "In late 2010 Hungary's government gave its citizens a choice: hand over all their savings to the government or lose all their state pension money. The government sought control over Hungarians' $14 billion in individual retirement accounts. The Bulgarian government did something very similar when it tried to transfer $300 million in private early retirement savings into a state pension scheme. They only managed to get roughly 20% of the funds they sought. Last year Ireland raided the private stash in the National Pension Reserve Fund with a 0.6% levy under the label of a “jobs plan” in order to bail out insolvent Irish banks." entire: Just to verify the reality of this....I looked around a little for this: Their kindness brings me to tears!

    Nov 28, 2012 - 3:07am

    Graphs are still FLAT

    It is in my opinion that we are still in the flat portion of the silver and gold graphs. Think about that...

    Nov 28, 2012 - 4:26am

    Comparison with December 2010 FDN

    I don't know how many of you also watch the declining "stand for delivery" numbers in silver on Harvey Organ. For me it has become a regular feature of the pre-delivery month, although it is a long time since I "expected great things". The drain out of contracts for delivery does not follow a set pattern during the last few days (I have looked hard) except that it always drains down to what seems to be a surprisingly low point.

    Many of you will know that this month the numbers are very high. Months with high numbers usually get high falls in the last days so that the actual deliveries are disappointingly normal.

    One very slightly exceptional month with rather high numbers (although not as high as this month) was November 2010. On that occasion Harvey expected FDN on 29 November and was very excited about the 16k standing for delivery. It was actually 30 November and 5k stood.

    Nevertheless it seems that delivery even on that quantity was not easy.

    the price of silver in dollars rose at that time from $23.00 to an intraday peak of $29.50 on deliveries of 5000 contracts and it did so in 10 trading days. I am convinced that the hold-back until FDN and the resulting spike were both due to delivery distress. $6.50 was almost 30% at the time, or an average of 3% per trading day (not compounded). I have popcorn.

    Nov 28, 2012 - 4:50am

    Question for technical boffins

    I have been banging on about the ellipse clearly forming in the XAG chart, which started at $28 in mid-August and still appears to be targeting $39 in mid-December (based on perfect symmetry, which is not that uncommon). This would mean more or less smoothly accelerating price rises on most days from about here to that point.

    My question: if this happened, what would the daily chart then look like from a technical perspective? Clearly the price would be above all the MAs. Would it appear grossly overbought and unbuyable, or would the prospect of regaining / taking out the all time high be interesting?

    I ask because I still don't really know whether to expect up ellipse - down ellipse or ellipse-spike.

    Another problem is that the parabola linking the tops since mid 2011 would in that scenario have rendered the October top irrelevant and created an excessive upslope. This sometimes happens if the right-hand half of the parabola is very skewed to the upside (as also in 2010). Nevertheless the parabolic shapes linking absolute tops and absolute bottoms are very robust and don't usually get breached. If it were not breached, we would see an attempt at rises over the next few days followed by a vicious flattening around $36 (manipulation/news/regulatory?).

    So if this happened - which I consider perhaps equally likely - what would the technicals then be like? My guess is better (less overbought), but I am not a chart boy.

    Edit PS: The October high of 2010 was rendered irrelevant - I just looked at it from the perspective of December 15 and it appeared to have breached but the parabola was still meaningful post hoc. But I know proper technical chart analysis does not include either ellipses or parabolas, which are my two main "tools" - although I don't really use them to trade or even for timing, I just watch and learn.

    Nov 28, 2012 - 5:18am


    Very high silver volume today in Netdania for morning trading.

    Is that accurate?

    Nov 28, 2012 - 5:33am

    Deleveraging in the USA households

    Looks like Household have destroyed about 1,5- 2 trillions of USD since 2008 buy paying of debt.

    I wonder how much Companies have destroyed. Total should closely balance money created by FED.

    This is total household debt from this report (where You get it with all the numbers).

    sixdollarsilver ratioarbitrage
    Nov 28, 2012 - 5:35am

    "I have popcorn"

    Classic line, ratioarbitrage :)

    I'm afraid (once again), I don't have any answers for you. I greatly enjoyed reading your posts though and think that your two main propositions are equally valid. Ellipses and parabolas should always be in a technician's toolbox.

    There's an inexorable nature to this dozen year (and counting) rise in the fiat/metal ratio.

    Nov 28, 2012 - 5:36am

    The REAL dollar cost average issue

    (Apologies if the point was made up-thread already)...

    All this focus on the average buy-in cost, though relevant, is only the warm up to the main exercise.

    Like many, I am heavily invested into silver, as I believe that the nominal percentage gains will outperform gold.

    However, I am haunted by the 1980 spike up and crash. I expect gold to plateau at a higher level. I expect silver to hit some great highs, but I do not expect it to plateau; I expect the highs to be transitory, perhaps very transitory. The trick is to know when to get out.

    We cannot know when to get out, so we must arguably, divest in a steady stream as silver rises, just as we dollar cost averaged our purchases.

    however, we have a finite pool of silver stacked, and we do not want to expend it too soon. Nor do we want to end up with most of it, with the spike now behind us.

    If regular purchases work for acquisition, then regular sales will work for divestment.

    My own strategy is to start swapping silver for gold, as the silver:gold ratio starts falling below 30, in a steady stream so that half is swapped by the time it gets to 5:1, or something like that. This is not a hard plan, I change it every month, but I am focused on the need for a plan. It is the Goldmoney and Bullionvault portion of my 'stack' where I will be doing this; my phys stays at the bottom of the lake, as it is very tricky to get to.

    Credit to Mike Maloney, who is vociferous about the need for an exit plan. Not for the whole stack necessarily, but there will be a time when it makes sense to switch asset classes. I think many of us are hoping that the metals peak will coincide with the real estate bottom.

    Edit: I do not expect the GSR to stay flat while the metals moon-shot in price. If it does stay flat, then I will need a plan for that too; $5000 gold and $100 silver requires a conscious decision as to response, even if it is to sit tight, but I think that higher price levels require a diversification into other asset classes for sure.

    silver foil hat Bollocks
    Nov 28, 2012 - 5:59am

    @bollocks and katie

    enjoy..... before the cheese police will get you.

    Video unavailable
    Nov 28, 2012 - 6:06am

    if you have no reportable income

    and can live off savings........and are over can move 25,000$/year out of a 401k/IRA and pay $1,896 in income taxes filling single.

    25,000-3,700 personal exemption-5,800 standard deduction= $15,500

    income tax on $15,500 = $1,896

    or just move the $9,500 n pay no tax.

    and buy physical, of course.


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