In like a lamb….
Well, it’s March, and it’s been three months since I last harangued you about getting your mitts on some actual real store of wealth like silver or gold. I stick with silver because it’s still affordable, the government doesn’t (yet) place capital gains on your potential profits from it, and because it outperforms gold in both supply and demand.
Folks, I’m not going to bother going into detail about things like bank holidays, government takeovers of 401(k) plans or Iranian oil bourses. I won’t go deep about Russia’s crop failures or the Chinese buying fully 1/5th of the world’s output of precious metals last year. What I *will* tell you is that you’re seeing inflation beat the hell out of you at the grocery store, and the reason is because the value of the dollar is dropping even more rapidly. And that means that currency benchmarks like silver are rising against it.
Silver sold on March 1st for $34.59. That’s a 6 month increase of $12.50, or 56.58%.
It’s a 12 month increase of $18.24 or 111.56%. Had you bought silver at the beginning of last year when I said “It’s not too late,” you would have more than doubled your holdings.
At these rates, you can expect silver to be at $46.55 in 6 months, and $73.19 in 12 months.
You may say “That doesn’t take the long-term into account.” Okay, I’ll play that game too.
I’ve taken the percentage increase of silver for both a 5-yr and 10-yr span and then divided by the number of years to get your average annual performance yield.
5 year average:
silver on 3/1/06: $9.78 per oz
silver on 3/1/11: $34.59
$ increase: (34.59-9.78) = $24.81
% increase: 253.68%
divided by 5= 50.74% annual increase each year over 5 yrs
10 yr average:
silver on 3/1/01: $4.51
silver on 3/1/11: $34.59
$ increase: (34.59 - 4.51) = $30.08
% increase: 666.696%
divided by 10 = 66.70% annual increase each year over 10 years
If you go by these longer-term trends, then can expect your $34.59 ounce of silver to be worth
$52.14 in a year using the 5 yr trending, and
$57.66 in a year using the 10 yr trending.
And again, this is NOT because silver is some whiz-bang-o hot stock. This is because the purchasing power of your dollar is decreasing each and every year. And if you know anything about cumulative effect, it means that your loss of wealth increases geometrically.
How so? The dollar now buys what a quarter bought in 1971 when Nixon decoupled our currency from the gold standard. That’s reality. But an ounce of silver bought in 1971 at the average annual price of $1.55 would today get you a profit of $33.04.
Westegg’s Inflation Calculator tells me that $1.55 in 1971 money is worth $8.12 in 2009 dollars. But silver would get you four times that amount.
Can you see why your best protection against losing your shirt is socking away as much as you can in a stable commodity like silver? And even at $30, it’s still cheap - especially if it continues and we see $46 silver in September and $73 silver next spring.
Now’s the time!! Buy Silver!!