SILVER: Inflation Hedge, Store of Value or Great Investment
Recently, Don Harrold came out with a YouTube video on how silver has been a poor inflation hedge since 1914 as it has underperformed its expected price for most of the time. In this part of his video he brings back an interview of what he said about silver in 2011, when silver had shot up to $43 on ounce. Basically, Harrold was saying that he was not a buyer of silver at time because the current price had shot way above its expected price based on the inflation rate.
Harrold provides this screen shot in his video to show that silver had way out performed its expected priced (base on inflation) in two periods.
The numbers at the bottom do not represent actual years, but the number of years since 1914. The two huge price spikes were in the 1976-1980 & 2009-2012 periods. The blue line represents what the expected silver price should be based on a normal inflation rate.
Harrold includes a table that shows this rate of chance since 1914. He explains that for most of the years since 1914, silver has been a lousy inflation hedge.
This is another table showing that the 2013 expected price of silver should be $19.13, and the current actual price at the time was $19.45… which according to these statistics, Harrold believes is right in line with the inflation rate.