Question of the Day....

[ChrisF]

If you purchased an ounce of silver for £15 and twenty years later went to sell it and found out you could only get £15 for it, would you be happy?  

[JunkBond]

Happier than if it was only worth £10

[HawkHybrid]

2 minutes ago, ChrisF said:

If you purchased an ounce of silver for £15 and twenty years later went to sell it and found out you could only get £15 for it, would you be happy?  

 

that would depend on what value you managed to get

out of it in those 20 years?

straight maths says you've lost out on opportunity cost

+ inflation.

 

HH

[STONE]

Yes!  That tells me that the value of the currency has seriously deflated by the over printing of it. Your looking at it backwards...

[Melon]

Twenty years to stack an ounce? I'd feel disappointed in myself. 

[RacerCool]

In other words that £15 has kept its value, whereas the £15 in paper currency is worth less than it was twenty years before. So at the very least, the silver did its job and kept its value. 

[MancunianStacker]

20 hours ago, ChrisF said:

If you purchased an ounce of silver for £15 and twenty years later went to sell it and found out you could only get £15 for it, would you be happy?  

House prices do this too as can stocks, so not sure I’d be happy but also not sad 

[sovereignsteve]

19 minutes ago, RacerCool said:

In other words that £15 has kept its value, whereas the £15 in paper currency is worth less than it was twenty years before. So at the very least, the silver did its job and kept its value. 

but the silver has lost value as you can only get 15 of the new worthless pounds for it. You would need more for it to have kept it's value.

[HawkHybrid]

45 minutes ago, RacerCool said:

In other words that £15 has kept its value, whereas the £15 in paper currency is worth less than it was twenty years before. So at the very least, the silver did its job and kept its value. 

 

you get offered the same £15 that that you use to pay

for it 20 years ago. but after 20 years the very same £15

does not buy as much now due to inflation?

 

HH

[Roy]

20 hours ago, ChrisF said:

If you purchased an ounce of silver for £15 and twenty years later went to sell it and found out you could only get £15 for it, would you be happy?  

No, but I'd be resigned to the fact that silver is a poor investment.

[richatthecroft]

Financially perhaps, but pleasing on the eye 😀

 

[RacerCool]

1 hour ago, HawkHybrid said:

 

you get offered the same £15 that that you use to pay

for it 20 years ago. but after 20 years the very same £15

does not buy as much now due to inflation?

 

HH

Another way of looking at it is that the same £15 from twenty years ago is now worth only £10. So it kept its value instead of losing it.

[Melon]

21 minutes ago, RacerCool said:

Another way of looking at it is that the same £15 from twenty years ago is now worth only £10. So it kept its value instead of losing it.

That's not how inflation works mate. The value of currency goes down, every single year - aka inflation. It costs more to buy the same basket of food in 2019 than it did in 2018 (let's not even talk about 2020 🤣).

So if in 20 years you get the same amount of currency as you paid originally for your ounce of silver (£15), you're effectively no better off than if you had kept £15 worth of notes in your glove box for 20 years. In both scenarios, inflation has eroded your asset and it's now worth less than when you started. Of course if you kept the cash in an interest bearing account you could offset inflation and would have more than £15 when you check your balance in 20 years. One would likewise hope the spot price of Silver is higher in 20 years than today. 

[HawkHybrid]

1 hour ago, RacerCool said:

Another way of looking at it is that the same £15 from twenty years ago is now worth only £10. So it kept its value instead of losing it.

 

so you are offered £15 which is worth only £10. where as

you paid £15 for it which was worth £15 at the time that

you paid for it(20 years ago). so you managed to turn £15

value into £10 value. how is that holding it's value?

note the £15 that you are offered is not inflation adjusted

into todays amounts. it's just plain £15 in modern currency. 

 

HH

[trp]

1 hour ago, richatthecroft said:

Financially perhaps, but pleasing on the eye 😀

Gorgeous collection, definitely pleasing to the eye

[BazzaC]

On 20/03/2020 at 20:34, ChrisF said:

If you purchased an ounce of silver for £15 and twenty years later went to sell it and found out you could only get £15 for it, would you be happy?  

Financially speaking ; no I wouldn't be happy at all mate.

But you "choose" when you "want" to sell.  In the past 20 years there are certainly times you probably could of obtained alot more than what you had initially paid for it, even when £15 for 1oz of silver 20 years ago seems like a "high" price to pay. Suggest if you auction it here;  I'm sure you'll get more than £15 for it.

@richatthecroft very nice coins 🤗 thanks for the pics. What's the 4 coin set of Egyptian deities ?

[richatthecroft]

19 minutes ago, BazzaC said:

What's the 4 coin set of Egyptian deities ?

https://www.google.co.uk/amp/s/amp.providentmetals.com/coin-series/egyptian-gods.html

[RacerCool]

On 21/03/2020 at 09:52, Melon said:

That's not how inflation works mate. The value of currency goes down, every single year - aka inflation. It costs more to buy the same basket of food in 2019 than it did in 2018 (let's not even talk about 2020 🤣).

So if in 20 years you get the same amount of currency as you paid originally for your ounce of silver (£15), you're effectively no better off than if you had kept £15 worth of notes in your glove box for 20 years. In both scenarios, inflation has eroded your asset and it's now worth less than when you started. Of course if you kept the cash in an interest bearing account you could offset inflation and would have more than £15 when you check your balance in 20 years. One would likewise hope the spot price of Silver is higher in 20 years than today. 

True, and thanks for pointing that out. 👍

Point is that silver will hold its value better than cash, and will likely even gain in value. Though gold is the way to go if you actually want to invest.

[Altitudes]

It would be disappointing because it didn't keep up at the very least with inflation, but not nearly as disappointing as it severely losing value. At least you would still have something tangible.

 

[MancunianStacker]

It’s only a loss when you sell, same with paper and property.

That’s why you should have cash savings in a portfolio. So you can take advantage of opportunities and have an emergency fund to ride out the dips and maybe take advantage of the dips too.

 

[Cointreau]

On 20/03/2020 at 20:34, STONE said:

Yes!  That tells me that the value of the currency has seriously deflated by the over printing of it. Your looking at it backwards...

I do not have an economics degree but that makes no sense to me. It is inflation that reduces the value of your currency as goods and services become more expensive.

In a deflation scenario your pounds have more purchasing power.

[HawkHybrid]

10 hours ago, RacerCool said:

Point is that silver will hold its value better than cash, and will likely even gain in value. Though is the way to go if you actually want to invest.

 

I think this only applies to gold.

for those who bought silver during the last decade low in

dec 2015, are they not underwater now against $spot?

 

HH

[Roy]

30 minutes ago, HawkHybrid said:

 

I think this only applies to gold.

for those who bought silver during the last decade low in

dec 2015, are they not underwater now against $spot?

 

HH

Very much so. Luckily, I don't have much left.

[HawkHybrid]

4 hours ago, MancunianStacker said:

It’s only a loss when you sell, same with paper and property.

 

I'd be extremely unhappy if I had my emergency assets in

silver bullion right now.

(the idea of a core stack made up of silver bullion proposed

by some)

 

HH

[RacerCool]

2 hours ago, HawkHybrid said:

 

I think this only applies to gold.

for those who bought silver during the last decade low in

dec 2015, are they not underwater now against $spot?

 

HH

I agree, and there should be the word "gold" after "Though" where I said, "Though is the way to go if you actually want to invest".