• Tim Knight from...
    04/28/2016 - 00:27
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  • Tim Knight from...
    04/28/2016 - 00:27
    I was expecting a few boring candidate statements of the U.S. Senate - AKA the World's Most Exclusive Club - but, boy, was I wrong. Just take a look at some of these gems.

Guest Post: So How Many Ounces Of Gold (Or Silver) Should You Own?

Tyler Durden's picture




 

Submitted by Adam Taggart of Peak Prosperity,

This week, Chris talks with Jeff Clark, Senior Precious Metals Analyst at Casey Research, where he serves as editor of their Big Gold newsletter.

They tackle head-on many of the questions weary precious metals investors are wondering after enduing the volatile yet range-bound price action of gold and silver over the past year:

  • Have the fundamentals for owning gold & silver changed over the past year? No
  • What are they? currency devaluation/crisis, supply-chain risk, ore grade depletion
  • How should retail investors own gold? Mostly physical metal, some quality mining majors (avoid the indices), and ETFs only for trading
  • Is gold in a bubble? No
  • Could gold get re-monetized? Quite possibly
  • Where is gold flowing? From the West to the East. At some point, capital controls will be put in place

What the politicians are doing is the exact opposite of what they need to be doing. We continue adding to our debt, we continue raising the debt ceiling, we continue deficit spending, we continue borrowing money, and, of course, we continue printing money. We are doing the exact opposite of all the things that would lead us away from inflation. So yes, I think that is an important point.

 

I will add that inflation has occurred very quickly, very rapidly, very suddenly many times in the past, just in recent history. If you look back at the high inflationary times, just in the past 100 years here in the U.S., many of those that hit 12%, 14%, 15% -- two years prior to then, the CPI was completely benign. It was 1%, 2% – I think at one point it was 4% – and then all of a sudden within 24 months, it was 12%, 14%. So it can happen very suddenly, and my fear is that is what is going to happen this time. People are in a lull; no one is expecting it: the CPI is low; nothing is really happening with all this money printing; there has been no fallout. But I think that is the critical point. You cannot do these kinds of things we are doing forever and not experience any consequences. Sooner or later there are going to be consequences to what we are doing, and my fear is that it is going to be nasty, catch a lot of people off guard, and really hurt our society. The bottom line for me is, that is why I am buying gold and silver, still, to this day.

For these reasons and others, Jeff strongly believes everyone should have exposure to gold and silver as a defense for preserving the purchasing power of their weath. The key question is: how much exposure?

You want to focus on how many ounces you own, not necessarily looking at whether the price is $5 higher today than it was yesterday. How many ounces do you own? That is really the question you want to ask yourself, so you can focus on how much you are really going to need, and the amount really comes down to this.

 

For me, I am probably going to use some of this gold if we get high inflation. How are you going to protect your standard of living if we get some kind of runaway inflation? And let’s say it's not runaway hyperinflation; let’s just say it's high inflation, 10%, 15%. Remember it was 14% in 1980, so the odds of us getting high inflation are realistic. So if I am going to use that gold to cover my standard of living, you are going to need about two thirds of an ounce of gold for every thousand dollars of monthly expenses. If you want to protect your standard of living and not have your house be ravaged by inflation, so to speak, so that is a good guideline to follow.

 

So if inflation lasts a couple years, well, you are going to need 15 ounces of gold for every thousand dollars of monthly expenses. That is a good guideline to think about. And if your expenses are more per month, you are going to need more gold than that. If inflation lasts longer than two years, you are going to need more than that, but you can actually use the sales of gold and silver to protect your standard of living. You sell some gold and silver, you are going to get U.S. dollars or Canadian dollars with it and you can use the increase in the gold and silver price to offset the increase in the goods and services you are buying.

 

So I think that is the way to view it, to look at how you are going to use it. And so the focus again comes back to how many ounces do you own? So if you do not have any, you need to obviously start buying. 

Here are two tables -- one for gold and the other for silver -- Jeff offers in his newsletter to help investors calculate the requisite ounces needed to protect against rising inflation over time:

The point here is that you're probably going to need more ounces than you think. Look at your bank statement and assess how much you spend each month – and do it honestly.

 

The other part of the equation is how long we'll need to use gold and silver to cover those expenses. The potential duration of high inflation will dictate how much physical bullion we need stashed away. This is also probably longer than you think; in Weimar Germany, high inflation lasted two years – and then hyperinflation hit and lasted another two. Four years of high inflation. That's not kindling – that's a wildfire roaring through your back yard.

 

So here's how much gold you'll need, depending on your monthly expenses and how long high inflation lasts.

 

Ounces of Gold Needed to Meet Expenses During High Inflation
Monthly expenses in US dollars Monthly expenses in gold, oz* Inflation Duration
6 months  1 year  18 months 2 years 3 years 4 years 5 years 
$500
0.31
1.9
3.7
5.6
7.5
11.2
15.0
18.7
$1,000
0.63
3.8
7.5
11.3
15.0
22.5
30.0
37.5
$2,000
1.25
7.5
15.0
22.5
30.0
45.0
60.0
75.0
$3,000
1.88
11.3
22.5
33.8
45.0
67.5
90.0
112.5
$4,000
2.50
15.0
30.0
45.0
60.0
90.0
120.0
150.0
$5,000
3.13
18.8
37.5
56.3
75.0
112.5
150.0
187.5
$10,000
6.25
37.5
75.0
112.5
150.0
225.0
300.0
375.0
$20,000
12.50
75.0
150.0
225.0
300.0
450.0
600.0
750.0
*Based on $1,600 gold price

 

If my monthly expenses are about $3,000/month, I need 45 ounces to cover two years of high inflation, and 90 if it lasts four years. Those already well off should use the bottom rows of the table. How much will you need?

 

Of course many of us own silver, too. Here's how many ounces we'd need, if we saved in silver.

 

Ounces of Silver Needed to Meet Expenses During High Inflation
Monthly expenses in US dollars Monthly expenses in silver, oz* Inflation Duration
6 months  1 year  18 months 2 years 3 years 4 years 5 years 
$500
17.9
107.1
214.2
321.3
428.4
642.6
856.8
1,071.0
$1,000
35.7
214.3
428.5
642.8
857.0
1,285.6
1,714.1
2,142.6
$2,000
71.4
428.5
857.0
1,285.6
1,714.1
2,571.1
3,428.2
4,285.2
$3,000
107.1
642.8
1,285.7
1,928.5
2,571.4
3,857.0
5,142.7
6,428.4
$4,000
142.9
857.1
1,714.2
2,571.3
3,428.4
5,142.6
6,856.8
8,571.0
$5,000
178.6
1,071.4
2,142.8
3,214.3
4,285.7
6,428.5
8,571.4
10,714.2
$10,000
357.1
2,142.6
4,285.0
6,427.8
8,570.4
1,2855.6
17,140.8
21,426.0
$20,000
714.3
4,285.7
8,571.4
12,857.0
17,142.7
25,714.1
34,285.4
42,856.8
*Based on $28 silver price

 

A $3,000 monthly budget needs 1,285 ounces to get through one year, or 3,857 ounces for three years.

 

I know these amounts probably sound like a lot. But here's the thing: if you don't save now in gold and silver, you're going to spend a whole lot more later. What I've outlined here is exactly what gold and silver are for: to protect your purchasing power, your standard of living. 

Jeff discusses the Hard Assets Alliance as a solution worth considering when purchasing bullion. For more information on the HAA can be found here. 

Click the play button below to listen to Chris' interview with Jeff Clark (46m:01s):

 

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Sat, 11/17/2012 - 17:41 | 2992285 Silver Garbage Man
Silver Garbage Man's picture

The answer to how much should you have is 100 % - what ever % you are willing to see vapourized when the ponzi collapses.
Once you realize this is a take down by the illuminati, it becomes obvious to hold as much as you can.

Sat, 11/17/2012 - 19:20 | 2992472 samsara
samsara's picture

"...Once you realize this is a take down by the illuminati, it becomes obvious to hold as much as you can."

 

THAT is what to keep in mind.  Regardless of the day to day details that may confuse you.  You should have a long range stragegy.  (but the long term stategy is actually getting you through the next 10 years.  If you make it thru the other side...

Good Luck. 

 

Sat, 11/17/2012 - 17:47 | 2992294 DowTheorist
DowTheorist's picture

One positive for gold:

The gold /dow ratio turned long term bullish for gold on Nov 7:

http://www.dowtheoryinvestment.com/2012/11/dow-theory-update-for-nov-8-s...

As important as the GOLD/DOW ratio is the BLV (long-term bond term bond) /gold ratio.

Gold will not really shine until the long-term bond /gold ratio denotes that gold is holding the upper hand. Until now, the ratio is solidly bullish, which implies treasuries being stronger than gold.

http://www.dowtheoryinvestment.com/2012/10/dow-theory-spells-trouble-for...

 

 

Sat, 11/17/2012 - 17:47 | 2992296 Atomizer
Atomizer's picture

 

 

Asia and the Promise of Economic Cooperation - Remarks by Christine Lagarde

http://www.imf.org/external/mmedia/index.aspx

Gold in the IMF

Making Gold Mining a Force for Development – World Bank

Fast & Furious demand reduction strategy. Administration will meet brick wall, selective memory always prevails during the process of getting caught in a lie.

http://www.trilateral.org/download/video/Negroponte.html 

These fuckers are chasing their own tail.

Sat, 11/17/2012 - 17:53 | 2992304 q99x2
q99x2's picture

Worth your weight in gold unless you're one of those fat fuckers in which case you take two onces off for every pound overweight.

Sat, 11/17/2012 - 18:03 | 2992315 eddiebe
eddiebe's picture

 Oh come on now!!  I really don't need to have anyone to tell me how many ounces of gold I should own. I know how many ounces of gold I want to own!

Sat, 11/17/2012 - 18:03 | 2992316 dinastar2
dinastar2's picture

OK high inflation is back - 1st scenario : A new Paul Volcker jacks up the interest rate (up to20-25%) to avoid a chinese-japanese manssive selling of T Bonds.So a lot of austerity , 3 years of deleveraging, massive unemployement, but the cure really works.Gold will plummet. You the savvy saviours have lost your investment

2nd scenario :   Hyperinflation and still Ben Bernanke or a clone of him at the Fed.The Fed wants to outsmart the chinese-japanese so you have more QE 4-5-6-etc... the $ dollar plummet and gold goes through the roof BUT (here is the catch ) GOLD is voted ILLEGAL as a mean of payement inside the USA .Meaning your gold really belongs to the Government.So you suffer fom high inflation but the goivt has confiscated your hedge.FDR did that in 1933.

Please vote for wich scenario you think is more credible:My opinion is scenario No.2 is the real one.

Sat, 11/17/2012 - 18:17 | 2992339 hapless
hapless's picture

As I have always said, it will not be safe to bring out your gold until the air is filled with the stench of the rotting apparachtik. In the meantime, barter with cigarettes and hope for the best.

Sat, 11/17/2012 - 22:43 | 2992806 Ginsengbull
Ginsengbull's picture

Everclear grain alcohol.

 

Anesthetic, antiseptic, universal solvent, emergency motor vehicle fuel, improvised incendiary device, memory eraser, truth serum....

Sun, 11/18/2012 - 02:34 | 2993165 Real Estate Geek
Real Estate Geek's picture

. . . and a hell of a leg spreader!

Sat, 11/17/2012 - 18:34 | 2992372 cossack55
cossack55's picture

There have been a lot of things voted illegal that the majority of citizens ignore daily.

Sat, 11/17/2012 - 22:20 | 2992754 BooMushroom
BooMushroom's picture

There were 9 "marijuana for sale" ads on Craigslist for my area today.

Your argument is invalid.

Sun, 11/18/2012 - 09:48 | 2993363 Vooter
Vooter's picture

"GOLD is voted ILLEGAL as a mean of payement inside the USA . Meaning your gold really belongs to the Government. So you suffer fom high inflation but the goivt has confiscated your hedge."

LOLOLOLOLOLOL!!! How's the government going to find everyone's gold so that they can confiscate it? Are they going to do a yard-by-yard search of the U.S. mainland? Plenty of people didn't "turn in" their physical gold in '33--and that was when the population actually had some (misquided) respect for the U.S. government. As I assume you're aware, marijuana has been illegal in the United States for many decades now. How many people do you think turn their pot stash into the government? LOL...wake up...

Sat, 11/17/2012 - 18:15 | 2992334 fuu
fuu's picture

More.

Sat, 11/17/2012 - 18:23 | 2992352 Yen Cross
Yen Cross's picture

 I need to start a pawn shop in a Farmers Market ... Pm's and Gems in, and " Fiats for Foods out...  ;-)

Sat, 11/17/2012 - 18:28 | 2992360 fuu
fuu's picture

Cross market pollination.

Sat, 11/17/2012 - 18:40 | 2992388 Yen Cross
Yen Cross's picture

 Hey :-) Happy Week End fuu! Hope you have been doing well...

Sat, 11/17/2012 - 18:47 | 2992401 fuu
fuu's picture

Everything proceeds apace.

Sat, 11/17/2012 - 18:53 | 2992419 Yen Cross
Yen Cross's picture

 As in status quo, or beating the markets like a "RED" headed stepchild? /s

Sat, 11/17/2012 - 19:17 | 2992465 fuu
fuu's picture

"The horse walked with a patient, uncomplaining gait. It had long grown used to being wherever it was put, but for once it felt it didn’t mind this. Here, it thought, was a pleasant field. Here was grass. Here was a hedge it could look at. There was enough space that it could go for a trot later on if it felt the urge. The humans drove off and left it to its own devices, to which it was quite content to be left. It went for a little amble, and then, just for the hell of it, stopped ambling. It could do what it liked.

What pleasure.

What very great and unaccustomed pleasure."

Sat, 11/17/2012 - 19:35 | 2992496 Yen Cross
Yen Cross's picture

 Good on you fuu. 

  JUST remember... to never !... look a gift UNICORN in the eye.

Sat, 11/17/2012 - 18:27 | 2992358 mjorden
mjorden's picture

But our dollars are backed by the faith and credit of the United States government!

Sat, 11/17/2012 - 18:29 | 2992363 AgShaman
AgShaman's picture

One hundred ounces of silver....and one ounce of gold

....for every year of your working adult life

Sat, 11/17/2012 - 18:40 | 2992390 Dre4dwolf
Dre4dwolf's picture

My only argument AGAINST inflation is, that

Its easy to double 1 Million dollars 

Its hard to double 15 Trillion.

BUT since the M2 Charts are essentialy "parabolic" and we are over the curve, its QUITE POSSIBLE to happen in a short time-span.

 

Right now most of the inflation is tied up doing work running the "virtual world", stocks are in a bubble, other currencies are in a bubble, everything ins in a bubble, and housing is a sinking ship, they are just dumping money into a sinking ship that will never float again.

 

The next real-estate boom will be in large scale apartment buildings in new - developement areas (wherever people move to get away from the worst places like major city areas).

Trains might see a new boom, as fuel costs for cars rise, and airplane fuel becomes expensive / forcing the cost of flying too high for most.

I actually see high - speed rail as the "next big thing" in like... 15 ~ 20 years.

 

Sat, 11/17/2012 - 19:18 | 2992469 Bansters-in-my-...
Bansters-in-my- feces's picture

Answer:  all of them...Haha!

Sat, 11/17/2012 - 19:18 | 2992471 pitterrier
pitterrier's picture

If we experience significant inflation, be assured that all mortgage contracts will be modified by the banks and their lapdog politicians to inflation adjusted principle and interest payments.  There is not a chance in hell that the banks are going to allow borrowers to benefit at their expense.

Sat, 11/17/2012 - 19:44 | 2992505 ArrestBobRubin
ArrestBobRubin's picture

Weary you say??? Who's weary?

What I am is happy: happy we're not in chaos yet. And super happy to have had yet another year to accumulate more physical silver and gold at prices that are nothing short of cray-cray.

In reality, this government subsidized bonanza has been the Bailout for the Average Joe. The only question is whether Joes (and Janes) were smart enough to see it that way, and bold enough to seize the moment.

If 2013 brings another year of artificially supressed paper metal prices that allow me to swap less trash fiat paper for more Hard Assets and Real Money, so be it. Because one of these days that's all going to change, and it will change in a big way. Until then? Disciplined accumulation via Dollar Cost Averaging is the name of the tune we dance to.

Keep your head down, and just keep stacking. Month in, and month out. The rest will take care of itself in due time.

Weary's got nothing to do with it. It just.... is. You take what the defense gives you.

Sun, 11/18/2012 - 10:28 | 2993403 Absinthe Minded
Absinthe Minded's picture

Bingo! You better take advantage of it while you still can. Let these clowns blow their cash on big screen TVs or the new Dodge Dart. What a joke this world has become, it is like a caricature of what life used to be. So sad.

Sat, 11/17/2012 - 19:41 | 2992507 Supernova Born
Supernova Born's picture

All I need is lead, brass, water and a freight train to move it all around.

Sat, 11/17/2012 - 20:02 | 2992534 ArrestBobRubin
ArrestBobRubin's picture

One thing ZH still stuggles to understand overall: what people need to be doing is SAVING in gold and silver. "Investing" in it has its benefits but is NOT a substitute or replacement for saving wealth and savings in metal form.

Just because gold has been the best performing asset class over the past 12 years does not mean one should only "invest" in it. Until you undertand that the real imperative is to SAVE in a form of money that cannot be debased, you really don't understand the need for (or the benefits of) gold and silver ownership.

This is exacty what Jeff Clark says in this chat with Chris Martenson. To protect ones wealth and purchasing power via the ownership of gold and silver. In short, it's Standard of Living insurance.

All here would do well to embrace this knowledge and act on it while supply is easy and prices remain low. Dilettantes and lightweights "invest" in PM, mostly via trading in GLD and SLV (paper metal) shares. Those in the know SAVE their wealth in physical gold and silver.

The difference is night and day.

Sat, 11/17/2012 - 20:11 | 2992554 Benjamin Glutton
Benjamin Glutton's picture

no more than I can sew into my clothing?

 

“… [G]old is a great thing to sew onto your garments if you’re a Jewish family in Vienna in 1939 but civilized people don’t buy gold – they invest in productive businesses.”— Charlie Munger.

Sat, 11/17/2012 - 22:31 | 2992783 BooMushroom
BooMushroom's picture
“… [G]old is a great thing to sew onto your garments if you’re a Jewish family in Vienna in 1939 but civilized people don’t buy gold – they invest in productive businesses.”— Charlie Munger.

He's begging the question: are we a Jewish family in Vienna in 1939?

Sat, 11/17/2012 - 20:31 | 2992598 Wave-Tech
Wave-Tech's picture

Low end: 10% of NET WORTH / Mid-Range: 15% NET WORTH  / High-end: 20%+

Do what you must to make it so ASAP - hope you never need to spend it - and rebalance your hard-money to Net Worth Ratio every year or so...

Download the excel spread sheet on this bonus page to play with budgeting for essential allocations beyond that of Gold/Silver as there are a few more MUST-HAVE tangible assets that one must have at the ready.  Without them, all the gold in the world is worthless....

http://prudentmeasures.blogspot.com/p/bonus.html

Sun, 11/18/2012 - 10:22 | 2993400 Absinthe Minded
Absinthe Minded's picture

Interesting worksheet, but going by their projections shouldn't we all be buying Silver? Projected increase in fiat value seems way more desirable than Gold. To think, I was buying Silver all this time because I could afford it easier. I didn't know I was an investment genius.I know, even a blind squirrel finds a nut once in a while.

Sat, 11/17/2012 - 21:58 | 2992720 Never One Roach
Never One Roach's picture

Lets look at it this way. My house value is down 38%, my dollar purchasing power is down about 40% over the past five years and my GLD and SLV are up over 250%.

 

'nuff said.

Sat, 11/17/2012 - 22:25 | 2992767 Cabreado
Cabreado's picture

This article is disturbing on many levels, it's simplicity and shallowness first.

Mr. Clark, I'm sure you mean well, but there will be no charts to guide us from here to there.

 

Sat, 11/17/2012 - 23:10 | 2992847 RockyRacoon
RockyRacoon's picture

That would be correct.  All this goes out the window in the real world.  "Accumulate!" is the only relevant phrase.

Sun, 11/18/2012 - 00:06 | 2992954 User 3461
User 3461's picture

Key take away: I'm screwed.

Sun, 11/18/2012 - 01:26 | 2993091 Manic by Proxy
Manic by Proxy's picture

In discussing the topic of stacking incessantly with Mrs. Manic, we have covered food, ammo, silver, gold, water, seeds and even soap, toothpaste, shampoo and detergent. When the topic of toiletpaper arose, she sagely observed that you needn't have more toiletpaper than food. Thus proving (once again, dammit) her superior analytic acumen.

Sun, 11/18/2012 - 01:37 | 2993101 mt paul
mt paul's picture

i stack

therefore i am ...

Sun, 11/18/2012 - 03:11 | 2993183 Rick Blaine
Rick Blaine's picture

If you think you REALLY "need" gold (or silver), you really need lead.

Sun, 11/18/2012 - 03:31 | 2993201 Silvertrader
Silvertrader's picture

I own gold and silver but also trade it using CFD's.

Sun, 11/18/2012 - 11:56 | 2993566 Sudden Debt
Sudden Debt's picture

actually, 4 years ago I calculated that I would need 8000 ounces of silver. Do Did Done.
But I do think this calc is wrong. the price stays at 28 dollars? that means only the dollar would drop and demand for the metals would not increase.
So I think in such a scenario, demand will go thermo nuclear propping up the price to at least 500 inflated dollars versus inflated global currencies.
remember, the euro is also death, china is only maximum 6 months aways from hyperinflation and also has a 22% unemployment rate which will cause their real estate bubble to explode and with 64 million vacant appartments versus 650.000 in the US, that bubble will be epic.

I think that Joe average should own at least 250/500 ounces. and that is so he or she can buy a ticket out of that mess and go international for a year. not in the barbados of saint johns but in a comfortable place with plenty of food and a climate that allows a lesses luxurious lifestyle.

remember, the guy who has 250 or 500 ounces has about 250 to 500 times more than the guy who sells everything to get one.

Do NOT follow this link or you will be banned from the site!