A bigger number. How much more buying power?

Two different measurements

A nominal return describes the change in a monetary value. A real return adjusts that change for the movement in a chosen price level. If a holding is worth more money but everyday prices have also risen, its additional purchasing power is smaller than the headline gain. The Federal Reserve Bank of St. Louis distinguishes current-price measures from inflation-adjusted measures precisely because money totals and buying power answer different questions.

Divide the growth factors

Suppose a hypothetical holding rises from 100 to 110 monetary units during a period in which the relevant price index rises from 100 to 105. The nominal gain is 10%, and inflation is 5%. Divide 1.10 by 1.05, then subtract one: the real return is approximately 4.7619%. Simply subtracting 5% from 10% gives a useful rough approximation, but 5% is not the exact inflation-adjusted result in this example.

Choose the period and basket

Both inputs must describe the same period and currency. Comparing a monthly silver movement with a full year’s inflation would mix incompatible measurements. A broad consumer-price index represents an average basket, not every household’s actual spending pattern. It is still a useful reference when clearly identified. Realised inflation measures what happened during the period; expected inflation is an assumption about the future. Substituting one for the other changes the question being answered.

Include the ownership experience

This illustration measures the change in metal value before transaction costs, storage, product fees and tax. Those items can reduce the return actually retained. Calculate the appropriate nominal result first, then apply the inflation adjustment consistently; recurring contributions require a method that respects their timing. A positive nominal return can coexist with a negative real return when inflation is higher. Neither silver ownership nor the word “precious” guarantees preservation of purchasing power over a particular horizon.

FOLLOW THE EVIDENCE

Sources & further reading

Sources checked 14 November 2026. Reference organisations do not endorse this website. Price examples are hypothetical and educational.