Ponderings of supply and extraction. Gold vs. Silver

You said earlier:

"I was there in the 80's/90's when masses of people were forced to sell the PM they had bought for enormous losses.​

So by "masses" you meant your cousin?

The word twisting isn't by me. It's you who seem to have made a general statement about gold buyers over a 20 year period that simply isn't true. If your cousin bought during a brief spike in 1979, then too bad. It's certainly not an indication that people lost enormous amounts of money on gold and silver over a 20 year period.

 

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I said:

I saw many of them, some every coin show, having to sell and not happy having to sell at such low PM markets

Read more: http://www.cointalk.com/t217486-3/#ixzz2COwKnxBD

My reference to my cousin was referring to silver as well, and was only one data point.

Again, I will be even clearer for Fatima:

I PERSONALLY MET MANY PEOPLE, MAINLY MEN, WHO HAD TO SELL GOLD AT A LOSS IN THE 80'S AND 90'S. THESE WERE PEOPLE I SAW EVERY MONTH, EVERY YEAR, DURING THIS TIME FRAME. SOME MADE MONEY, BUT OTHERS LOST MONEY. IT HAPPENS, AND INVESTING IN GOLD WILL NOT MAKE YOU IMMUNE TO THE POSSIBILITY OF LOSING MONEY.

I will NOT let your assertion stand that by investing in gold its impossible to lose money Fatima. That is simply a lie on the face of it. This is only accounting for nominal value, we are not even TALKING about how many people have lost real purchasing value even if nominally they might have showed a gain.

We can go all day sir. I am unwilling to allow an assertion that its impossible to lose money in ANYTHING to stand unchallenged.

Everything in life that you can buy, you can lose money on. EVERYTHING.

BTW, I am not saying anyone WILL lose money buying gold today. Not arguing that at all. I am just saying I was physically there and met these people who did lose money. I refuse to allow you to tell everyone on this board I am lying. I bet every single person on this board who was actively buying PM in this timeframe also met people who were losing money by selling. Were YOU there then Fatima?

 

I never said you couldn't lose money on gold, silver or any investment, but you issued a blanket statement that I quoted above. If you are now saying you didn't mean it then so be it. I just wanted to clearly understand where that statement came from.

Masses of people did not lose money on silver & gold investments in the 80s and 90s. The prudent ones avoided buying during bubbles and this advice holds true for ANY investment. My advice to any investor is to avoid any statements that are opinion based broad generalizations and much of the battle is already won.

 

I stand by my statement that many people lost money on PM. If you are objecting to the use of "masses" then maybe its a disagreement of the connotation of that word.

 

medoraman-
With all due respect (and I do have the greatest of respect for your opinion) and apart from whatever issue you might have w/ fatima, I too have a long-running argument against Paper Bugs who insist most Gold holders suffered enormous losses in the 1980s and 1990s. That simply was NOT TRUE.

Fact is, almost no one (nary a soul!) bought Gold bullion on the Gold High January 21, 1980. People were buying for years before that date (1976-9) also after the Investor Death Spike. Use those avg prices, instead.

In 1979, a very high price, the avg POG was $USD 307./oz. Gold didn't sell off to that price until December 1984. So there were literally thousands of exit points (dates) to have sold safely and WITH PROFIT over the next 15 years. Just look at the Kitco data, see for yourself.

To be sure, many low-information "gold investors" still don't realize this. They witnessed the January 1980 High as 'the Top, Missed!' Forever after, these so-called "investors" conceptually billed any sale off the illusory Death Spike as a realized loss. That's loser (il)logic, an absurd but all-too-common misunderstanding, a peculiar form of Buyer's Regret typical to low-information "investors." Is this really so counterintuitive? Quote Beanie Baby Investors, but also examine their financial statements very carefully.

Their wrongness cannot be overemphasized: in all likelihood, these folks did NOT lose money on the POG declining between their Buy/Sell periods, unless they sold en masse on a smaller number of Loss Dates. Do you have any evidence to support that assertion, or reasons when/where/why these purported "Lemming Events" occurred? I doubt it. So it's otherwise wild speculation; the burden of proof really is on these imagined 'Gold Losers' to show their Losses with receipts, please!

I will grant it's possible some Gold holders initially paid very high premiums for bullion/coin and then sold at extraordinary discount for different reasons. That (especially poor trade) is something else, we should agree, and also remains mere speculation. The fundamental issue here is low-information buyers, misunderstanding what happened, and NOT 'huge Gold Losses' as Paper-Bugs have declared ad nauseum to "prove" Gold is the worst asset class you could possibly own (".... and you should buy my Pets.com stock, buddy!")


btw, I think we both agree 'Gold is not a good investment' (I say, because it's NOT an "investment" in the classical sense: no income, dividend, yield, predictable cap app, etc.) but we need not appropriate the Paper Bugs' Lie to make that point.

Regards.

 

I would agree with you that anyone with no risk of losing their job, getting sick, suffering a catastrophic loss, or getting old during the period 1980 to present was able to hold PMs through that entire period, although their rate of return was anemic if they were in PMs for the entire holding period.

 

I would agree sir that actual losses were not as great as potentially they could have been. I stated that many I talked to had made a profit since they bought in the mid 70's. However, the 80's was a great big bear for PM, with long term gradual declines in the market nominally. Many of those I talked to thought it would go back up, but financially had to sell. Many of these DID experience losses because they bought in the early 80's, (maybe not at the high, but still higher than the market price they sold at, plus the losses you normally experience selling to a dealer).

I understand your point sir, and it is a fair one I would agree with to a point. Its just I remember the conversations with gentlemen who would tell me they bought these double eagles for $650 or $700 per, and had to sell today and the best they could get was around $450. Yes, some of that could have been "bad trades", but a lot of it was market decline.

I simply object profoundly to any assertion that "you cannot lose money buying gold", a statement some like to believe. This is simply not true even nominally, let alone factoring in inflation.

That's all. I am sure most of us are very close to agreement on this point, with smaller differences than we believe.

Now, if someone wants to say that an investor dollar cost averaging into the PM market over a long time frame, and then exiting the market in the same manner will be very unlikely to lose nominally, then I would generall agree with that. 1980 and the subsequent bear caused by governmental selling was an extraordinarily unusual event.

 

Looks like I fell a little behind, but just my quick 2 cents on the recent thoughts

Counterfeits are a real concern. There is a counterfeit for just about everything, ASE's and junk silver included. Anyone wanting to get into the market should most definitely do their due diligence and only buy from trusted sources. This will likely only get worse.

I do not think that will be enough to dampen prices on the long term, and I also do not think that this is a typical market where you want to hit the top. Reason being is because metals are primarily a hedge against dollar devaluation. If they do go high enough then there will be no top, at least not in dollar terms. They may simply become the currency of choice, which is why I have no plans to sell unless interest rates are jacked way up beyond inflation. Sure there may emerge a new asset class that is more undervalued or more desirable, but for cash profits I have no specific target. I will say that I do expect resistance in silver at 75 for fibonacci retracement, and 114 for percentage based pattern resistance derived from the previous highs, should it get up that far, but otherwise I see very little resistance above 50.

 

Fake pandas' already are quite common in ebay, maple's not as much but i have heard of fakes' popping up here and there.
Here is video of Fake 1 oz pandas :
http://www.youtube.com/watch?v=DkgCnYShoLQ

 

The quote I responded to said that masses of people lost enormous amounts of money because they were forced to sell their gold & silver. However it did not qualify that statement with ONLY if you purchased during the very short spike of 32 years ago. Gold & Silver coin collecting and bullion buying continued through the 80s & 90s. The ASE & AGE were introduced in the mid 80s and were received quite well. Many mints introduced pure gold offereings in this period.

Certainly if masses of people were losing enoumous amounts of money on their purchases, then these institutions would have never bothered. In fact they would lose money too. Nobody would buy their items. Obviously this wasn't the case.

 

Yes, sir I'll repeat what I said and add a point:
In all likelihood, these folks did NOT lose money on the POG declining between their Buy/Sell periods,{...} or initially paid very high premiums for coin and then sold at extraordinary discount for different reasons.

(I'm almost convinced your poor friends paid HUGE premiums then sold at HUGE discounts to the very same coin shysters.)

And wasn't there also a 'numismatic Bubble' in the early 80s-90s? From November 81 - November 97, rare coin returns look terrible. That may be an additional factor for Double Eagle losers, no?
http://www.usrarecoininvestments.com/coin_articles/rare_coins2.htm

 

"Fake Pandas" are how common, exactly? Sure, any coin can be fabricated to look like another. That is NOT the point. Do said fakes actually and TRULY:
1) weigh true to a real Panda AND
2) have the same density/volume as a real Panda AND
3) have the same specific gravity as a real Panda AND
4) ring true to a real Panda AND
5) pass all/any other simple tests to confirm it's a real Panda?

I think if someone is spending >$100. on something, s/he ought to exercise common sense. If s/he does not, honestly, I have ZERO sympathy.

This isn't rocket science, you just do a little bit of homework: does it pass the sniff test?
http://www.pandausa.com/fake-panda-list.html

I suppose the easiest thing is buying only from a reputable dealer and paying whatever small premium for peace-of-mind. eBay isn't that, sorry.

 

No, this was way before that. The MS 65 bubble was the late 80's, the coins in that example were low grade MS. The MS65 bubble that accompanied the intro of slabbing was not a factor.

Shysters can always be a problem, but most of these people I were talking to were buying from good dealers, and selling the coins back to the same good dealers 5-10 years later or so.

People can believe what they wish. People bought gold in 1980-82 in higher periods and had to sell 5/10/15 years later and lost money. Anyone looking at a graph of gold prices in the period, and then saying "I do not think anyone lost a nickel even though the general market trend was down" can believe what they like. It boggles my mind to read that people think that, but they can if they wish.

All I can say is I was there and talked to these people, and knew some of them personally. If someone who wasn't there and has no first hand knowledge believes they know better, then so be it.

Chris

 

I know it is a blind spot for you and it isn't possible for you to admit that it is possible to lose money holding PMs. I think you misinterpreted medoraman's initial post but I'll leave that up to him. I don't think he was referring to people buying in the 90s.

 

Well, I wouldn't dispute that SOME people buy/bought High and sold Low - that happens with every single investment and isn't specific to Gold or PMs. (Like fatima, I read that as a 'new qualification' too.) I'm still looking for any reasonable baseline on the assumption of 'lots of Gold losers/major loss in assets' but vague or one personal example doesn't meet criteria for me either.

I'm not beating you up, just irked that you employed my pet peeve, a notorious Paper Bug Lie. To hear Paper Shills, EVERYONE bought Gold in Late January 1980 and then lost it all within six months. Rubbish! I have NO IDEA how many investors (nor what %age, more or less) were piling into Gold AFTER the Investor Death Spike and AFTER Volcker jacked interest rates to 20%. "Lots of people" and "tons of money" sounds counterintutive to me, but I confess I was waaaaaay to young to remember that. I'd love to see the data to back up that thesis, though.

(I suppose many many more people got hosed by the S&L crisis, but for Gold-Bugs in the farm-belt it may well have been a cruel & painful double-whammy!)

 

Anyone can lose money on PMs. If you thought that I've said otherwise, then it's you dear heart who have the blind spot. Since you are now saying that you really didn't have anything relevant to say on the matter, then I can at least agree that you got that right.

 

I know a while back there was discussion of how even a reputable dealer had picture of fake panda coin in its site just saying and there rumors of fake mazu slabbed coins flooding the markets (even reputable ebay dealers are selling them likely unknowingly). The video already showed fake Panda coin with same weight as real deal and even image was spot on (with exception of little copper toning).

1/2/3. Combination of lead with another base metal should give you same density as Silver. Unlike Gold which can only faked with tungsten (already seeing it with bars but expensive for smaller fractional coins) or platinum with Silver it is whole different story.
4. Not a metallurgist but i know in a discussion in Kitco a expert noted the ring cannot be used to distinguish fake from real all the time, since if plating is thick enough it can produce the similar ring as real silver coin.
5. Only way to know for sure is ultrasound test and these machines are expensive or of course employ a destructive test (gold testing acid or just break the coin in half and see for yourself )

 

Don't forget tungsten is not very easy to get a hold of anyway, besides being kind of pricey.

Right now, as an educated consumer, I know small gold and PT is not really a concern. I do not worry about those purchases. Silver, however, since its cheap and easy to fake SG tests, and new fakes like "circulated" WL halves have hit the market, along with much better bullion coin fakes, I am leery of. I usually buy junk silver that there is no reported Chinese fakes of, and pay attention even then. This is from a guy who literally has had thousands of WL halves go through his hands. I very easily could see in a year or two some major exposes about what jjack is talking about, and it putting cold water on retail bullion demand. How many people need to find out the "silver" they bought is worthless junk before it affects the market? IDK, but don't think anyone else does either.

Juan, I know you are against overreacting to "tungsten gold bars" and in that I agree. I do believe, however, the issue is more severe today with silver than you have heard about. At least once a year there are stories from major conventions where dealers talk about new, better quality fake silver bullion products hitting the market. Every time even experienced dealers are found out to be holding some unknowningly. Because silver is so easy and cheap to fake SG with, I believe we will be seeing an explosion of increasingly better and better fakes. There are already a whole slew of coins like Trade dollars, pillar dollars, and other series I would never DREAM of suggesting someone who is not an expert in them buy them unslabbed. Just wait until this same advice applies to washington quarters, mercury dimes, and American Silver Eagles.

Just my opinion.

 

I think we both know THAT is really all it takes: public perception. There's almost zero risk buying "fake Gold coins/bars" from a reputable source, but even here there's panic & nonsense. I still can't believe that no one else looked at that Fadl Case more closely. Sheesh, it clearly doesn't pass the sniff test... the story was driven by FauxNews.

Take a deep breath and get a grip, ppl. Wall Street Paper-Bugs are just lovin' the way Little People - gold-sensitive sheeple? - get so worked up and bothered silly on a rumor. "... and here, go buy more shares of the 'safe' mutual fund instead..." nevermind that Fido owns on your behalf, LOL: READ THAT FINE PRINT!!!

It's like everyone has lost not only perspective but also their minds. Good grief, Charley Brown! Buy a $6 scale, a $5 gauge, and learn what a silver ring sounds like. The only other advice I can offer any investor in anything is 'grow a pair' LOL

 

I believe this post will be seen as a bit off-topic at this point, but I have had a few experiences over the past few months of people coming into my shop looking to BUY silver as an investment. Their rationale is that since gold is so expensive it is better to buy silver to trade for food and ammo in the coming apocalypse...