Protection of Wealth

SliderC

SliderC

Active Member
Did this calculation in another thread discussing inflation, found it interesting to see it on paper, thought Id share.

Silver in 1985 approx $6 per ounce.
$3000 / 6 = 500 Ounces

The average yearly income in Australia in 1985 = $20800 ($400 per week)
As a percentage of yearly income $3000 spent on silver would be approx 14% of your income invested in 1985 ($20800 / $3000)

Value Today @ $28 per ounce: $14000

Average yearly income in Australia in 2012 = $69580 ($1,338 per week)
Percentage of yearly income = $69580 / $14000 = Approx 20% of income in 2012

Saving 14% of your income in silver in 1985 gets you 20% of your income in 2012. Not a bad preservation of wealth

Using this "moment in time" look and disregarding any market conditions during the period, Wages have increased 350% in 27 years where as Silver was up 466%.
 
One little problem. Wage rises haven't been in line with inflation. We've been getting progressively poorer since the 1960s.
 
gcsun said:
I don't buy that our avg wage is $69580, would be lower IMO...
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I think you'll find the average wage is around that mark (although I thought it was closer to $65,000).

What is lower, however, is the median wage. This is closer to the $45,000 mark last time I checked
 
Could the 69580 be average household income? Ie earnings of 2 people in many cases...
 
SliderC said:
My perspective on this is, silver is first and foremost a protection of wealth and, if your in the right cycle, a means to make profit.
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Well if you take 1985 to now as your time frame, both shares and property killed silver, without even counting dividends/rental income.
Not too sure how much wealth silver preserved.
 
trew said:
SliderC said:
My perspective on this is, silver is first and foremost a protection of wealth and, if your in the right cycle, a means to make profit.
Click to expand...

Well if you take 1985 to now as your time frame, both shares and property killed silver, without even counting dividends/rental income.
Not too sure how much wealth silver preserved.
Click to expand...

The wealth in terms of labour invested has been preserved, grown a little maybe.


Here's an interesting one, thought I'd plot local petrol prices against silver spot to have a look at wealth measured as purchasing power of fuel:



9225_litres.jpg




Spent a lot of time around the 10 litre mark, to return there silver spot has to come down to roughly $16, or fuel has to rise to nearly 3 bucks.
 
Interesting calculations...

But here's a simpler - closer one:

If someone bought silver in October 2008 for 9.35 $, it would have been a bargain considering today's prices.
Would have bought 100 ounces of silver back then and sold it later...

100 oz x 9.35 $ = 935 $ (2008)

Would have sold all at the 2012 peak, which was about 34.50 $:

100 oz x 34.50 $ = 3450 $ (2012)

!!! Wowie !!!

More than triple!

Let's see another scenario... theoretical:

Suppose silver drops below 20 $ this year... Let's say it goes down to 17 $ (many are predicting this level, but I don't know for sure... it is likely for it to dip below 26 $, I guess...):

Stack up 100 oz for 17 $ this year:

Invest 1700 $ in silver to buy 100 oz

Later, when silver touches only 40 $ (I will, even if you have to wait 2-3 or more years), sell the entire "arsenal" and you'll have

4000 $ for the 100 oz! 2.35 x ROI!

Obviously, during times like these it would be "delicious" if silver dropped back below 10 $ so that we can stack up again...
But that's less likely to happen.

Small investors will be glad to see sub 26 $ silver, but I'm unsure if it could go lower...

Silver can multiply your money in a matter of months, 1-2 years.

I think you can use silver to multiply your fiat money and use it later to buy more as it dips. If you know how to ride the roller coaster, you'll be full of silver and gold in a matter of years...

All you need are a few thousand dollars at the beginning. And many don't have that kind of money.
 
In my humble opinion, if you plan to buy and resell in a short period of time, buy the paper silver (stocks, etfs, options, futures etc) then you have maximum liquidity when you want to sell and can pull the trigger at any moment.

Of course I do this and also buy coins since they are pretty to look at. But any coins I buy I'm keeping long term. For me its almost an insurance policy if I'm broke and need cash. Otherwise its simple wealth preservation, but mostly a hobby.

BTW I bought my first 20oz coin today.
 
I know of someone that started with no money!

And it worked....BIG time....but I am not telling...and this

Info is not for sale. It will be in a book oneday for sure.

They might call it Balls of steel or Just Plain Desperate.....the latter is more true lol

Better still everyone got the Bullion they paid for.....and no illegal scams were involved.
 
menotcrimex said:
I know of someone that started with no money!

And it worked....BIG time....but I am not telling...and this

Info is not for sale. It will be in a book oneday for sure.

They might call it Balls of steel or Just Plain Desperate.....the latter is more true lol

Better still everyone got the Bullion they paid for.....and no illegal scams were involved.
Click to expand...


Tease.
 
The secret to wealth is to live below your means. Put what you save into stocks, metals, land or collectibles. If you spend less than you make, you accumulate wealth. Inflation eats at your savings and staying ahead of it requires investing in something other than a savings account.
 
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