Is holding silver a hedge against inflation? Can you show me the math?

[GoldDiggerDave]

Hi Guys,

I'm not out to bash silver, any PM holders or stackers, I'm seeing so much on websites and social media with individuals saying hold silver as a hedge against inflation. Can anyone show me the math?  If you bought silver in 2021 can you show me how it out performed inflation once you factor in dealer premiums, VAT and real world inflation not the 3-4% the government is pretending it to be?

I have seen massive inflation in the building materials, even the most mundane basics have quadrupled in price of the last few years.  The common house brick looks like it's performing better as a hedge against inflation than many PM's.  

 

[HerefordBullyun]

1 minute ago, GoldDiggerDave said:

Hi Guys,

I'm not out to bash silver, any PM holders or stackers, I'm seeing so much on websites and social media with individuals saying hold silver as a hedge against inflation. Can anyone show me the math?  If you bought silver in 2021 can you show me how it out performed inflation once you factor in dealer premiums, VAT and real world inflation not the 3-4% the government is pretending it to be?

I have seen massive inflation in the building materials, even the most mundane basics have quadrupled in price of the last few years.  The common house brick looks like it's performing better as a hedge against inflation than many PM's.  

 

charts dont lie look at silver when is was £30 an oz in 80;s after the mad inflatiion in 1979. Silver follows late after gold. Also I can recommend the book the silver bomb to understand it a bit more, espically why its the sleeping tiger,

https://www.amazon.co.uk/Silver-Bomb-Paper-Wealth-Upon-ebook/dp/B00A9X9770/ref=sr_1_1?keywords=the+silver+bomb&qid=1640604049&sr=8-1

 

[GoldDiggerDave]

6 minutes ago, HerefordBullyun said:

charts dont lie look at silver when is was £30 an oz in 80;s after the mad inflatiion in 1979. Silver follows late after gold. Also I can recommend the book the silver bomb to understand it a bit more, espically why its the sleeping tiger,

https://www.amazon.co.uk/Silver-Bomb-Paper-Wealth-Upon-ebook/dp/B00A9X9770/ref=sr_1_1?keywords=the+silver+bomb&qid=1640604049&sr=8-1

 

Cheers Bully!

 

There is a lot of feelings and sentiment about PM but I'm finding it hard to see the math, especially in the UK where we get nailed with high dealer premiums and VAT.  I just can't see it and honestly I'm not out to disprove (quite the opposite)  I can not see how it's a "hedge"  against real world inflation.

I'd love someone to show me the math.  There might be something I'm missing and happy to learn from more skilled silver or PM investors than myself.  

 

 

[HerefordBullyun]

42 minutes ago, GoldDiggerDave said:

Cheers Bully!

 

There is a lot of feelings and sentiment about PM but I'm finding it hard to see the math, especially in the UK where we get nailed with high dealer premiums and VAT.  I just can't see it and honestly I'm not out to disprove (quite the opposite)  I can not see how it's a "hedge"  against real world inflation.

I'd love someone to show me the math.  There might be something I'm missing and happy to learn from more skilled silver or PM investors than myself.  

 

 

I dont really know the math as Im not clever enough. You maybe able to see something on mike maloneys gold silver channel albiet it is would be in USD, or even email him or someone like rick rule, Lyn Alden who @Stacktastic is big fan of would certainly know who works on the rebel capitalist show, shes got stats and all sorts, she has a good brain albiet she has a face like she could eat a apple through a tennis racket. The book I recommend doesnt give the math fundamentals but more the reason and evidence is why silver so undevalued and will one day explode. Sprott money do a monthly ask the expert session where yo can email in questions which I do find an interesting listen and the weekley wrap up.  

Edited December 27, 2021 by HerefordBullyun

[Oddjob]

When this topic is brought up, the benefit of holding PM's as a hedge against inflation needs to be taken / looked at in the long term. ie years not months.

The number of oz's of gold v house price is a good example of this. Refer link to graphs from certain countries (inc UK) which shows this data from 1980 to 2015 ish.

http://investinginshares.com.au/australian-house-prices-to-gold-ratio-from-1880/

In Australia (and noting each country will differ depending in own economic issues), the same number of oz's of gold required to buy a house in the late 1960's bought the same average house in 2015. In the UK is was 1988 compared to 2015 house prices in Au oz's required.

This then can be compared with taking the same GBP 160k odd required in 1988 and investing it in a straight out bank deposit (calculated at real interest rates) until 2015.

There's also the old adage / story that an oz of gold bought a nice going out toga, sandels and belt in 150bc, a nice suit, shoes, belt and tie in 1930, 1970 and 2021.

How is should be explained is that gold has held it's value over the years and buys a comparable product now for the same one oz of gold as in years / decades past and over time pretty much matches or exceeds long term inflation....If this is looked at in the short time say last 12 months, yes then gold has not been a hedge against inflation, but then again in 2019 and 2020 for example, the 12 month increase in gold price well out paced general inflation.

The below data from https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart 1980 to 2021 when averaged provides a long term 41 year average pa gold price increase of 4.22% v the UK Govt (and yes I know Govt CPI / inflation numbers are questionable) but over the same period UK inflation averaged 3.63% p.a, thus holding gold over the same period covered and out paced inflation based on pure hard data.

Re your comment re house bricks as a better investment than gold, this is true in the short term. Even investing in Lego in recent years has outpaced the gold price increase. Will need more years of affirming price data to see if the price of various goods (bricks, fuel and even Lego) remains high and gold loses that mantel of the inflation hedge.

Gold Prices - Historical Annual Data Year Average Closing Price Year Open Year High Year Low Year Close Annual % Change 2021 $1,798.54 $1,946.60 $1,954.40 $1,678.00 $1,811.70 -4.40% 2020 $1,773.73 $1,520.55 $2,058.40 $1,472.35 $1,895.10 24.43% 2019 $1,393.34 $1,287.20 $1,542.60 $1,270.05 $1,523.00 18.83% 2018 $1,268.93 $1,312.80 $1,360.25 $1,176.70 $1,281.65 -1.15% 2017 $1,260.39 $1,162.00 $1,351.20 $1,162.00 $1,296.50 12.57% 2016 $1,251.92 $1,075.20 $1,372.60 $1,073.60 $1,151.70 8.63% 2015 $1,158.86 $1,184.25 $1,298.00 $1,049.60 $1,060.20 -11.59% 2014 $1,266.06 $1,219.75 $1,379.00 $1,144.50 $1,199.25 -0.19% 2013 $1,409.51 $1,681.50 $1,692.50 $1,192.75 $1,201.50 -27.79% 2012 $1,668.86 $1,590.00 $1,790.00 $1,537.50 $1,664.00 5.68% 2011 $1,573.16 $1,405.50 $1,896.50 $1,316.00 $1,574.50 11.65% 2010 $1,226.66 $1,113.00 $1,426.00 $1,052.25 $1,410.25 27.74% 2009 $973.66 $869.75 $1,218.25 $813.00 $1,104.00 27.63% 2008 $872.37 $840.75 $1,023.50 $692.50 $865.00 3.41% 2007 $696.43 $640.75 $841.75 $608.30 $836.50 31.59% 2006 $604.34 $520.75 $725.75 $520.75 $635.70 23.92% 2005 $444.99 $426.80 $537.50 $411.50 $513.00 17.12% 2004 $409.53 $415.20 $455.75 $373.50 $438.00 4.97% 2003 $363.83 $342.20 $417.25 $319.75 $417.25 21.74% 2002 $310.08 $278.10 $348.50 $277.80 $342.75 23.96% 2001 $271.19 $272.80 $292.85 $256.70 $276.50 1.41% 2000 $279.29 $282.05 $316.60 $263.80 $272.65 -6.26% 1999 $278.86 $288.25 $326.25 $252.90 $290.85 1.18% 1998 $294.12 $287.70 $314.60 $273.40 $287.45 -0.61% 1997 $331.00 $367.80 $367.80 $283.05 $289.20 -21.74% 1996 $387.73 $387.10 $416.25 $368.30 $369.55 -4.43% 1995 $384.07 $381.40 $396.95 $372.45 $386.70 1.10% 1994 $384.16 $395.00 $397.50 $370.25 $382.50 -2.09% 1993 $360.05 $329.40 $406.70 $326.50 $390.65 17.35% 1992 $343.87 $351.20 $359.30 $330.20 $332.90 -5.80% 1991 $362.34 $392.50 $403.70 $343.50 $353.40 -9.62% 1990 $383.73 $401.65 $421.40 $346.75 $391.00 -2.49% 1989 $381.27 $413.60 $417.15 $358.10 $401.00 -2.23% 1988 $436.78 $484.10 $485.30 $389.05 $410.15 -15.69% 1987 $446.84 $402.40 $502.75 $392.60 $486.50 24.46% 1986 $368.20 $327.10 $442.75 $326.00 $390.90 19.54% 1985 $317.42 $306.25 $339.30 $285.00 $327.00 5.83% 1984 $360.65 $384.00 $406.85 $303.25 $309.00 -19.00% 1983 $423.71 $452.75 $511.50 $374.75 $381.50 -14.84% 1982 $376.11 $399.00 $488.50 $297.00 $448.00 12.00% 1981 $459.16 $592.00 $599.25 $391.75 $400.00 -32.15% 1980 $614.75 $559.00 $843.00 $474.00 $589.50 12.50%
https://www.macrotrends.net/countries/GBR/united-kingdom/inflation-rate-cpi U.K. Inflation Rate - Historical Data Year Inflation Rate (%) Annual Change 2020 0.99% -0.75% 2019 1.74% -0.55% 2018 2.29% -0.27% 2017 2.56% 1.55% 2016 1.01% 0.64% 2015 0.37% -1.08% 2014 1.45% -0.84% 2013 2.29% -0.28% 2012 2.57% -1.28% 2011 3.86% 1.36% 2010 2.49% 0.53% 2009 1.96% -1.56% 2008 3.52% 1.13% 2007 2.39% -0.07% 2006 2.46% 0.37% 2005 2.09% 0.70% 2004 1.39% 0.01% 2003 1.38% -0.14% 2002 1.52% -0.01% 2001 1.53% 0.35% 2000 1.18% -0.57% 1999 1.75% -0.07% 1998 1.82% -0.38% 1997 2.20% -0.65% 1996 2.85% 0.15% 1995 2.70% 0.48% 1994 2.22% -0.34% 1993 2.56% -2.03% 1992 4.59% -2.87% 1991 7.46% -0.60% 1990 8.06% 2.30% 1989 5.76% 1.60% 1988 4.16% 0.01% 1987 4.15% 0.72% 1986 3.43% -2.64% 1985 6.07% 1.11% 1984 4.96% 0.35% 1983 4.61% -3.99% 1982 8.60% -3.28% 1981 11.88% -6.09% 1980 17.97% 4.54%

 

[Bars]

1 hour ago, GoldDiggerDave said:

Hi Guys,

I'm not out to bash silver, any PM holders or stackers, I'm seeing so much on websites and social media with individuals saying hold silver as a hedge against inflation. Can anyone show me the math?  If you bought silver in 2021 can you show me how it out performed inflation once you factor in dealer premiums, VAT and real world inflation not the 3-4% the government is pretending it to be?

I have seen massive inflation in the building materials, even the most mundane basics have quadrupled in price of the last few years.  The common house brick looks like it's performing better as a hedge against inflation than many PM's.  

 

Silver is a LONG term hold, and those who bought silver only going a year back will be quite pleased with their purchases. Silver was being bought at 10-15 GBP an ounce.

[trozau]

I read somewhere that silver is just too pedestrian.

[HawkHybrid]

2 hours ago, GoldDiggerDave said:

I'm seeing so much on websites and social media with individuals saying hold silver as a hedge against inflation.

anyone who is telling you to hold silver as an inflation hedge is either too stupid to recognise that gold

exists or is purposely trying to mislead you(in order to try and sell you silver? maybe).

historic data shows that silver does by and large track average inflation over multiple decades.

but did not track inflation during the two decades that was 1980-2000. note how gold also did not track

inflation between 1980-2000, but has made up some ground for 1980-2020. silver is currently still lower

than it's non inflation adjusted price in 1980($50/toz). is it underpriced now or was it overpriced in 1980?

(hunt brother tries to corner the silver market, which would have resulted in a complete monopoly). let's

see how many forum members are going to defend that silver was not stupidly overpriced in 1980(due

to behaviour that would have lead to a complete monopoly).

2 hours ago, GoldDiggerDave said:

I just can't see it and honestly I'm not out to disprove (quite the opposite)  I can not see how it's a "hedge"  against real world inflation.

it's not about proving or disproving that silver has historically tracked inflation.(anybody waiting for silver

to track inflation from it's 1980 peak are not even remotely close to being correct, even after 40 years).

silver pumpers are too blind to see that silver has a multi decade cycle. telling them that it's perfectly

possible that they can be old and retired before their silver 'investment' pay dividends is not what they

want to hear when they've already entrenched themselves with 'silver as a get rich quick' scheme.

silver loses to gold in many scenarios, but silver does have it's rightful place as a niche holding next to gold.

 

HH

[Minimalist]

4 hours ago, GoldDiggerDave said:

Can anyone show me the math?

Someone can bring out figures but they will be manipulated from the position of understating the rate of inflation which invertedly keeps Silver down - not to its true price.

[Robda1986]

My daily driving car has stood up to inflation better than my silver I paid £400 end of 2020 and like most cars it's now a grand plus 🙄 genuinely tempted to just buy a load of cheap cars instead of silver or gold 

[Thelonerangershorse]

The current price of second hand cars is due to a shortage of brand new cars causes by a world micro-chip shortage, this will eventually be solved, but not next year, or maybe even the year after.

On the plus side, cars are CGT exempt.

[HawkHybrid]

1 hour ago, Minimalist said:

Someone can bring out figures but they will be manipulated from the position of understating the rate of inflation which invertedly keeps Silver down - not to its true price.

always someone who insists on calling it manipulation.

from 1980 until 2000 silver has dropped from ~$50/toz to ~$5/toz.

you don't need to know what the exact inflation rate was from 1980-2000.

all you need to know is that there wasn't a deflation of about -90%, to conclusively prove

that silver did not come anywhere near close to tracking inflation from 1980-2000.

 

HH

[Minimalist]

2 minutes ago, HawkHybrid said:

always someone who insists on calling it manipulation.

When Banks refuse to account all expenses in relation to measuring inflation then that constitutes manipulation.

[HerefordBullyun]

2 minutes ago, Minimalist said:

When Banks refuse to account all expenses in relation to measuring inflation then that constitutes manipulation.

yup and when from next year commodities wont be counted against CPI figures with FOMC  monthly inflation releases - if thats not lunacy and fraud I dont know what is. The fed has no resrves and its far from federal.

[HawkHybrid]

3 minutes ago, Minimalist said:

When Banks refuse to account all expenses in relation to measuring inflation then that constitutes manipulation.

instead of dodging the question,

explain why inflation was not equal to the -90% drop that the silver price experienced between 1980-2000.

 

HH

[Minimalist]

7 minutes ago, HerefordBullyun said:

yup and when from next year commodities wont be counted against CPI figures with FOMC  monthly inflation releases - if thats not lunacy and fraud I dont know what is. The fed has no resrves and its far from federal.

Correct.

Im sick of the psychosis from the keynesians on here refusing to believe the truth. Agenda setting for Bankers to steal wealth and purchasing power from the average person, f*cking disgusting.

[HawkHybrid]

in fact gold failed to track inflation from 1980-2000($870/toz to $280/toz).

oil also failed to track inflation over the same period, ~$120/barrel to ~$40/barrel.

I'm not simply having a jab at silver as some on the forum like to think is true.

I merely point it out more often on silver because some people on the forum like to inappropriately defend silver

regardless of what is true.

 

HH

[Minimalist]

10 minutes ago, HawkHybrid said:

instead of dodging the question,

explain why inflation was not equal to the -90% drop that the silver price experienced between 1980-2000.

Im not dodging any question. Dave never set out the figure you have stated. I mean, under whos authority do you think I have to answer to you? At no point, ever, in this thread did I quote you when I addressed my point to Dave. So, f*ck knows where you think im dodging a question. You quoted me ffs.

As for the figure your asking I havent looked over the data for a reason I have addressed to Dave: the data is hugely manipulated by inflation figures and rigging the silver futures market which can be proven in the courts of law. But that isnt enough for you - So no doubt, like previous experiences with posting to you, youll make attempts to deny this or dance around the truth.

[GoldDiggerDave]

2 hours ago, Robda1986 said:

My daily driving car has stood up to inflation better than my silver I paid £400 end of 2020 and like most cars it's now a grand plus 🙄 genuinely tempted to just buy a load of cheap cars instead of silver or gold 

I'm thinking about stacking DrMartens 7 years ago £89 a pair today £169.  I'm seeing some YT pumpers tell people to buy silver because it will protect them from inflation, it's looking way off the mark.  Allowing for dealer premiums, vat PLUS real world inflation spot needs to increase  50% (to normally break somewhere close to even)+ 10% year on year to allow the stacker any chance at all to attempt to keep up with inflation and thats not allowing for delivery or other associated costs, the 50p for the capsule and few quid for postage will wipe out most peoples gains.   I'm not against silver or PM's people have their own reasons, it just makes me sick watching YouTubers  with 10,000's of followers giving them BS advice.  

There is always that day where if, but and maybe all align and silver goes to the moon, but that's not advise that's a lottery.  

Edited December 27, 2021 by GoldDiggerDave
typo

[HawkHybrid]

2 minutes ago, Minimalist said:

Im not dodging any question. Dave never set out the figure you have stated. I mean, under whos authority do you think I have to answer to you? At no point, ever, in this thread did I quote you when I addressed my point to Dave. So, f*ck knows where you think im dodging a question. You quoted me ffs.

As for the figure your asking I havent looked over the data for a reason I have addressed to Dave: the data is hugely manipulated by inflation figures and rigging the silver futures market which can be proven in the courts of law. But that isnt enough for you - So no doubt, like previous experiences with posting to you, youll make attempts to deny this or dance around the truth.

the data from the cpi is irrelevant.

the so called data that you believe as the true rate of inflation is irrelevant.

what is relevant is that silver, and gold, and oil failed to track inflation over the 20 year period

from 1980-2000. will they fail to track inflation again over another 20 years? who knows?

what we do know is anyone unlucky enough to buy them in 1980 believing that they would at

least perform equal to inflation until 2000 was looking at a losing at least two thirds of their

money.

so keep on wasting your time tracking how wrong a made up index such as the cpi is versus the

real rate of inflation. and then ignore the bigger picture that commodities are not guaranteed to

at least equal inflation over 20 years.(why has no one told you that the cpi is always wrong because

it's an index that is made up to make the government look like they have inflation under control.

it a made up index for political reasons and have no relation to the price of bread).

the op wanted to know if silver can fail to track inflation which I've proven to be true over a 20 year

period without spamming the thread with irrelevant discussions about the cpi. don't you already have

an existing cpi bashing thread?

 

HH

[GoldDiggerDave]

36 minutes ago, Minimalist said:

When Banks refuse to account all expenses in relation to measuring inflation then that constitutes manipulation.

I agree with this the CPI is BS and dose not reflect the normal real world monthly spend for a normal person.  If the CPI only tracked the lion share of peoples monthly outgoings, rent, mortgage, bills, petrol, food. transportation  etc etc it would be well over 15%.  I know people who rent and the prices increase are criminal.   

[SilverStorm]

I'm not buying PM to hedge against inflation, I believe there are better asset classes for that.  If you buy PM, make sure you buy for the right reasons.  For me, PM represents a diversification of investment risk.  If my asset portfolio drops in value, I may be able to rely on PM to even out the losses.  Also, having some physical PM helps me to prevent the debasement of fiat currency; as well, knowing that one day my PM can and will be able to put food on the table for my family or escape from my home country if the SHTF scenario (re: Lebanon, Turkey, Afghanistan, etc).   I'm definitely not buying PM to get rich, and therefore I don't care whether or not it hedges against inflation.   I buy PM to preserve my standard of living and/or pass it to the next generation when I pass away.

[Minimalist]

24 minutes ago, HawkHybrid said:

the so called data that you believe as the true rate of inflation is irrelevant.

what is relevant is that silver, and gold, and oil failed to track inflation over the 20 year period

There was no failure, the entire period was manipulated and continues to be. The terminology you apply insinuates that inflation doesnt matter therefore it doesnt matter to mark it in with costs - pure insanity and utter criminal acts of financial terrorism.

[Minimalist]

27 minutes ago, GoldDiggerDave said:

I agree with this the CPI is BS and dose not reflect the normal real world monthly spend for a normal person.  If the CPI only tracked the lion share of peoples monthly outgoings, rent, mortgage, bills, petrol, food. transportation  etc etc it would be well over 15%.  I know people who rent and the prices increase are criminal.   

Oh, 100%. The keynesians on public record have stated that this is simply not the case, to the point that inflation doesnt "hurt" the lower classes. Im serious (Below proof). 

Your maniac keynesian on the forum will attempt to deny the truth for financial terrorists exploiting the average person. Its disgusting. Pure racketeering

The same posters where branding me a lunatic refuse to believe the truth.

Dont think keynesians, its good for you. Surrender all your views to gangsters in suits. Being a debt slave is for your safety! 

[Martlet]

Silver and gold do not track inflation very well, up or down.*  It's an old trope from the days of gold standard.  What metals do is provide a hedge for wealth preservation against hard falls of market, though even then we see them suffer in short term events. 

Some may blame manipulation, this only makes the case if the price is held down, it is not tracking inflation.  Some will claim its undervalued, however if its tracking inflation the value is what it should be relative to economic value.  

* Silver is about twice the 1970 value adjusted for official inflation, gold about 7x more.  So is the manipulated up or down?