Feeling bad with statistics

It would be no surprise to me if bullion investors would simply want to forget this year’s market results.

I have begun to look forward to 2016.

Next year will bring the fifth anniversaries of the highs for both gold and silver in the present cycle.

In April of 2011, silver peaked out at $48 a troy ounce, if we want to put the figure in a convenient round number.

For gold, the anniversary of the peak price comes in September, when we will recall the conveniently rounded $1,900 apex that then was achieved.

I have no way of knowing what the prices of either metal will be on their respective anniversaries, but I can and did look up where the metals sat five years after the peaks of 1980.

Gold and silver peaked simultaneously in 1980, aided in part, by Nelson Bunker Hunt’s attempt to corner the silver market.

The January 1980 figures I use are $850 for gold and $50 for silver.

In January 1985 gold was at $308 and silver was at $6.28.

That means gold was trading at a loss from the peak price of $542. In percentage terms the decline was 63.76 percent.

For silver, the decline of $43.72 in percentage terms was a loss of 87.44 percent.

How do these historical numbers compare to where we stand today?

Checking the Kitco website I see gold is trading this morning at $1,066.40 and silver is at $13.81.

For both, the percentage losses from 2011 are smaller than they were from 1980 to 1985.

For gold, the present loss stands at $833.60, or 43.87 percent.

For silver, the loss is $36.18, or 75.38 percent.

What does this mean? Obviously, in both instances the pain suffered by gold investors is less than silver investors.

Silver has been reputed to be more volatile and more attached to the economic cycles than gold. These numbers add just a bit more proof for that contention.

The fact that current bullion cycle losses are milder raises the question as to whether the cycle has completely run its course.

If gold precisely matches the five-year figure from three decades ago, come September 2011 the metal could be sitting at $688.56. For silver, the April five-year anniversary number could be $6.03.

Is there any solace in these numbers for bullion owners?

If there is, it might be expressed simply as it could be worse. It was worse in 1985.

Events of 2016 will determine where we go from here and whether history repeats.

Buzz blogger Dave Harper has twice won the Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper "Numismatic News."

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