Days 29-31

Good evening, readers.

First, my sincere apologies for neglecting this blog over the past several days. I'm not going to make excuses, suffice it to say that I had been extremely busy with work and couldn't find the time to plug in the numbers, let alone write something useful or even remotely entertaining. With that out of the way, lets turn out attention to our hypothetical investments...

Since Friday, our precious metals have continued to beat our Vanguard 500 Index Fund investment, in spite of two significant down days in precious metals, yesterday and Monday. Our precious metals have now appreciated by more than 7% since we bought them, giving us a total return of 2.4% (remember the 5% premium we paid for them?), versus just 1.1% for our S&P 500 (Vanguard 500) investment.

As some of you may have seen before, I like creating charts in Excel to try and explain data and (ultimately) to make predictions. Therefore, I present the following two charts:

Snapshot of Vanguard 500 (S&P 500) Performance-to-Date
With Polynomial Regression Curve Indicating Expected Performance Through 4/30/2011

Snapshot of Precious Metals Performance-to-Date
With Polynomial Regression Curve Indicating Expected Performance Through 4/30/2011

This is not to say that by the end of the month our Vanguard will be at -4%, while our precious metals will be at +17%. What this says is that the best fit curve -- the R-squared value -- is fairly well-correlated to these data points. The important thing is to look at the trend, not the absolute value. The trend -- based on our totally arbitrary starting point -- for precious metals is decidedly upwards (with an ~89% correlation), while the trend for the S&P 500 is mostly downwards (with a ~75% correlation).

Over the years I've found that these charts are very good at predicting long-term movements, but not so good at predicting short-term values. How good are they at predicting short-term movements? Why don't we re-visit this in 17 days...

Here are the numbers, delayed, but hopefully worth it:

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Day 27

Results upon NY close of trading -- April 13, 2011:

• Gold closed at $1,457.40 per oz, up $3.70 and 0.25% from yesterday. Silver closed at $40.66 per oz, up $0.55 and 1.37% from yesterday.
• VFINX closed at $121.15 per share, up $0.03 and 0.02% from yesterday.

Investment #1, Precious Metals:

• Percent return for the day: 0.84%
• Profit for the day: $851.41
• Total percent return: 2.4%
• Total profit: $2,443.48

Total investment value: $102,365.26

Investment #2, Vanguard 500 Index:

• Percent return for the day: 0.02%
• Profit for the day: $25.02
• Total percent return: 1.1%
• Total profit: $1,084.20

Total investment value: $101,038.91

Advantage: Precious Metals, by $1,326.16

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Day 26

Results upon NY close of trading -- April 12, 2011:

• Gold closed at $1,453.70 per oz, down $9.50 and -0.65% from yesterday. Silver closed at $40.11 per oz, down $0.11 and -0.27% from yesterday.
• VFINX closed at $121.12 per share, down $0.94 and -0.77% from yesterday.

Investment #1, Precious Metals:

• Percent return for the day: -0.45%
• Profit for the day: $-461.99
• Total percent return: 1.6
• Total profit: $1,592.07

Total investment value: $101,513.85

Investment #2, Vanguard 500 Index:

• Percent return for the day: -0.77%
• Profit for the day: $-783.96
• Total percent return: 1.1%
• Total profit: $1,059.18

Total investment value: $101,013.89

Advantage: Precious Metals, by $499.77

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Day 25

Results upon NY close of trading -- April 11, 2011:

• Gold closed at $1,463.20 per oz, down $11.80 and -0.80% from last week. Silver closed at $40.22 per oz, down $0.71 and -1.73% from last week.
• VFINX closed at $122.06 per share, down $0.34 and -0.28% from last week.

Investment #1, Precious Metals:

• Percent return for the day: -1.34%
• Profit for the day: $-1,332.98
• Total percent return: 2.1%
• Total profit: $2,054.06

Total investment value: $101,975.84

Investment #2, Vanguard 500 Index:

• Percent return for the day: -0.28%
• Profit for the day: $-850.68
• Total percent return: 1.8%
• Total profit: $1,843.14

Total investment value: $101,797.84

Advantage: Precious Metals, by $177.80