Buying Stocks Silver
Buying Stocks Silver
Mexican Stocks, Silver, and Real Estate–A Ten Year Review
By: Jim Scherrer
The Consumer Price Indexes (CPI) program of the US Department of Labor produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services in the United States. Tracking the CPI data began in 1913 and by 1983, inflation had reached 100%. Therefore, today most all data is calculated using a 1983 base of 100. For example, a CPI of 215.3 in 2009 indicates 115.3% inflation since 1983. Below is the inflation calculator based on data provided by the U.S. Department of Labor Bureau of Labor Statistics showing inflation during the past decade:
CPI Inflation Calculator
If in 1998 (enter year)
I purchased an item for $100
then in 2008 (enter year)
that same item would cost: $132.09
Rate of inflation change: 32.1%
The above calculator shows that if you put $100 under your mattress ten years ago it, through the inflation of goods and services during the past decade, it would be worth $76 ($100/1.32) today, i.e., worth 76% of its original value or a loss of 24% in terms of 1998 purchasing power.
In order to hedge against inflation, many advisors suggest that you buy various commodities, oil and gas, foreign dollars, Real Estate Investment Trusts (REITS), Treasury Inflation-Protected Securities (TIPS), gold, and silver, etc. All of these investment vehicles are now available through Exchange Traded Funds (ETF’s) where you don’t have to take physical possession of the commodities; for relatively small investments, gold and silver in the form of bullion or coins is readily available and simple to purchase and hold. All of these forms of hedges against inflation can be excellent, however for the purpose of this article, we’ll concentrate on silver.
Silver has always been one of Mexico’s major export materials; in fact, until just a few years ago, Mexico was the largest producer and exporter of silver in the world. Let’s assume ten years ago, instead of putting your $100 under the mattress, you bought $100 worth of silver selling at approximately $5.50/ounce. Today, at $16.65/ounce, you can sell your silver and enjoy a gain of more than 200%, i.e., your $100 investment is now worth $303 resulting in a 1999 purchasing power of $230 (76% of $303); not bad! If you’re concerned that the recent increase in silver prices is only a temporary spike, it should be known that silver was selling at $20/ounce in 1981 and when the Hunt brothers were speculating in 1980, it was driven up to over $50/ounce; now that was a spike! The last time silver was selling for $16.65/ounce was in 1981. Taking the CPI inflation index of 2.37 (1981 to 2009) into consideration, $16.65/ounce in 1981 was equivalent to almost $40/ounce (2.37 X $16.65) in today’s money and therefore it’s not too difficult to imagine a much further increase in silver prices! This logic is further reinforced when you take into consideration the weakening dollar forecasted for the near future. (see ten year silver price graph below)
The world’s leading miner and producer of silver is the Pan American Silver Corp. (PAAS), headquartered in Vancouver, B.C. This publically traded company has silver mines throughout Latin America with a couple of its largest mines in Mexico. In fact, one of these two mines is their only open pit mine and the other huge Mexican mine, located north east of Puerto Vallarta, has been producing the purest silver of all their mines since 1929. The graph below reveals the PAAS stock performance during the past ten years.
Next, let’s analyze the performance of the US stock market during the same ten year time frame. If your $100 had been invested in SPY, the S&P 500 ETF, it would be worth 80 dollars today per the graph below. Let’s take it a step further and adjust for inflation; that $80 would have only $61 (76% of $80) of 1999 purchasing power. Yes, that’s correct; if you were invested in the US stock market and your return was better than average, you’ve lost almost 40% of the purchasing power that you had ten years ago!
Now, let’s compare the ten year performance of the Mexican stock market (Bolsa) to the US stock market. If you had purchased EWW, the ETF basket of Mexican stocks, in 1999, you would have realized a 150% gain and your initial investment would now be valued at $250, with a 1999 purchasing power of $190 (76% of $250); pretty decent, especially when you compare it to the $61 left from investing in the SPY’s!
Review the graph below and you’ll immediately see how much the ETF basket of Mexican stocks (EWW) and the Pan American Silver Corp. (PAAS) stock had appreciated in value through 2007 and then fell precipitously in the second half of 2008. More importantly, you can see how both are recovering beautifully as the world recovers from the global recession. Comparing both of these Mexico related stocks to the SPY’s; you may never again want to invest your $100 in a US related stock! Assuming that the global economy continues its gradual recovery, it seems quite apparent from extrapolating the curves below that Mexican stocks and silver are very attractive areas for investing a portion of your portfolio at this time. It’s amazing to see how closely the EWW and the PAAS stock prices have correlated over the past decade!
Finally, let’s look at Mexican real estate. Along the prime region of the Mexican Riviera, property values have tripled from 1999 to 2008 (we don’t have any empirical data but after being invested in the real estate market in Puerto Vallarta for more than a quarter of a century, we can state it as a fact; some properties have quadrupled in value!), after which they have remained flat to perhaps dropping by as much as 20%. Therefore, a real estate investment of $100 in 1999 was worth about $300 in 2008. Assuming a depreciation of $60 (20% of $300) over the past 18 months, it’s now worth $240. In terms of 1999 purchasing power, it’s worth $182 (76% of $240); about the same as EWW and PAAS, not as much as silver, but a whole lot more fun than owning either! When comparing these facts and figures to the $61 of 1999 purchasing power remaining from the $100 invested in the SPY’s, it’s truly disheartening to think of those of you that were fully invested through IRA’s or 401k’s during the past decade. Fortunately, it’s not too late to recoup your losses; in fact, the time could never be better!
The recent drop in Mexican real estate values was caused mainly by the global recession; however, the recent border town drug cartel war news (1,200 miles between PV and Juarez!) and the swine flu scare (three confirmed cases in PV!) contributed significantly to the local real estate recession. The border town drug cartel war and the swine flu scare effects will vanish over time and in all probability, the property values will soon recover to their 2008 highs. Unlike the 20% property value drop in the US, there are virtually no foreclosures dragging down the housing values in Mexico. The housing crisis in the US will probably continue for a couple more years resulting in further erosion of home values by an additional 10-20%. Currently, millions of Real Estate Owned (REO-lender owned) properties exist in the US but you won’t find any in Mexico!
In summarizing, $100 placed under the mattress ten years ago has a 1999 value of $76 today, $61 if in the S&P 500 SPY’s, $230 if in silver, $190 if in the Mexican EWW fund, $185 if in the silver company PAAS, and $182 if in Mexican real estate. Regardless of where in Mexico you had invested your $100 ten years ago, whether it was in Mexican silver, stocks, or real estate, you’ve now got at least three times as much as you would have had if you had invested in the S&P 500 SPY’s! So, here we are in 2009; the question is where best to invest your remaining money after the fiasco of the past decade? With real estate prices 20% off recent highs, long term mortgages of 50% (or more) available in Mexico, and many developers willing to short term finance up to 50%, there has never been a better time to invest in Mexican real estate.
Why hesitate; isn’t it about time that you at least consider making an investment decision totally contrary to those recommendations that you’ve been receiving from your personal financial “guru” that have cost you 40% of your life’s savings? Come on down and retire in Mexico; maybe you’ll even want to buy a bag full of Mexican Libertads or dabble in the Mexican Bolsa through a vehicle such as the EWW fund while enjoying retirement to its fullest! Who knows; as you’re relaxing in your beach front condo on the Mexican Riviera, perhaps your investments in Mexico will gain enough over the next couple of years to recover what you’ve lost during the past decade!
(Please refer to GRAPHS associated with this article)
Buying Silver and Gold on the Taboo Stock Market.. Silver and Gold investing
|
|
Plus Size French Knickers Sizes 18 – 24. Asst Colours Buy Now Stock won’t last! $19.72 |
|
|
Plus Size French Knickers Sizes 18 – 24. Asst Colours Buy Now Stock won’t last! $14.80 |
|
|
Novelty Cufflinks – Silver Stock “Buy Low Sell High” $14.75 |
|
|
CUFFLINKS SILVER STOCK BROKER BUY SELL OVAL FREE SHIPPING USA GIFT BOXED BANKER $14.70 |
|
|
CUFFLINKS SILVER SELL HIGH BUY LOW BANKER TRADER STOCK BROKER WEDDING SALES BANK $14.70 |
|
|
Sterling Silver Stock says Buy Low Sell High Charm! $12.99 |
|
|
XMAS GIFT BLACK ENAMEL SELL BUY STOCK MARKET SILVER OVAL WEDDING MENS CUFFLINKS $7.99 |
|
|
DOW JONES NASDAQ STOCK MARKET BUY LOW SELL HIGH SILVER SQUARE WEDDING CUFFLINKS $7.99 |
|
|
FINANCES STOCK BROKER BUY LOW & SELL HIGH BLACK ENAMEL w/SILVER PLATED CUFFLINKS $7.99 |
|
|
DOW JONES NASDAQ STOCK MARKET BUY LOW SELL HIGH SILVER SQUARE WEDDING CUFFLINKS $7.99 |
|
|
XMAS GIFT BLACK ENAMEL SELL BUY STOCK MARKET SILVER OVAL WEDDING MENS CUFFLINKS $7.99 |
|
|
XMAS GIFT BLACK ENAMEL SELL BUY STOCK MARKET SILVER OVAL WEDDING MENS CUFFLINKS $7.99 |
|
|
DOW JONES NASDAQ STOCK MARKET BUY LOW SELL HIGH SILVER SQUARE WEDDING CUFFLINKS $7.99 |
|
|
FINANCES STOCK BROKER BUY LOW & SELL HIGH BLACK ENAMEL w/SILVER PLATED CUFFLINKS $6.99 |
|
|
STOCK MARKET BROKER BUY & SELL OVAL SHAPED BLACK ENAMEL SILVER PLATED CUFFLINKS $6.99 |
|
|
STOCK MARKET BROKER BUY & SELL OVAL SHAPED BLACK ENAMEL SILVER PLATED CUFFLINKS $6.99 |
|
|
STOCK MARKET BROKER BUY & SELL OVAL SHAPED BLACK ENAMEL SILVER PLATED CUFFLINKS $5.99 |
|
|
DOW JONES NASDAQ STOCK MARKET BUY LOW SELL HIGH SILVER SQUARE WEDDING CUFFLINKS $5.99 |
|
|
DOW JONES NASDAQ STOCK MARKET BUY LOW SELL HIGH SILVER SQUARE WEDDING CUFFLINKS $5.99 |
|
|
XMAS GIFT BLACK ENAMEL SELL BUY STOCK MARKET SILVER OVAL WEDDING MENS CUFFLINKS $5.99 |
|
|
DOW JONES NASDAQ STOCK MARKET BUY LOW SELL HIGH SILVER SQUARE WEDDING CUFFLINKS $5.99 |
|
|
XMAS GIFT BLACK ENAMEL SELL BUY STOCK MARKET SILVER OVAL WEDDING MENS CUFFLINKS $5.99 |
|
|
Oneida Mooncrest 45-Piece Flatware Set, Service for 8 $80.00 Frame an everyday dinnerware pattern or complement a dressy special-occasion table with the clean, gently rounded lines of Oneida’s Mooncrest flatware. Made of quality 18/0 stainless steel with a lustrous mirror polish, this durable yet elegant design features slightly elongated working ends balanced by slender flared handles with softly pointed tips. The curved edges make for a comfortable fit in… |
|
|
Sanyo BC1206 Kegerator Beer Cooler $728.57 Ideal for home brewers or just regular ol’ beer drinkers, this cooler keeps cold brews on tap and ready to pour. With a capacity of 6.5 cubic feet, the cooler holds up to a half-barrel keg and comes with a complete CO2 tap system to get things flowing. The tap system includes a Sankey keg tapper, a type that fits all North American beer kegs; a pressure gauge; a pressure regulator; and an arm, for… |
|
|
ViSalus Body By Vi Balance Kit {30 Meals, 5 Health Mix-Ins} $42.95 The “Balance kit” is designed to help you begin your journey by giving your body good nutritional balance. This kit contains 30 servings of balanced nutrition with our Vi-ShapeTM Nutritional Shake Mix for once-a-day balanced nutrition. The kit includes an assortment of our Health Flavors, to add flavor variety, and added health benefits to your shake. Included is access to our online Health Member… |
|
|
Apple MacBook Pro MD311LL/A 17-Inch Laptop (NEWEST VERSION) $2,149.99 Introducing the 17-inch MacBook Pro. The state-of-the-art quad-core Intel i7 processor delivers up to 2x faster performance (over the previous generation of MacBook Pro). New Thunderbolt technology lets you connect high-performance peripherals and high-resolution displays to a single port, and transfer files at lightning speeds. And with the built-in FaceTime HD camera, you can make astonishingly… |
|
|
Apple iPad MC706LL/A (32GB, Wi-Fi, Black) NEWEST MODEL $599.00 Pick up the iPad and suddenly, it’s clear. You’re actually touching your photos, reading a book, playing the piano. Nothing comes between you and what you love. To make that hands-on experience even better, they made the fundamental elements of iPad better – the display, the camera, the wireless connection. All of which makes the third-generation iPad capable of so much more than you ever imagined… |
|
|
Acer Iconia A510-10k32u 10.1-Inch Tablet (Olympic Edition-Black) $449.00 In celebration of the 2012 London Olympics, Acer unveils the Iconia Tab A510. This Special Edition Tablet carries the symbol of the iconic Olympic rings in its design – representing the strength, confidence and possibility that the Olympics stands for. Featuring NVIDIA® Quad-Core performance, the latest Android 4.0 OS and an amazing productivity suite, you can multitask at a new level and surf … |
|
|
Ferrero Rocher Hazelnut Chocolates 48 count gift box $13.10 Established 60 years ago by Pietro Ferrero as a premier chocolate maker in Italy, today, Ferrero Rocher delights chocolates lovers all over the world with its delicious creations. At the heart of Rocher chocolates are a whole roasted hazelnut and creamy chocolaty filling inside a light, crispy wafer, all wrapped in milk chocolate and finely chopped hazelnuts. This beautiful clear box contains 48 g… |
|
|
Apple iPod classic 160 GB Silver (7th Generation) NEWEST MODEL $228.99 The new iPod classic comes with 160GB of storage in the same compact size, making it the take-everything-everywhere iPod. It’s available in quintessential silver or striking black. iPod classic also has plenty of battery life (up to 36 hours of audio playback or 6 hours of video playback), good looks (a sleek, anodized aluminum design), and other great features (Cover Flow and Genius playlists for… |
|
|
Moshi Monsters Moshlings Toys Mini Figure 5Pack $11.99 Look for Special Ultra Rare Moshlings! Moshi Monsters is a brand new online game where you can adopt your very own pet monster. Each one has a lively, unique personality that develops the more you play…. |
|
|
2011 Canadian Silver Timber Wolf 1 Troy Oz Coin $59.95 The Royal Canadian Mint has placed a strict and and low mintage on these coins. With the unprecedented demand of these gorgeous .9999 fine silver coins in Europe and the rest of the world, these Timber Wolf coins will sell out very fast! The Canadian Timber Wolf coin is the first coin released in the Royal Canadian Mint’s 3-year long “Canadian Wildlife Coin Series” program. The obverse of the coin… |
