Darren Kugler
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Darren Kugler in Commodities,

Here’s the chart gold bugs don’t want you to see

Do precious metals really protect you? Not if the history of silver is any guide


If you’re among those who’ve stocked up on gold bullion to protect your family’s long-term wealth, for heaven’s sake don’t look at the chart above.

It won’t help you sleep.

The chart shows what happened the last time a precious metal was dropped as a monetary standard by the federal government.

Uncle Sam stopped treating gold as “money” in 1971. But he stopped treating silver as money all the way back in 1873.

And since then, it has been a spectacularly poor investment.

It hasn’t been a “safe haven” or a “store of value.” It hasn’t protected owners against inflation, war or depression. And it’s lost a third of its purchasing power.

A troy ounce of silver will get you about $16 today. But to buy the same amount of goods and services as it did back in 1873, silver would today have to be around $25 an ounce, or more than 50% higher.

Yes, it’s done better over that time than paper dollars kept in a mattress, which have lost 95% of their purchasing power.

Today it is impossible to draw any serious conclusions about how gold ‘will’ perform during some future state of inflation, chaos or disorder.

But it’s done but vastly worse than bonds or real estate, let alone stocks.

In total, silver has averaged price gains over that period of 1.8% a year … before inflation.

And it’s lost an average of 0.3% a year in real, purchasing-power terms.

The chart shows just how unsteady this performance has been as well.

Only during the years 1973 to 1980, and 2003 to 2011, did silver bugs see serious gains. During the 1950s and 1990s, silver bought barely a third as much as it did back in 1873.