Take into consideration that UK interest rates will rise to 5% it it means there is only a nominal 2.5% profit as over the next few years inflation is forecast at 2.5%. Is this enough for collectors to mass exodus from coins to investment in equities + bonds? Is the demand growing for US & British high quality coins in the US ? + is the US market now focusing on higher quality American coins. The market for classical coins is it slowing down? or moving again to higher quality as they have watched icon coins increase out of proportion to the regular market. What is your opinion if coins as an "asset class" for protection of wealth.
One point in favor of coins (or stamps) is the privacy factor. You buy at a coin show, pay cash, refuse to reveal any personal data, and nobody knows what you've got or where it is. But I believe hyperinflation will once again crush the middle class, and the number of buyers will shrink accordingly. For the very very rich, it will be a buyer's market, and a thin market indeed. If by coins you possibly mean junk silver and bullion coins, then you're on the right track. And that's not for "investment" -- it's for preserving the purchasing power that you already have, today, in 2014. I like to use the "bread" analogy. Today, a silver dime will buy a decent loaf of bread. Hyperinflation comes, and ravages the country. Odds are great, greater than any other asset class, that a silver dime will STILL buy a loaf of bread, even if its nominal price is $6 per loaf. Got paper money? Good luck. Central banks, including both the U.S. and the U.K., will do ANYTHING to keep interest rates down, as that increases the amount they must borrow to pay the interest on new debt. How do they borrow? They PRINT more money. It's an endless loop that will end badly.
Thanks Doug, you bring new thoughts to consider. The middle class is being crushed now, this is the heart of the capitalist society. If government understand all you are writing why do they not correct the situation? What you are saying means that a % of your savings is required to be in gold, physical and not paper? I am a collector not a dealer, therefore you points are very interesting www.petitioncrown.com https://www.facebook.com/petitioncrowncoin
I am not a dealer either, except in the sense that I am selling off a lot of peripheral items to raise cash to buy junk silver. I think it is a harmless, prudent strategy. Gold and silver are the only REAL money you will ever hold in your hands, and because the gold/silver ratio is currently very high (takes 60+ ounces of silver to buy 1 ounce of gold), and these things tend to revert to the historical mean (in the 16 to 25 ounce range), I tend to believe silver will rise in price, percentage-wise, more quickly than gold. For China and India, where much of the gold purchased is in the form of jewelry, silver might not work out as well. Also, silver comes in sizes and denominations more useful for trade, whereas the smallest unit of gold coin (1/10th ounce) you can buy is in the $150-175 range. A silver dime will always buy a loaf of bread, and no one has to "make change" for you. This is why I shy away from silver ASE's, bars, rounds, etc., and stick to the coin types Americans have seen in their pockets for the past century: Mercury and Roosevelt dimes, Washington quarters, and Walker and Franklin half dollars.
You might take note of the fact that until very recently, all U.S. paper money in circulation was Series 2009 or older. It is not impossible that the interim time has been spent by government printing a new "Series" of currency, and that one fine day, the newspapers will announce a mandatory currency exchange (old Series for new Series), to be completed in 30 days, at which point the old bills are demonetized (in the name of "national security" or "anti-counterfeiting"), and you must explain to the IRS or the agents of the Comptroller of the Currency the source of your "old" currency if you exchange more than $1,000 face value... Again, it's not impossible. Since World War II, it's happened in more than 100 countries around the world. The excuse? Well, Mexican drug lords, as good an excuse as any (all $100s), rendered worthless overnight.
Yes, and no. Of course it is pretty common in many countries to phase old cash out once a new "generation" is issued. But the redemption period is usually several years, not one month. Christian
Depends on the government's motives. If the plan's intended to goose the Federal Reserve's balance sheet, it could happen almost overnight. The current situation in the U.S. and Europe is unprecedented - anything can happen. Five years ago, the citizens of Cyprus would have scoffed at the idea that the banks would confiscate a percentage of depositors' accounts to head off a crisis of insolvency. With new laws in place, it can happen in France and Canada too. Part of the game would be to drive out all the untaxed currency that skeptics have secretly hoarded for several decades.
Even in Spain, the redemption period for pre-euro cash (initially unlimited) will not end tomorrow or next year. People have time until the end of 2020. As for Cyprus, OK, now we seem to talk about money in bank accounts and not cash. Well, in any EU member state the money you have at a bank is guaranteed up to the amount of €100,000 - and that does not only apply to cases of a bank going bankrupt but also to a tax like the one imposed in Cyprus in early 2013. So yes, if you have even more money sitting in a bank account (as opposed to investments), some "diversification" may be wise - and that may include bundles of cash. By the way, if you exchange €1,000 here, nobody will ask you about the source of the cash. Christian
Anything is possible. Earth could be struck by a giant asteroid and all life wiped out within the next year. Aliens could invade ! What is possible is not what matters. What is probable is an entirely different story. And any individual's determination of what is probable, is largely dependent upon the bias of the given individual.
There is a little difference in the situations. In the EU, members were adopting a totally new currency, the Euro, which meant fees had to be adjusted, contracts had to be re-written, new coins minted, many complex factors. An overnight switch in the US would still involve dollars, but it could heavily penalize those who had hoarded cash, especially illicit income. Plus, and a serious consequence, the Feds would then know precisely how much cash you started with, on Day One, that is, more invasion of your privacy. So I say again, it depends on the government's motives. Right now, the government can only guess the amount of liquid assets you hold; after a sudden currency switch, they would KNOW. This is especially useful if we wake up yet another morning to currency controls. This is all about money, not power. Here is an interesting "privacy" sidelight for you. I closed a brokerage account in April because I didn't like the trading platform. Then the fun began: "...xxxxxxxx (and all broker dealers) is required by the USA PATRIOT Act and the Financial Industry Regulatory Authority (“FINRA”) to perform due diligence, in order to “know our customers”. Because of these regulations, xxxxxxxx does periodic reviews of accounts and follows up with customers, if we feel we need more information in regards to account activity. Your brokerage account #xxxxxxxx was recently reviewed, and it appears that, since the inception of your account, you have deposited funds into your account, and subsequently removed those funds, with no trading activity at all. Please explain the reason for these cash transactions..." The Patriot Act lets the government do ANYTHING it wants in the name of national security... Forget about habeas corpus, forget about a speedy trial, forget your constitutional rights. [the true test of a Patriot, I guess...] I realize this point is not about cash, but it shows you the roadmap down the slippery slope...
Boy, you guys crack me up. You talk about $6 for a loaf of bread, and only those with incredible foresight to stockpile silver will be able to afford it. Implicit in that view is the idea that everyone else will continue to do their jobs despite the fact that they will essentially not be paid, and only you will have money. If the currency collapses, there will be nothing to buy - no bread, no gasoline, no electricity, no nothing. Silver will only have value if everyone accepts it as such. Do you really think that will happen if no one but you has silver. It is just as likely that clamshells or bird feathers will become the medium for commerce. If you want to survive the coming apocalyse, spend your money stockpiling farming implements that do not require fuel, start breeding draft animals, buy all of the books you can find on gardening, foraging, tanning, etc., and load up on canning supplies. Remember, you can't eat silver. Sorry for the rant, now back to coins.
