How much do you need to spend to get digital to rival analog?

Comparison's made with the same system cancel out everything except the variables being changed. For digital it is relatively simple. It is all about the DAC. Any good transport will suffice. For Vinyl however it is the cartridge, tonearm, TT and phono amp. Get a few of your favorite albums in as many formats as you can. In order to do this correctly you have to be able to match volume levels and they have to be exactly the same which is not so easy and you have to do this with every set of recordings. I use a sound pressure and match peak output. Then I get all three going, CD, Hi Res and vinyl just a little staggered so I can listen to the same passage in all three formats, sit back and trigger between the formats with a remote. This is actually a lot of fun and I promise you will be surprised at some of your results. The first time I did this was with Dylan's Desire as I had all three formats and I was sure the Hi Res was going to trounce the others. It did not. The MoFi 45 rpm version won hands down. Even Cleeds would agree. But in other cases Hi Res won like Led Zepplin One Two and Three. The surprise here is how well vinyl matches up to Hi Res. You would never think that dragging a rock through a trench could match up against modern computer wizardry. Anyone who thinks taking care of records is a PITA needs to bone up on their technique. Even getting up to change sides is an advantage if you are over 60. If you sit too long in one place you freeze:) With an automatic tonearm lift you do not even have to disrupt whatever other activity you have going at the time. Everyone should know my mantra by now. Dust Covers and Conductive Sweep Arms. 

35 yrs ago I had a fully vinyl rig set up to compete with a heavily modded magnavox player du jour (which did sound way better than other players of the day). I had many vinyl/CD repeats and auditioned them extensively, one after the other (through a big tube amp & Vandersteen 4 speakers). Digital always sounded different from vinyl in way described above, and to my ears, vinyl usually sounded better. But it was easy to see the vinyl recession that would follow--vinyl would no longer be ascendant. 

I formed an opinion then that still holds up, though my audio gear is vastly different today: that is, if I had a vinyl system, I would put serious $$ into the TT & cartridge, also the phono preamp--because the extra outlay could be heard relatively easily. But with digital, I would keep it mid-level, never plunging on the big-$$ brands of the moment. Beyond making sure the cables were good quality, I'd upgrade players from time to time, rather than going for any one SOTA player.

And so it is today in my desktop audio system. No vinyl here (no room). I use DACs pretty much as I did CD players back in the day. I'm fond of non-oversampling (NOS) multibit DACs & am on my 2nd. Its sound is very fine for digital (MHDT Labs Orchid @$700). I have no urge to upgrade. My passive studio monitors are very high resolution & sound wonderful to me in the current setup. I listen to a lot of streaming music, also 100s of GBs of music I ripped to the HD.

One thing I would certainly try if I had a vinyl front-end (1500 LPs in storage) is to rip vinyl recordings to disk, then output through DAC + speakers. That would be very interesting, to see if the positive attributes of vinyl survive digitization.

There are audiophiles who swear by analog. The other day, I saw, in a coverage of the AXPONA show (If I am not mistaken) a TT that costs $130,000! There was a debate in the forum about LP's that were mastered digitally. I find them to be as good as those that were mastered from Reel-to-Reel decks. I am one of those audiophiles who are annoyed by the clicks and pops when listening to Vinyl. The only way to solve this is to buy an uber-expensive FM Acoustics Phono Stage - they supress the clicks and the pops. As for me, my TEAC CDP3450SE CD Player (with ken Isiwata teaks) sounds as good as analog. No grain, not analytical, just a warm, articulate sound. But I want to share with you a simple, cheap setup that I have devised. I bought a 1USB to 3USB splitter ($20), and connected it to a USB port at the back of my PC. from there, I connected a cheapo ($5) USB cable to my humble integrated amp. All I have to do is type the name of a concert, album, song, in any genre, in Cortana. The source of the  files is YouTube. Now, You wouldn't think that a $25 setup like this is a recipe for a good SQ? Surprise Surprise, the SQ is excellent! My mother, my brother, and myself were impressed by the SQ. No need for a costly streamer, this set-up does the job beautifully!

I have 25,000 LPs, 7,000 78s and 7,000 CDs.  Sure, I love playing analog.  As of yesterday, I now have more than an analog-like sounding CD front end (EAR Acute).  I purchased a COS Engineering DAC (D2).  I have entered to realm of great digital playback.  As mentioned, digital can be sonically uncolored unlike most analog gear.  My new DAC is not 100% perfect but it allows me to hear music with a unfettered/untethered frequency response, dynamic contrast, soundstage, tonality, resolution and imaging.  I wonder if it's pacing could be bettered.  There is so much music I was missing, the subtle sounds that my best LPs have.   Moreover, this is the first time that I can enjoy music from very soft to very loud sound pressure levels (my system should have been able to play quietly did not until now).  My friend Grover Huffman has the H1 and last week showed me how fabulous my system could sound.  I got pant flapping bass without distortion, wild dynamic contrasts and an ability to listen for 4 or 5 hours without listener fatigue (his demonstration led to a very long listening session).  I should mention that I have Grover to thank for his all silver RCA 75 ohm SPIF cable, his Pharoah A/C and RCA ICs which I own.  I enjoyed the EAR from 2006 with it's rich, lively sound but it has been eclipsed by the DAC.  Warning-this DAC is not forward sounding to bright.  The plane of the sound is between the speakers.  Digital playback cannot make a mediocre or poorly mastered CD sound great, but I have so many great CDs that it is as difficulty to choose music to hear as it is in the analog realm.  

I agree with geofkait re cassettes. Holly Cole's "Temptation" sounds as good as any CD or LP in my collection when played on my Tandberg 440 A.