Preserving Wealth? What do you mean?
Ok, so I've spoken a number of times of why individuals will buy silver a gold. Some. as an investment to make money. Some, as a means of money in a SHTF scenario. Some, as a way to reduce debt and/or to purchase items at a reduced price. Finally, some that buy it as insurance to protect their wealth during times of high or excessive inflation.
Having discussions with a friend of mine who understands the various reasons to buy silver and gold; as well as my other researching, I decided to present a short illustration on what gold and silver could buy over time.
I had to do this manually, because I wasn't able to find a direct presentation on what silver or gold could buy over the years. There's a lot of variables, so I only went back about 100 years. Some variables like employee wages changed drastically in the last 40 years with minimum wages. Also, in the last 40 years things like "Fast Food" restaurants has become very popular vs a traditional restaurant. Also, since the separation of the US Dollar to the gold standard, the price of silver and gold fluctuated much more often. Of course, we can't not mention the price manipulation of silver and gold by governments, central banks, and the "Paper" crowd. An example is that between 1978 and 1982, silver prices went from $5.82 to $21.79 to $16.39 to $8.40 to $10.56. That is so much variance. At the time however, the was VERY HIGH INFLATION going on in the United States. Some here old enough will remember how at this time, savings accounts would pay about 5%. You could get CD's close to 10%. Home loans were in the double digits. From the 1980's the price of silver settled back into the $5-$8 range, but from the 1990's to 2008, it was a gradual climb up to about $15 an ounce. After the stock market crash, silver gradually climbed in the the $30 and as high as about $49, before settling back.
So as you can see, there are many variables that affect the "SHORT TERM" price of silver and gold. That is precisely why I wanted to write this article. If you're the first group of silver/gold buyers who are investors and simply want to make money; similar to buying stocks; then this information won't mean much to you. If you're the SHTF buyer, then you don't care what the price is, because you believe silver and gold will eventually need to be our source of money. Those buying to reduce debt and buy at a discount can find some use of the information. It will show that over time, silver and gold keep up with inflation and therefor, it's a better investment over time than money in the back. But for those wanting to preserve their wealth, and have silver/gold as insurance to protect them from diminishing their saving or retirement accounts during a high/hyper inflation period, it will make the most sense. You will see, that if you take out the erratic bumps in price, like I showed in the 1979-1982 period. Or the big change when the United States went off of the gold standard and there was initial corrections because metals were way to low. And if you dismiss some of the more recent manipulations before the metals rebound themselves........ you'll find that silver and gold have done a pretty good job PRESERVING WEALTH. What you could buy 100, 50, 30, 10 years ago with an ounce of gold or silver, you pretty much can again too today.
Remember; don't compare to specific days like TODAY'S prices or a specific date. You need to look at the averages. You can't compare specific days. But on the average, the BUYING POWER has maintained the same over time. The inflation index calculator shows that an item in 1913 that cost approximately $20, today, would cost about $474. That's a 2270% increase in inflation. But that doesn't count all items. Some items are actually cheaper. So you have to look at the bigger picture. Look at the average prices. Below is a listing of what an ounce of gold could buy with clothing; and what an ounce of silver could buy in eating out. I think it will illustrate the point that silver and gold, while possible to make money, is most useful in preserving your wealth so you don't have to deplete your savings or retirement accounts.
Men's suit. This includes shirt, jacket, slacks, tie/vest, shoes, etc.
GOLD
1900 Men’s suit, worsted, 7.00-16.00/each - One Ounce Gold: $20.67
1940 Men’s suit, tweed, 25.00/each - One Ounce Gold: $35
1970 Men’s suit, shaped double-breasted, wool, 56.95/each - One Ounce Gold: $35 *
(in 1971 we broke the gold standard. This official price was too low. By 1972 the gold price shot to $65 an ounce essentially matching the prices from previous decades in terms of purchasing power.)
Gold standard broken in 1971 — Gold allowed to float against the dollar and inflation went into the double digits.–
1980 Men’s suit, wool worsted, 425.00/each - One Ounce Gold: $661
(Note the price increase since 1971 when we abandoned the gold standard and inflation raged. )
1990 Men’s suit, Evan Picone, wool, 279.99/each (inflation finally under control) Ounce Gold: $380
2000 Men’s suit, 375.00-475.00/each One Ounce Gold: $270 (who wants gold when you can own catlitter.com stock!!)
2007 Men’s suit, $400-600 One Ounce Gold: (approx) $700
2014 Men's suit $700-$1000 One Ounce Gold: (approx) $1150
Remember, numerous variables. Especially in technology that will change the price of some things. Example; today... most people will buy a automated machine made $200-$300 suit vs a $1000 handmade suit.
SILVER
Since the major stock crash of 2008 and the fact that Silver is still primarily an "Industrial" metal compared to gold, it is extremely and highly undervalued. At 2015 rates, it's at a 72:1 ratio with the price of Gold. In 2011 when gold peaked at $1900 and silver peaked just shy of $50 and ounce, the ratio was at close to 38:1. That is more in line with what it should be.
I hoped the historical buying power, when looked at on average, will let you realize how important silver and gold are for being part of your investments. Especially as a way of preserving your wealth. My next post I will attempt to discuss the major variance in silver to gold price ratio. Why there is such a difference; and what you can learn from it.
CYA: SE:
Having discussions with a friend of mine who understands the various reasons to buy silver and gold; as well as my other researching, I decided to present a short illustration on what gold and silver could buy over time.
I had to do this manually, because I wasn't able to find a direct presentation on what silver or gold could buy over the years. There's a lot of variables, so I only went back about 100 years. Some variables like employee wages changed drastically in the last 40 years with minimum wages. Also, in the last 40 years things like "Fast Food" restaurants has become very popular vs a traditional restaurant. Also, since the separation of the US Dollar to the gold standard, the price of silver and gold fluctuated much more often. Of course, we can't not mention the price manipulation of silver and gold by governments, central banks, and the "Paper" crowd. An example is that between 1978 and 1982, silver prices went from $5.82 to $21.79 to $16.39 to $8.40 to $10.56. That is so much variance. At the time however, the was VERY HIGH INFLATION going on in the United States. Some here old enough will remember how at this time, savings accounts would pay about 5%. You could get CD's close to 10%. Home loans were in the double digits. From the 1980's the price of silver settled back into the $5-$8 range, but from the 1990's to 2008, it was a gradual climb up to about $15 an ounce. After the stock market crash, silver gradually climbed in the the $30 and as high as about $49, before settling back.
So as you can see, there are many variables that affect the "SHORT TERM" price of silver and gold. That is precisely why I wanted to write this article. If you're the first group of silver/gold buyers who are investors and simply want to make money; similar to buying stocks; then this information won't mean much to you. If you're the SHTF buyer, then you don't care what the price is, because you believe silver and gold will eventually need to be our source of money. Those buying to reduce debt and buy at a discount can find some use of the information. It will show that over time, silver and gold keep up with inflation and therefor, it's a better investment over time than money in the back. But for those wanting to preserve their wealth, and have silver/gold as insurance to protect them from diminishing their saving or retirement accounts during a high/hyper inflation period, it will make the most sense. You will see, that if you take out the erratic bumps in price, like I showed in the 1979-1982 period. Or the big change when the United States went off of the gold standard and there was initial corrections because metals were way to low. And if you dismiss some of the more recent manipulations before the metals rebound themselves........ you'll find that silver and gold have done a pretty good job PRESERVING WEALTH. What you could buy 100, 50, 30, 10 years ago with an ounce of gold or silver, you pretty much can again too today.
Remember; don't compare to specific days like TODAY'S prices or a specific date. You need to look at the averages. You can't compare specific days. But on the average, the BUYING POWER has maintained the same over time. The inflation index calculator shows that an item in 1913 that cost approximately $20, today, would cost about $474. That's a 2270% increase in inflation. But that doesn't count all items. Some items are actually cheaper. So you have to look at the bigger picture. Look at the average prices. Below is a listing of what an ounce of gold could buy with clothing; and what an ounce of silver could buy in eating out. I think it will illustrate the point that silver and gold, while possible to make money, is most useful in preserving your wealth so you don't have to deplete your savings or retirement accounts.
Men's suit. This includes shirt, jacket, slacks, tie/vest, shoes, etc.
GOLD
1900 Men’s suit, worsted, 7.00-16.00/each - One Ounce Gold: $20.67
1940 Men’s suit, tweed, 25.00/each - One Ounce Gold: $35
1970 Men’s suit, shaped double-breasted, wool, 56.95/each - One Ounce Gold: $35 *
(in 1971 we broke the gold standard. This official price was too low. By 1972 the gold price shot to $65 an ounce essentially matching the prices from previous decades in terms of purchasing power.)
Gold standard broken in 1971 — Gold allowed to float against the dollar and inflation went into the double digits.–
1980 Men’s suit, wool worsted, 425.00/each - One Ounce Gold: $661
(Note the price increase since 1971 when we abandoned the gold standard and inflation raged. )
1990 Men’s suit, Evan Picone, wool, 279.99/each (inflation finally under control) Ounce Gold: $380
2000 Men’s suit, 375.00-475.00/each One Ounce Gold: $270 (who wants gold when you can own catlitter.com stock!!)
2007 Men’s suit, $400-600 One Ounce Gold: (approx) $700
2014 Men's suit $700-$1000 One Ounce Gold: (approx) $1150
Remember, numerous variables. Especially in technology that will change the price of some things. Example; today... most people will buy a automated machine made $200-$300 suit vs a $1000 handmade suit.
SILVER
1910 Meal $0.50 Silver $0.55. Most menu items no more
than $0.10
1947 $0.75-$1.00 Silver $0.75
1960 Furrs cafeteria Loin Pork, Yams, Cabbage, Pie,
$0.82. Silver $0.91
1971 Lobster, or Filet, or Prime rib dinner $3.60 Silver
$1.40 (Remember, end of gold standard)
1981 Average meal per person $8.50. Silver $8.43
2010 Average meal per person $21 Silver $30
Since the major stock crash of 2008 and the fact that Silver is still primarily an "Industrial" metal compared to gold, it is extremely and highly undervalued. At 2015 rates, it's at a 72:1 ratio with the price of Gold. In 2011 when gold peaked at $1900 and silver peaked just shy of $50 and ounce, the ratio was at close to 38:1. That is more in line with what it should be.
I hoped the historical buying power, when looked at on average, will let you realize how important silver and gold are for being part of your investments. Especially as a way of preserving your wealth. My next post I will attempt to discuss the major variance in silver to gold price ratio. Why there is such a difference; and what you can learn from it.
CYA: SE:
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