Guest Post: Time to Accumulate Gold and Silver?

Tyler Durden's picture

Submitted by Jeff Clarke of Casey Research

Time to Accumulate Gold and Silver

Do you own enough gold and silver for what lies ahead?

If 10% of your total investable assets (i.e., excluding equity in your primary residence) aren't held in various forms of gold and silver, we at Casey Research think your portfolio is at risk.

After speaking at the Cambridge House conference last month and talking with many attendees, I came away convinced that most investors fall into one of two categories: those that hold an abundance of gold and silver (which tends to be physical forms only), and those with little or none. While both groups need to diversify, I'm a little more concerned about the second group. Here's why.

Regardless of what you think will happen over the remainder of this decade, one thing seems virtually certain: the value of paper money will be affected, perhaps dramatically. Even if the economy slips into deflation, the deflation wouldn't last long. A panicked Fed would print to the max and set off a wild rise in prices. This is why we're convinced currency dilution will not only continue but accelerate.

Let's take a look at what's happened so far with the value of our currency vs. gold, after accounting for the loss in purchasing power.

Both the US and Canadian dollar, after adjusting for their respective CPIs, have lost about a quarter of their purchasing power just since 2000. Concurrently, gold has increased dramatically in buying power, far outpacing the effects of inflation.

This is the core reason why I'm convinced we should hold our savings in gold and silver instead of dollars. Let's take a brief look at how gold and gold stocks might perform if the economy takes a turn for the worse…


What If We Enter a Recession or Depression?

Mayan prophecies aside, many of our panelists last month, including most of the senior Casey staff, believe economic, monetary, and fiscal pressures could come to a head this year. The massive build-up of global debt, continued reckless deficit spending, and the lack of sound political leadership to reverse either trend point to a potentially ugly tipping point. What happens to our investments if we enter another recession or – gulp – a depression?

Here's an updated snapshot of the gold price during each recession since 1955.

Clearly, one should not assume that gold will perform poorly during a recession. Even in the crash of 2008, gold still ended the year with a 5% gain. And with the amount of currency dilution we've undergone since that time, it seems more likely gold will rise in any economic contraction than fall. Indeed, if the response of government to a recession is more money printing, precious metals will be a critical asset to have in your possession.

Even if the gold price ends up flat or down this year, the CPI won't. Gold's enduring purchasing power is why we hold the metal.

How about gold stocks?

In spite of the debilitating 1970s that suffered from stagflation, price controls, three recessions, and the Vietnam war, gold producers rose over 600% while the S&P was basically flat. And that includes a roughly 65% fire-sale correction, much like we saw in 2008. To be clear, gold and silver stocks won't be immune to selloffs if a recession or worse temporarily clobbers our industry. But in the end, we're convinced they will prevail.

Don't lose patience with, or confidence in, your gold holdings. What happens to the price over any short period of time is only one chapter in the book of this bull market, and we think you'll be happy by the time that last chapter is written.

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B-rock's picture

I've said this here before, but here goes again: In 1972, 1986 and today, a good new Ferrari costs 90 oz of gold.

Ahmeexnal's picture

So much for Iceland wanting to adopt the loonie.

They might as well adopt concrete boots and jump off a pier.

kito's picture

Back off of my friend jim.....

Mr Lennon Hendrix's picture

Fourth Rule:  Only two guys to a fight

kito's picture

who said mr. morrison was the one fighting?...............

GetZeeGold's picture



Fight all you want.....I'll hold your gold for you.


In a death match.....theoretically I'll only have to give back 50%.



smiler03's picture

How come it is ALWAYS overlooked that the poor sucker who bought gold on 21st January 1980 had to wait almost 28 YEARS to see their asset once again reach what they paid for it?

"The previous all-time record high gold price in US dollars, reached on 21st January 1980, fixing at $850.00 on that day's p.m. London fix, was finally topped on January 3rd 2008, 11 times in January, and again on February 1st."

edit: It's not difficult to foresee that gold bug rage will ensue and somebody will say something like... but if you bought it on ..... then it would be worth ..... today. Go on, surprise me.

bonderøven-farm ass's picture

Because boomers weren't intelligent enough to read the writing on the wall.  My generation has inherited this shit storm and we aren't buying the story line..... (ad meliora) 

Silver bitchezz.......! 

DosZap's picture

bonderøven-farm ass

Because boomers weren't intelligent enough to read the writing on the wall

 My generation has inherited this shit storm and we aren't buying the story line..... (ad meliora) 

Brainiac where were you?, if Boomers were not intelligent enough , Oh mighty one, why did your Dick get caught in the watergate?.

If YOUR generation was so intelligent, how did you get stuck?.

You assign blame but accept NO personal responsibility for yourself.Unless your 20yrs old, I do not buy it.

bonderøven-farm ass's picture

You don't have to 'buy' it....history speaks for itself, no?

Look around ya buttercup, what's your grand assessment? Want to lay the blame on the 30 somethings? The 20 somethings? Undoing decades of fiscal mismanagement, entitlement programs, reckless foreign policy, corporate 'globalism', and irresponsible legislation (to name a few) will take time......that's the legacy my generation has inherited.

Pull yer head outta yer ass.....

Lord Koos's picture

Want some cheese with your whine?  Do you somehow think history started with the baby boomers in 1970? 

GetZeeGold's picture



It's all in the timing.


No one held a gun to anyones head in 1980 and forced them to buy gold just the same as no one forced anyone to keep 100% of their retirement in Enron.......thanks for that gumball Paul Krugman.


Confused's picture

Of course not. But each generation has the power to stop the shit mess the previous one has created. 


Perhaps yours just joined the party........

GetZeeGold's picture



Party on Wayne.


DosZap's picture

bonderøven-farm ass

I am not laying blame on anyone asstard.

I am saying know what the hell your talking about, how this started..........99.5% says NO one here was alive when this BEAST was started, try 1913.

Facts are your homework.

bigkahuna's picture

I am frustrated too, but the boomers got played just like we have. They did not have the easy access we have to information. The word is out and we all are learning together on this, age is not relevant to what we are dealing with now.

Crash N. Burn's picture

the boomers got played just like we have. They did not have the easy access we have to information.


 Try to imagine a time boys and girls when there was no internet. The only information available was presstitute approved.

Ghordius's picture

and how many use the internet for news about Lady Gaga and sports only?

the presstitute is still working nearly as well as before

economics1996's picture

The boomers elected Ronald Reagan and he sold them down the river, just like Bush I and II.  Fuck we had a Republican house, senate, and president for 6 years and the mother fuckers still spent us into oblivion.  

Don't say the boomers did not try, they just didn't realize the Republicans were feeding them shit and they should have voted Libertarian.  Don't make the same mistake.

GetZeeGold's picture



It was Bush.......infinity.


/sarc the size of my ranch in Crawford TX.


Confused's picture

restricted information is part of what allows this game to continue.


which is why the internet will be shut down in some form.

Gold Dog's picture

As a boomer-

I did buy at high prices....but kept buying all along. It was easy to see where the policies of the Gubbmint were going to end up.

I also take some measure of responsibility for the trouble our country is in. (See above.) Once the draft ended I went on my merry way bitching and moaning but I know I should have fought harder to change things.

May future generations forgive me.




DosZap's picture

Gold Dog

Gold Dog, do not apologize for things 100% out of your control.

Government is to blame, for all this..........................ALL WE did was what we were taught was right, and worked for a better country for all .None of us did anything to bring this about,and there damn sure was nothing we could have done.

I have beat my brains in mailing/calling/donating to causes for change..............all it got me was less wealth,and losing candidates, and disrepect for failing.

WHO was the majority that voted the current asclown in?, youth, and women, and minorities.

So, see anyone can get suckered..............

kito's picture least the twenty year olds have enough sense to vote for ron paul...the boomers are still looking for more of the rape train by supporting romney.....

DosZap's picture


Kito, agreed to a point but I am damn sick and tired of the ass clowns here blaming the Boomer's for everything bad.(1946-64)

If they know history at all, they would go back and bitch about WHO really started the shit train.

Teddy Roosevelt,Woodrow Wilson, and FDR..........................LBJ, and Ted Kennedy, and ALF Gwhore.

The Tea Party, and the Conservatives are not buying into Romney.(and that covers a ton of boomer's, and millions that fall in that age bracket.),it's not that they do not want to support Ron, it's just the system is rigged against him,

A vote for Paul, unfortunately is a vote for Obama.(facts are facts)

Bottom line, is we must get the SOB out of the peoples house.....................with anyone but him, deal with the next one later.

jpalm's picture

"A vote for Paul, unfortunately is a vote for Obama.(facts are facts)"


Then so be it. Our republic is doomed regardless, may as well vote my conscience in the last election. I can sleep at night with that.

DosZap's picture


I just love Monday morning quartebacks..............................All that $$$$$$$$$ for only 9%?, in most cases.

RP has never garnered over 10% of the ELECTION vote.He has had the most respect ever this trip around, simply because the house is burning down.

I vote NO for all of them except Paul, but voting for him, gets me Obama,make a political statement and vote for him....................Same old shit KITO.

What does that get us a moral victory?, or 5yrs more of total tryranny.

sitenine's picture

So, you're saying, if I get you right, you'd prefer Mittens Romney as your President perhaps?  Maybe Santorum?  As you say, yes, there are ass clowns on ZH, but our ass clowns are world class.  You are a status quo-bot, a dime a dozen, and nothing special with nothing special to say.  BTW, what do you mean 5yrs more of total tryranny - you mean 4yrs? - and what the fuck is tryranny?  Seriously.

mnevins2's picture

I'm almost at 5%, but I very well recall the period that culminated in 1980 - and what followed afterwards.  Will it be "different" this time?  No idea.  And so I'm at 5%.  But it is disingenuous to "overlook" 1980 - 2000!

tmosley's picture

What, it's possible to lose money chasing parabolic moves?  NO WAI!

ljag's picture

Again, it matters not the price but how high ur stack is. Surprised?

nmewn's picture


And a dollar (your chosen value comparison, not mine) bought how many loaves of bread in 1980 vs 2008?

RafterManFMJ's picture



Just stepped out of the wayback machine: according to the inflation calculator:


What cost $100 in 1980 would cost $258.03 in 2008.

Also, if you were to buy exactly the same products in 2008 and 1980,
they would cost you $100 and $35.44 respectively.

nmewn's picture

Glad to have you back and I trust you're all in one piece with nothing of value missing ;-)

smiler03's picture

Hi nmewn, tis always a pleasure to see your comments ;O) Regarding the bread, Rafterman saved me the work! 

nmewn's picture

The time released decay of fiat is no way to value anything is it? ;-)

Paul67's picture

28 years? not bad, you have just made a great point; namely that given at most a few decades you won’t lose your purchasing power in the long run.  Sounds like ‘the’ money of savers to me.


How long do the people below have to wait to get the same purchasing power out of their paper?  I’ll save you the time, never is the correct answer Alex.


Question; If you had a time machine what would you to take as a form of money at your destination?  Simple, Gold if I want to buy land or politicians and Silver for everything else.  Then again you can buy Gold with Silver though at 15 to 1 so plan accordingly.  Unless you go foward in time at which 10 to 1 might be a better prediction.

Xploregon's picture


The answer is really simple; That was true then but, is it now? Looking at the totality of all curent world events and, the economic fundimentals, do you think it really is the same?

smiler03's picture

It's different now, of course.

Bansters-in-my- feces's picture

hey fucktard smiler03 I see you declined when they were passing out brains.

smiler03's picture

And let me guess... you're a goldbug and you don't like my question. It's your choice to ignore a historical fact.

FinsterMonster's picture

All time high for gold was year 1492, adjusted for inflation to 2012 = $3357 per oz.

Gold has not come back to its all time record in 520 years...

Source: for the 1492 to 1998 chart

Inflation calculator:

smiler03's picture

Well that's an interesting take on it :O)

Silveramada's picture

poor sucker average Joe then went and buy a home in 2005-2006...

WhiteNight123129's picture

I will sell when Gold gets at 12% of M3, and when Jim Rogers is trashing Gold and nobody listens to him because everyone is packined and "inflation panic is the headlines of WSJ ", then you buy Chinese stocks hands over fist, consumer spending sector and consumer financials in China. Yuan and HKD are good diversifaction of currency too for now. There are convoluted ways to buy Yuan. For now hoarding BITCHEZ that is PMs and agri commodities. Smiler03 this recipeworks since 1782,worked  before 1819, 1864, 1920, 1950, 1980, go to school smiler03.

smiler03's picture

But it didn't work between 1980 and 2008.

That's all I said.

Learn to read.

akak's picture

So you cherry-picked one 28 year period out of several thousand years, and expect us to take your argument against gold seriously?  What about those --- the VAST majority --- who did NOT buy gold at its one-day price peak in 1980?  I am still well ahead on the two Krugerrands which I purchased less than one year prior to that price spike in early 1980 --- can you say the same about your bank account?

Where did you go to school, anyway, the Jon Nadler Academy of Disingenuous Propaganda?

Diogenes's picture

And if you bought the Dow in October 1929 you would have gotten even in 1954. So what?

How about this. If you bought New York Central Railway, one of the market leaders of the time, you would never have gotten even. If you bought Johns Manville, another Dow stock, in 1980 and held it until now you would have lost all your money.

It is easy enough to pick a time period when you would make, or lose large sums of money. It is easy to find a time when your investment in a certain stock would have gone to zero. It is impossible to pick a period when gold went to zero.

smiler03's picture

How come it is ALWAYS overlooked that the poor sucker who bought gold on 21st January 1980 had to wait almost 28 YEARS to see their asset once again reach what they paid for it?

27 people downvoted my post. 

It is clear then that at least 27 people disagree with history. With hindsight, Gold was a BAD investment in 1980 unless you were prepared to wait for at least 28 years. Why downvote it? The answer is obvious, you're scared shitless that it might happen again.



Who knows?

I'm in Silver, f*** gold. Smileys :O) :O) :O) :O) :O)