Jeff Clark, Senior Precious Metals Analyst, GoldSilver
AUG 31, 2016
Most of you are convinced of the need to own gold and silver. But as you continue to accumulate, a question naturally arises: how much do you need?
Imagine the sick feeling in your gut if we get to the crisis and you suddenly realize you didn’t buy enough bullion to get through it. For this reason alone, it’s worth thinking about how many ounces you might need.
Traditional financial advice is that gold should comprise 5% or 10% of assets. But Mike and I are convinced that won’t cut it in the turmoil ahead. What passes for “normal” advice could be financially devastating in abnormal times.
If you’ve struggled to determine if you have enough physical gold and silver, I have a practical guide for you. This measuring stick is a more effective way to gage if your allocation will be sufficient.
Which brings up a rather obvious question:
When we sell, what will you do with the proceeds?
There will be plenty of options, from buying undervalued investments to building a family fortune… from buying a vacation home to supplementing your income during the crisis.
The point is, you will buy something with those proceeds.
And that is the starting point in knowing if you have enough ounces: will your stash be sufficient to support your standard of living during a major financial disorder?
A “major financial disorder” will include inflation, of course, but it’ll be much more than that. The global economy is likely to undergo a series of crises, only one of which will be inflationary.
And those crises won’t resolve quickly. As a result, we need to be prepared to weather all storms that hit our economy, markets, and monetary system, even if they last for several years. We’ll be living through the entire transition period.
And that means we may need to supplement, or fully support, our standard of living.
It is with this reality in mind that the following tables were created.
I calculated how much gold and silver you would need based on two factors: your monthly expenses, and how long the crisis period lasts.
Here’s the table for gold.
If you want to supplement your expenses by $500/month and the crises last three years, you would need about 14 ounces of gold to get through it.
[The charts assume the gold price keeps up with inflation, though history shows it is likely to far surpass CPI readings. If so, it’s possible we’d need less than what is shown. It also assumes you pay the taxes from another source.]
If you want to cover $3,000 in monthly expenses, you’d need 45 ounces to meet a crisis period of two years, and 90 ounces if it lasts four years.
Those already well off or who want to live like Mike or Alex should use the bottom rows of the table.
Of course we own silver too. Here's how many ounces you’d need if you’re using silver proceeds.
A $500/month supplement would need 300 ounces of silver to get through one year, or 1,500 ounces for five years.
If you want $3,000/month, you’ll need 1,800 ounces for one year, or 7,200 if it lasts 4 years.
Of course we can use both gold and silver to meet expenses. For $1,000/month, you’ll need nine ounces of gold and 600 ounces of silver to get through a two-year crisis period.
These amounts may look high, but keep in mind that if you don't save in gold and silver now, you'll be forced to spend a whole lot more in currency later.
These tables show how practical gold and silver can be. They really can be used to protect our standard of living—and even improve it.
So how much gold and silver do you need? I hope these tables show what you need to accumulate.