My 1st Million At 33 - yes, you can do it too

I have been contemplating on buying more physical gold/silver coins. Interesting emotions emerges when I visualize myself with the coins, having the actual price in mind. A gold coin would be costing me about $825, while a silver coin would be costing me about $16. The weights are the same, while the size of gold coin would be about 25% smaller in diameter (due to the difference in specific weight).

I kept thinking, “Geez, this tiny thing (gold coin) really costs.” While for silver coin, my first feeling is that it’s a pretty reasonable price if not cheap. I’ve seen many wild claims from gold bulls that gold is going to $2000+ or even $5000. I took their words without thinking. But those claims are based upon the BUBBLING price of $850 back from 1980. From the following historical chart of gold price,

I’m tempted to say that a “reasonable fair” price would be about $140 (roughly mid-point of $180 and $100) from 1975 to 1978, that will give an inflation-adjusted price of $536.84, based on Fed’s inflation calculator. If I tack on an extra 0.5% under-estimate of CPI annually, the price becomes $629.73. If I tack on an extra 1% under-estimate of CPI annually, the price becomes $738.12. Whatever mark-up you want to apply, it certainly appears that the current gold spot price is trading above the “fair” price. It means that gold is not as cheap as before. But it also means that the gold bull market is definitely in motion, and that the second phase of gold bull market is most likely upon us.

Another corollary from this, silver will always be the “poor man’s gold”. It will always rise more in percentage, simply because it is cheaper in absolute price, and it has similar monetary values like gold.