Church Silver Sale

No, nothing you can afford LOL It's currently 'property of Old South Church' held at the Museum of Fine Arts Boston and now to be auctioned by Sotheby's or Christie's in all likelihood (not HA or another premier coin brokers.)

Here's yesterday's news item... and 'selling the Silver' isn't even worth a single comment by Haaahrald readers (FauxNews dittoheads).
http://www.bostonherald.com/news/regional/view.bg?articleid=1061178913&srvc=rss

There were two votes. One, about selling ONE of the Church's two copies of an ultra-rare Colonial era book. The second vote was on the Church Silver. The possible sale was been described as a contentious debate because the Church already has a 'secure' $18 million endowment.... in Paper investments.

In 1911, there were 29 pieces (described & photographed here); recent news items say 19 pieces will be sold. Not sure IF they're selling the Paul Revere Chalice.
http://oldsouth.org/sites/default/files/OSC_MFA_Silver.pdf

I was not in attendance for the discussion/debate (about the portfolio allocation) and do wonder how the debate was framed, but it's pretty clear:

Among a sample of affluent well-educated Bostonians, 79% favor liquidating the heirloom Silver instead of selling any stocks or bonds or other non-material assets.

 

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Assuming they are bearer bonds, they are material assets. Additionally, registered stock are material assets, as you own a share in the actual intrinsic property. The question will always be one of liquidity and safety. It makes no sense for the church to hold the silver as an asset on the books, as there are huge "penalties," shall we say, associated with investment in collectibles and bullion space items.

 

I don't know that. I'm practically certain this isn't an "investment" the Church made: these objects were bequeathed long ago, not purchased by the portfolio managers. Assume the cost-basis was zero. As for negative-carry, I don't know that exists here either. The MFA may be assuming all costs associated with the Old South Silver, in exchange for display privileges (for all we know.)

The OSC portfolio in paper almost certainly entails very real management costs, however. Can we look at that? I carefully read through the Church members' discussion of the proposed sale of "Heritage Assets" and fully agree with both
a) the stated need to raise funds and
b) the philosophical/religious/ethical basis for selling something.

What's missing, however, is ANY cogent rationale for the alternative to dumping Silver: namely, selling their Paper. Without any scrutiny of their paper assets' valuation, they reveal themselves to be brainwashed by/ enmeshed in the Paper Lie, like almost ALL Americans. Selling the Church Silver is a big topic in many old parishes. So why does no one question that false belief that 'stocks will return 8%' for infintity, etc. ? Every portfolio decision ought to question that untenable faith.

It's spooky, sad and comical all at once. Now I'm not going to anonymously attack anyone in my business or town, but I do see that a major proponent for the sale is a new member of the congregation who shares the same rare name of someone who also works 1 block away from the Church (AND?) is:

1) employed by a major mutual fund company that offer NO PM investments
2) has managed a now $1.5 bln equity mutual fund +10 years
3) invests/speculates almost exclusively in aggressive small cap stocks
4) has produced the following 3-star returns:

5Yr MF return of +3% ....versus GLD, UP +115%
4Yr MF return of +95% ....versus SLV, UP +219%
3Yr MF return of +14% ....versus SLV, UP +79%
2Yr MF return of -13% .....versus SLV, UP +25%
1Yr MF return of - 7% .....versus SLV, UP + 4%

Totally different investor, right? So I wonder who currently manages the Paper Assets, and what his "return" was against Silver valuation in these periods. I sure DO hope it's not the same guy arguing to dump Silver and warning about a "death spiral" in the Endowment ... that he helps manage, both on behalf of his new Church and/or in any paid money-manager relationship?

Unfortunately, I HAVE heard of double-dealing by financial industry churchmen before... I just wish people looked more closely at their financial advisors' self-interest, from time to time.
Anti-Gold bias is really insidious and can harm portfolio return. Paper-Bug hotshots can sure be persuasive, too!

 

Belief systems and infinity aside, stocks have a long term historical record to back long term returns, and as long as they pay dividends with part of their earnings and reinvest the rest, an investor can expect that stock prices will continue to have a total return something close to the rate of return on capital. Of course, there will be periods of underperformance and outperformance. It's just math, not magic.

 

I'm not anti-paper either, cloudsweeper99. (It's been my bread-&-butter for too long!) But in the duscussions I read, no one questioned the perpetual "inerrant" Paper Premise : SELL PMs, BUY MORE PAPER. Nary a word about that Paper Return, either. Hmmm.

The Silver Wealth of this particular Church dates to around 1676, well over 300 years ago. So why - if the paper portfolio 'return' hasn't been looking to hot lately - is there a rush to sell the heirloom Wealth? (They sold off RE a few years ago; not sure this is the last 'real asset' either.) And the finances aren't dire, as every article says.

Millions of American families have been doing the same, for obvious financial need. So YES this course fits the mania of the moment: "Cash4Gold, baby!!!!" But I wonder why people worship paper so. Paper? Paper almost always, inevitably, goes to zero. Do they have any clue?

I found this posted on another local blog - it's probably applicable to the OCS too.
http://www.tparkerchurch.org/about/our-history/silver-stories/
>>Silver was the only reliable currency in colonial times. With multiple currencies in use, and with the continuing depreciation of the Massachusetts paper currency (and concomitant rise in the price of silver), silver was of great value. Silversmiths were the bankers for those fortunate enough to have silver coins. To keep the coins from being stolen, silversmiths melted them down, made household items from them (such as tankards, beakers, and spoons), stamped their own marks on the pieces, and often also stamped on the owner’s monogram or crest. This domestic silver was then often given to the church for use in church rituals.<<

 

I didn't catch what faith the church in question is, but if it's a Christian church you could take a couple different angles of persuasion.

Genesis 2 specifically says gold is good. Why then not silver?

Usury is a well covered subject in the good book. It used to be illegal, and is still considered immoral. You might have a long shot at convincing them that owning bonds is usury against our fellow citizens who ultimately backstop that government debt through taxes, and pay through inflation and money printing when the Fed buys them up. It's not so different from the money changers whose table was flipped over in the temple.

 

oh DONT bring up religion!!! The mods will gnash their teeth at me again LOL
I think 'love of money is a sin' and yes - it's filthy lucre too ; so far as we know, this sale was discussed apart from that. (there's a loooooong online discusion.) fwiw these folks are on 'the ultra far-left/communist' end of the religious spectrum.... but hey, CORPORATE STOCKS ARE GOOD! So there's some inconsistency in the 'filthy lucre' argument.

I'm just interested in the asset-allocation question.

 

JB, what is your objective in all of this? Are you a member of the church? If so, maybe bring it up to the Deacons that a financial analyst would be better suited for directing the sale of paper assets than collectible assets. The market for true antiquities is soft, but if they're using Christie's, it _MIGHT_ get enough attention to get positive value. Are they selling the pieces individually or as a collection? I think it might bring more, if advertised/marketed properly as a single collection.

It could also be that the individual in question wishes to purchase the items in private sale. You may want to clarify that members of that committee not be allowed to participate in the sale/purchase.

 

If you're looking at AA, then it's entirely possible that the portfolio is over-diversified, as it stands. Antiques (as it sounds like the items are) could sell for anywhere from $25k-$15mm (depending on provenance, condition, scarcity, demand). If it's on the high end of that scale, then they should auction the items and use the money to rebalance their portfolio. Just because that individual doesn't have a PM fund doesn't mean the argument for sale is faulty. It only becomes faulty if the church reinvests the holdings into that same guy's fund.

Another thing might be the investment policy statement of the church. If they did hold the items as legacy donations, rather than investments, the IPS might actually force the church to sell if the appraised value exceeds a certain amount.

 

I'm not a member of the congregation, no. However, Ben Franklin was baptized by the church, and Sam Adams was a member.

Did you click the links? The expectation is that the sale will realize more than $20 mln, mostly the book. The silver won't fetch the lion's share, but we shall see about that Paul Revere Chalice.
It will be the church-sale of the Year, to be sure.

I don't really follow you here, NorthKorea. There's no "individual" calling the shots; the decision to SELL was 80% of the congregants, by vote. But there was no 'choice' to sell the Paper investments, just the Psalm and Silver.

The Endowment, possibly (?) managed by that fund manager on the Steering Committee, was NOT to be touched. That alternative would affect his firm's bottom-line, fee-wise, IF they're the managers. My point: well who farted anyway? Not Silver in the vault, LOL

 

Again, it's entirely possible that the church has those recorded as legacy assets and not "investments" on the books. As such, they're supposed to (mostly for insurance purposes) dispose of those as efficiently as possible. The proceeds then are used for whatever + investments. Usually the congregation would vote to change the investment manager or sell "some of the portfolio" rather than specific assets. If the items up for sale were held/treated as investments, I'm certain the congregation wouldn't have been given the choice to sell or not. It's very likely that the cost of insurance on the book works out to 3 percent (give or take) of the maximum appraisal. Either the church never insured it (fire/theft risk) or had been using old appraisals. The discussion/vote may have been a result of someone having a recent appraisal done.

 

Well YES, this could be more complex like that... but I'd assume a church is not treated like a normal corporation nor individual, has exemptions you're not considering etc., etc.
By-laws explicitly state the Silver could NOT be sold without the consent of 2/3rd the congregation - and the Silver has been stored at the MFA, a museum of global renown.

This is a very significant Silver deaccession.

 

It's a nice example of how money can be made with silver investments.

In regards to the silver market, it will have 0 effect on prices if this was your point.

 

I don't know anybody who worships paper. I guess you just like extreme language. That aside, I don't consider investments in common stocks to be paper. It is a fractional ownership in a business. And many fine businesses with fractional ownership for sale through the stock market have track records longer than I've been alive. I understand that many folks are attracted to gold because of its elemental indestructiblity, but for me return on investment is more important than permanence. Permanence is an illusion, as is safety. I'd rather own Exxon-Mobile than an equivalent dollar amount of gold if I could never sell either during my lifetime. I also don't have a fundamental problem with bonds except that they are overpriced right now due to artificially low interest rates. This, too, shall pass.

 

Think some similar principles apply, but as a non-profit organization there are some different laws that apply. There's also quite a few exemptions to laws that would otherwise apply to a for-profit enterprise that wouldn't apply to a church.

 

Maybe this really is unclear to you, idk. When Americans say/believe "stocks return 6-8% over time" are they factoring cost-basis, surivorship bias, taxes, real inflation? No, NEVER.

So most people believe - have been convinced, and continue to desperately believe - that stocks "perform" a certain way ... when, in most retail portfolios, stocks usually don't.

At the base, there's a quasi-religious 'faith in Paper.' And I'm not overemphasizing the amnesia of Enron/Lehman/DotBomb investments, here. My favorite retort from the brainwashed Paper-Bug is "My 401k has grown 50% in x decades..." without even considering the CONTRIBUTIONS, lol And the tax-bite isn't getting any smaller either, chief.

Total irrationality? The All Paper portfolio (99% of US investors) is nothing more or less than pure "faith-based thinking" - credulity stretched to the fund co's bottom-line. The 'All Paper' investor is a sure-loser because s/he cannot see the forest for the trees; if lucky, it's zero-sum game at best. A grim future awaits: beyond the imminent Fiscal Cliff chatter, I see no evidence there will be any resolution of the ticking Debt Bomb. Rolling shocks to the economy must follow each crisis (as they have before) and each of these events will likely burn Trillion$ more in the shareholder value, the dumbest first. No, this is not 1955-2005, this is a new cycle with a new set of rules... yet uncertain. Greatly diminished real returns probably turned negative longer-term sometime around mid-2007, and only VERY AGGRESSIVE and lucky market timing will succeed, here on out. For most US retail investors, the game is over.

The Great Reset will be brutal, real losses will be like 1928: > -85%, and "it'll never happen here!" is just further proof that saps still worship Paper. I'm guessing they always did, to some degree, more or less. Homo sapiens seem hard-wired for irrational optimism and selective amnesia (bullishness); in overdrive now, that's what keeps the ponzi going.

I find it no small irony that - on the word of a Paper-Bug - a very rich, +300 year old Church dumps its heritage REAL assets first. (And you know what for? A NEW AIR-CONDITIONING SYSTEM!) Many smaller, less wealthy churches are watching & will surely follow suit. So let's see what a glut of Communion Silver does to the Colonial Silver market in 2013-16. Any guesses?

If modern Americans have basically abandoned common-sense, why shouldn't we be pauperized by our own stupidity? Follow the grifting mutual fund managers and hedgies, that's what you'll get! Worshipping Paper.

 

Everything you said applies equally to investors in gold. Do gold investors here factor in taxes and inflation when speaking about returns? Do they factor in survivor bias by deducting losses due to confiscation, theft, fire, counterfeits etc.? Do they talk about contributions when talking about the worth of their PMs? Gold investors here believe gold will perform in a certain way, when there is no real basis for it. Gold is a zero sum game. One ounce is one ounce. Common stocks grow over time through the reinvestment of earnings. I know it is fun to think you know something that most people don't, that everything but metals will go to zero, that nobody but gold holders have common sense and reasonable expectations. Enjoy it while it lasts. I don't dislike gold. I own investments in PMs. But the paper to zero malarkey might hurt some of the younger investors here whose best chance to compound their savings in life probably is through the very asset classes you condemn. That's the sad part. Some folks believe that to like gold, they must prove everything else worthless. I wonder what drives that sort of thinking.

 

I mostly agree with you Juan, but the quasi-religious investment nature applies both ways. I know I for one border on that nature toward metals. The difference being that I came to such a conclusion as a byproduct of my quest for knowledge and understanding which had nothing to do with investing at its onset many years ago, rather the intent being to understand how powers of manipulation succeed in this world. My ultimate conclusion being that their power is derived from money printing. This as opposed to people who are in paper/electronic assets because that's the societal norm.

Cloudsweeper makes a good point that common stocks are not the same as investing in say options or futures. Not all paper is created equal. At least a common stock is a piece of the company, not a hocus pocus financial vehicle that tracks something else without any inherent value of its own.

As I often refer to, Exter's Pyramid depicts the level of risk in each asset tier. Only hard assets will be safe in a reset. Even the most reliable paper will be at risk of a company or government going under, but some paper assets will run for the door sooner than others.

 

The Greater Fool Theory always requires another dupe, willing to pay more for an overvalued asset. If the US Treasury Bubble is the biggest bubble ever, US stocks today are a close 2nd Place... and the real correction has not yet occurred. Patience, grasshopper: it will come.

Younger investors should apply the age-old principles of 'Buying Low, Selling High' - trading from Paper Cash/Gold into solid value equity, but ONLY at deep equity discounts.
Nowadays, the US equity dips to buy are ~ -25% retracements, what used to be called 'a bear mkt.' And what's the %age of US stocks paying that historic 6% divvy?

otoh, Dollar-Cost averaging into overpriced equity today is a loser's bet. And that's what the 401kers are still doing, slavishly devoted to their Paper.
That's the typical investor in the USA, reality. They own no Gold, chief: that's what makes them Paper-Bugs.

 

The gold bull market will end as a textbook example of the greater fool theory. But not yet. I agree that bonds are overpriced and should be avoided. I disagree about stocks which in the aggregate sell for about what they did a dozen years ago while earnings, etc. have grown. The eventual surprise will be to the upside. I don't disagree about buying when prices are lower - I'm a long time value investor. But a 6% dividend is more of a warning sign than sign of value these days. Earnings, cash flow, balance sheet, and low multiples are the way to go. I agree that dollar cost averaging is a poor investment technique, and I've had many discussions with other forum memebers about it. Because of the size of the gold market, it won't become a significant portion of the typical investor's portfolio, so that's irrelevant.

Edit: I would also add that 6% has never been the historical or typical dividend on common stocks as a group.