American Silver Eagles vs Canadian Maple Leafs

I don't think one negative example (PMs 1980-1982/4) trumps hundreds of examples of failed currencies over centuries, but we need to clarify a point:

Money is never an investment, in the classical sense. Physical money and PMs (as an "alternative monetary instrument") are correctly called "real assets" but produce nothing by themselses - in fact, such instruments typically suffer negative carry-costs/inflation. There's no income dividend or yield; no capital appreciation is presumed with Money itself. It's wrong to conflate "money" with "investments," avoid the pitfalls of that misunderstanding.

fwiw I've also never met anyone who "made money" market-timing PMs but (by contrast) many have by accumulating stocks prudently. Caveat emptor to over-eager bullionists, there's essentially no alpha there!

Bullion has a different purpose, it's a real asset reserve. For decades, that was pointless (and actually, punitive) - not now. I've favored dip-buying PMs since 2002; continue to do so until the USD$ regime ultimately fails. Why? History teaches that ALL PAPER FAILS, eventually. For this reasonable presumption (it will occur in our lifetime) abit of bullion as a hedge and reserve against USD$ Paper investments & money makes perfect sense to the prudent.

Cheap premium Maples = value-buying, IMO.

COINS, as an "investment"?
Buying on PM dips now and going forward, I think Chinese Pandas, Imperial Roubles, (old Au) Brazilian Reis and Indian Gold Coins (Tanks, Half Ashrafi, Mohur, etc.) will protect capital and outperform inflation in all Paper currencies over the next 10-30 years. In all coin choice-alternatives, I suppose real investment potential may exist in the BRICs' high value numismatic collectibles.

This thesis presumes a diversified portfolio of numismatic BRICs should offer real capital appreciation: providing alpha over zero (where Spot approximates real long-term inflation.) My loaded premise is that Gold tracks real inflation over time far better than any fiatsco currency would - but realize that Au also may NOT perform to par at any given moment.

There are still a host of potential downsides to admit (theft/confiscation, taxes, fraud, poor Buy/Sell points or "usurious premiums", etc.) but these have corresponding risks or worse in Paper investments too.

That's my two cents, anyway.

 

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I don't think it matters that money isn't an investment. Many times, cash outperforms investments. Other times, investments outperform cash. It isn't easy to tell which will be the case on any given day. I've been earning interest on cash balances for years, so I don't know what you mean by cash not earning a return. Of course, rates are low now but that doesn't change the fact. Regarding your never having met anyone who made money timing PMs, scratch that off your list because now you have. This should not come as a surprise because the same methods that work for stocks also work for PMs.

 

No, you're not earning interest holding Money - you're earning interest LOANING money, on a contract. That's a very different thing (and you know that.)

'Successfully market timing currency ETFs' is another conflation you might avoid ; FXA or FXC isn't "money" but rather a highly synthetic financial instrument.

Physical money is what it is; borrowed money is credit, etc.

No I haven't. I've not met you - and consider you little more than an internet nebbish. And I've still never met any retail investor who made money market-timing bullion. I've met major market-makers and minor coin dealers - who obviously earned a living at this - but they're quite beyond the scope of this discussion. Is that really lost on you - or aren't you just being a pedant?

LOL

 

Heard this before? Things are different this time.

A LOT of the old "rules" aren't going to work. There will have to be a new money invented, something other than Federal Reserve notes. It's not impossible that the Fed will cease to exist (and good riddance).

PM's are the money (not an investment) that you don't have to apologize for. It scarcely matters whether you hold (and don't try to trade) ASE's or ML's.

 

One more thought on cash -- its value to me, was to take advantage of opportunities. That's why I always took $500 to $1000 in $20s to the flea market.

But if that cash is depreciating, nobody wants it in exchange for hard assets like food, ammo, and warm clothes. I'm not saying that everybody should set up a mini-Walmart in the spare bedroom, but I'm sure a day's coming when I'll be glad I have PM's instead of cash.

I might take a roll of silver dimes to the flea market.

 

Yes and no, but can there be any agreement at least on the basic elements of hyperinflation?

 

I should correct this, with one exception that I know. In currency arbitrage, a Portguese dentist once asked to "buy" my father's Dollars for Escudos on the belief the Escudo (his Paper Money) would be devalued. To this foreign gentleman, Dollars were in fact both physical money (accepted tender, 'black market') and speculative investment. This case is different than the professional currency trader who is 'making money' on the trading activity itself ...or the modern banker, mandated to hold physical asset reserves.

Synthetic instruments like money mkt funds and other contractual share schemes (call them e-zero assets) aren't physical money by definition. Those abstractions (with hidden counter-party risk) can be considered investments, however.

If thought as an "classical investment" (be that as it may) a 'coin, collected' is likewise transformed and conceptually quite different:
a) physical money removed from circulation, and
b) commodified as a now numismatical asset.

 

There is no important difference holding and loaning money when the loan is guaranteed under our present economic order. Now there are people who like to parse words, but usually they don't make any money. I just play the cards that were dealt rather than waste time over coulda shoulda woulda economics. I know it is more difficult for a person to unlearn something that they think is true so I won't bother you about it. A more intelligent response from you would have been to ask how successful trading is done, but it is too late for that now. I believe you when you say you never met a retail investor who made money by timing PMs. Birds of a feather and all that.

 

I agree. And the value of the cash is always changing and not always falling. One day you may be able to purchase an item for $100 dollars. Then you run across another dealer selling the same item for $50. In a very real sense, your cash just appreciated in purchasing power by 100%. And the same goes for land and stocks and PMs. I would caution against an all PM holding for that reason. Cash looked pretty worthless in 1980 and bonds were "certificates of confiscation." Then, all of a sudden this wasn't true and the person with significant liquidity in cash equivalents ruled the day. Life is messy.

 

Devil's advocate: I've read arguments - and I'm willing to entertain the premise - that FRNs actually might become MORE valuable in less dire scenarios like power outages or bank holidays. Frozen e-zero assets ("abstract money" forms) will be the biggest loser, in short- and medium-term events.

I agree bullion should be considered power-cash but wonder how liquid it really will be, zero-hour. Over time, I think it holds value better than anything besides productive real assets. Until whatever 'new & stable' currency regime.

 

But how do modern governments, trade practices, and macro-faith in the system fit in and/or affect the outcome?

 

If that's to me, LoneGunEsq, that's waaaay too broad. Also, I'm really not an armageddonist (yet) - the Big Reset comes in 2018-22 IMO. This worsening credit cycle has a few more chapters yet! But back to 'coin types' I was kinda hoping my idea above might get some replies:

 

http://www.youtube.com/watch?v=1Ul7s5JJLCU&feature=fvwberel

 

Living in the US, I have been a US coin collector for more years than I care to remember. I believe most collectors collect their national currency and although I like some foreign coins, I am inundated just trying to keep up with all the US issues - not to mention the ASE has one of the most beautiful/popular designs ever issued.