I tend to doubt it. Who would rather have a piece of paper saying they own a Ms-64 Morgan dollar, instead of the real thing. Charlie
An ETF is an exchange traded fund. It's a pretty new idea and the one that Barclays is trying to start for silver is being credited by some as what's driving the price of silver up. You would be buying into the actual asset rather then a mine. They would buy up silver and store it, as I understand it. I was thinking that one of the reasons for slabs was to make things easyier for speculators who otherwise have no interest in coins but believe they can make money on them. With an ETF they wouldn't even have to buy the slab just a piece of paper. I don't really know how feasible this would be. I just started wondering about it a few months back when CU bought up two coin dealer networks.
GDJMSP If your referring to the United States Rare Coin Fund of 1987 that was a limited partnership. And starting it so close to the market top probably wasn't too strategic. ETF's are like sectored mutual funds where you invest in one specific thing but they are traded the same as a stock. Your not counting on managers to buy and sell and make the fund grow. The value of the asset goes up or down based on whether you guessed right. How many times do people say they are both a collector and investor? Now they can truly keep the two separated. Collect what you like because you like it. But if you happen to think Texas Commens are due to go up and you happen to have money to invest, I think it would be pretty cool to be able buy 100 of them on paper. And it keeps everything separated. What you collect and like to look at is here and what you only think others will like, but you could care less about, is sitting in a warehouse out of sight. Which would also be wonderful for those who can't stand the sight of slabs. What if in a couple of years brokerage firms decide to give this a try? Millions of slabs in the warehouse would be millions of slabs not getting resubmitted. But TPGs could make up for that loss with transaction fees. So why follow Wallstreet at all? Get there first and grab as much market share as you can. If these ETFs work out I think TPGs are going to try this, maybe even as a joint venture. But ETFs are pretty new, I believe it remains to be seen if people are going to make money with these or just get :hammer:
longnine, have you really thought this thing through? An ETF trading in silver just buys and sells ounces of silver in accordance with the total investments in it. That's a commodity with a substantial following and pricing mechanism. An ETF trading in stocks comprising a specific market index (probably the most common type actually in existence) buys and sells stocks making up that index, which again have a pricing mechanism outside the control of the fund manager. To create an ETF in Texas quarters, or any other specific coin, would be a logistic nightmare. Where would the fund manager find "millions of slabs", or even "hundreds of slabs" of individual coins, and what's the pricing basis for buying and selling fund shares? If someone comes along with a fund that simply invests in "rare coins", think about what happened to the State of Ohio when it invested in such a fund. I didn't recognize the acronym when you first used it because I keep my stock market investments and my coin collection separate, and wasn't thinking about market terms in a coins thread. Unlike individual stocks, which are originally issued to create capital for operation of a business, ETFs are created solely for the purpose of gambling on economic trends.
Ah so a bit like E cards over in the sports card world, I have a few that were reedemed and they are nice little rareties but not realy sure how they would work with coins De Orc :kewl:
That was one of them longnine, I was also thinking of the MERRILL LYNCH RARE COIN FUND started in 1990. You are correct, they were not technically ETFs as the term didn't even exist then, but the principal was the same. The fund managers bought a basket of coins and profit or loss was based entirely on whether or not the value of the coins in that basket increased or decreased from the point in time where you bought them. There were a couple of others as well. They all failed miserably and most folks lost a bundle. Not long ago they tried to revive this idea by allowing people to purchase shares in such a fund for their IRA accounts. If I remember correctly the idea was not approved. Lucky thing for those who would have undoubtably invested in it. For the coin market is no different than any other market in one regard - it goes up and it goes down. But the coin market is much more fickle as it is almost entirely dependant on popularity instead of economic trends & policies. Bottom line - investing in coins is not a good idea and the big money folks know this since they've been burned before. They're not likely to do it again.
I agree Roy. But I believe it pertains to all forms of investing today. What passes for "investing" in America *coins included* isn't investing, it's just gambling on some public psychotic episode. The fact is coin collectors do gamble in coins everyday when they play the resubmission lottery. They gamble everyday when they trust that an MS68 will stilled be viewed as an MS68 next year when they go to sell it. And if it doesn't pan out that way they may then fool themselves by saying "it doesn't matter since they're a collector." That's the real danger, IMO, of being the Collector/Investor-- the danger of fooling yourself when you do lose money on coins. Could someone still say, "it doens' matter because I'm a collector" if they lose on a ETF? They could not make that claim unless they're collecting computer printouts. If coin ETFs existed coin collectors would know instantly where their collecting loyalties are at. They are in the actual coins that they actually look at.
I'm both a collector and investor, and this seems like a non-starter to me. First of all, there has to be a way to establish a net asset value each day for the coins owned by the ETF. It would have to be auditable. Coins are more like real estate than 1000 ounce silver bars, each one is a little different. Without the standardization, valuation becomes a big issue. There is also the question of size. Many people believe the silver ETF will eventually run into problems due to the lack of silver bullion. Institutional investors today control enormous sums of money. The SEC probably wouldn't even approve the ETF unless and until they could obtain possession of at least $1billion in coins. Assuming they would only want high grade merchandise, that would take a lot of material out of the marketplace. Could they even obtain $1billion worth of high grade Morgan dollars? Could the ETF liquidate large blocks of coins at close to the value stated on their books? How easy is it to sell, say, $50 million worth of Morgan dollars in two days? Anyway, it just isn't going to happen. The ETFs haven't even been around long enough to prove they work for gold and silver. They haven't been "stress tested" so to speak under difficult market conditions.
It may be a non-starter *at this point* just because of the regulartory hoops they would have to jump through. If it's true that the bull market has been running for 3 years they might not perceive enough life left in it to be worth the effort. It all seems to be humming along okay, but historically 3 year bull markets have blossomed into snaggled-tooth hags. But it doesn't matter, because historically, the perky maiden always come sashaying back around the bend.
