Most silver DCA mistakes do not happen at the moment you click buy. They happen in the records you keep afterwards. A stacker can follow a steady routine for months and still end up with an average cost that is wrong, a routine that breaks at the first fall in price, and a stack that looks cheaper on paper than it ever was at the checkout. The five mistakes in this post are the ones that do that damage, and one worked stack shows how large the gap can grow.
Worked example
One stacker makes two buys of 5 troy ounces each. The numbers below are kept simple on purpose so that every step can be checked at a glance.
- Buy one. Spot is $30.00 per troy ounce and the premium is $6.00 per troy ounce, so the product price is $30.00 + $6.00 = $36.00 per troy ounce. Five ounces cost 5 × $36.00 = $180.00. Shipping for the order is $10.00, so the all in total is $180.00 + $10.00 = $190.00, which is $190.00 ÷ 5 = $38.00 per troy ounce.
- Buy two. Spot is $34.00 and the premium is $5.00 per troy ounce, so the product price is $34.00 + $5.00 = $39.00 per troy ounce. Five ounces cost 5 × $39.00 = $195.00. Add shipping of $10.00 and the all in total is $205.00, which is $205.00 ÷ 5 = $41.00 per troy ounce.
- The true average. Total spent is $190.00 + $205.00 = $395.00 for 5 + 5 = 10 troy ounces. The true average cost is $395.00 ÷ 10 = $39.50 per troy ounce.
- The spot only average, shown as the wrong shortcut. Spot alone gives 5 × $30.00 = $150.00 and 5 × $34.00 = $170.00, a total of $320.00, and $320.00 ÷ 10 = $32.00 per troy ounce. That figure understates the true average by $39.50 − $32.00 = $7.50 per troy ounce, or $75.00 across the stack. The gap is no mystery: premiums add $30.00 + $25.00 = $55.00 and the two shipping charges add $20.00, and $55.00 + $20.00 = $75.00.
- What happens after a sale. The stacker later sells 3 troy ounces, so 10 − 3 = 7 troy ounces remain. At the blended average, the cost that leaves with the sale is 3 × $39.50 = $118.50, so the cost that stays is $395.00 − $118.50 = $276.50, and $276.50 ÷ 7 = $39.50 per troy ounce. The average itself does not move on a sale; the totals do. A stacker who never recalculates and divides the old total by the new ounces gets $395.00 ÷ 7 = $56.43 per troy ounce, a figure that overstates the true average by $16.93 and makes every later decision rest on bad maths.
Run your own numbers
Open the free Silver DCA Calculator on the homepage and enter the two buys as they really happened at the checkout: one buy of 5 troy ounces at $38.00 per troy ounce and one buy of 5 troy ounces at $41.00 per troy ounce. The calculator shows 10 troy ounces at an average of $39.50, the same figure as the worked example. If you add a sale, remove those ounces from the stack in the same session, so the totals the calculator tracks stay tied to the silver you still hold. Your portfolio stays in your own browser; nothing is uploaded.
Mistakes to avoid
- 1. Using spot in place of the all in price. Spot is the value of the metal alone. You cannot buy physical silver at spot, so an average built on spot will always look better than the truth and will flatter every profit and loss figure that follows from it.
- 2. Forgetting premiums and shipping. Premiums are part of what you paid, and shipping on a small order can add more per ounce than the premium itself. In the worked example those two items alone account for the full $75.00 gap. Record the full checkout total for each order, then divide by the ounces in that order.
- 3. Pausing the routine in a panic when the price falls. A fall in price is the moment a fixed dollar amount buys the most ounces, as earlier posts on this blog have shown. A routine that stops whenever the price drops and restarts when the price feels calm gives up that one plain advantage and turns a method into a mood.
- 4. Never recalculating after a sale. A sale changes two totals at once, the ounces you hold and the cost that belongs to them. Leaving either total stale corrupts the average, as the $56.43 figure in the worked example shows. The same care applies after a gift out of the stack or any other removal.
- 5. Chasing only dips with no routine at all. Waiting can work when it follows a written rule, but waiting with no routine behind it often ends with no purchases at all, because each fall looks like the start of a larger one. A routine that always runs keeps the stack growing while any dip plan earns its place beside it.
Variations to try
- Record the all in price at the checkout, every time. Note the date, the ounces, and the full amount that left your account for that order, shipping included. That one habit prevents the first two mistakes in this post at the source.
- Keep the routine, and give dips a separate small reserve. Let the fixed schedule run on its fixed day, and hold back only a small share for a fall that meets a rule you wrote in advance. The routine supplies the discipline and the reserve supplies the flexibility.
- Recalculate on the day anything leaves the stack. After a sale or a gift, update the ounces and the remaining cost at once and check the new average in the calculator before the next buy. Small corrections made at once stay small.
Want your own average worked out? The free Silver DCA Calculator on the homepage blends your purchases into one average cost per ounce and tracks your profit and loss at the live spot price, your portfolio stays in your own browser, nothing is uploaded.
Open the calculator