Discussion in 'Bullion Investing' started by Rob_0126, Jul 2, 2005.
Long live the rats!!! You know in some countries they are eaten don't you?
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Regarding the original topic, I prefer the silver maple leafs to eagles for two reasons. First, the purity is .9999 for the maple leafs. Second, they can also be used in circulation as $5 Canadian currency, which is about $4 USD. So you can buy silver with a floor of about $4 under it in case the price of the metal decreases. For gold, I'm not sure purity is much of an issue. 90% gold coins worked just fine as money for a very long time, and probably would again if the need arose.
Regarding everybody's preparation for the end of civilization as we know it; cigarettes go stale, and ammo might be illegal, and therefore dangerous, to use as currency. My uncle told me that in Europe at the end of World War II, gold was of limited value because everyone wanted to sell gold, but there was nobody to buy it and people were reluctant to trade for it because it had no use in daily life. He said that in a busted economy, soap was about the best currency in his opinion because it has a long shelf life, is fairly portable, and is useful so it can be traded for food. So plan ahead and think of all of the cool coins you will be able to buy from desparate collectors for a couple of cases of soap!
I don't think there will be too many collectors buying coins when the market falls.
In a few years, rat might just be an American delicacy.
Ammo is legal for me, for the time being. AG Gonzalez is gearing up his anti second amendment machine though, so it may not be for long.
I very much appreciate the idea of soap. Even though I have quite a stockpile because I like showers (luxury item for me then), I never thought about it for barter goods. A 4-pak of ivory soap is less than $2 now,and like you said easy to store.
Ammo is not something you barter with, it is something you defend yourself and your position with. Bartering with ammo would be a huge mistake on so many levels. The person you barter with today, may be the person you are shooting at tonight.
I have always felt about metals as an investment that if silver goes up to $60 an ounce, how many dealers are going to be buying knowing that it could just as easily drop back below $10 before they turn it around. I don't think many dealers will be taking that chance. The cosideration for me it to have it for gradual inflation. If in 20 years, we still have an economy, if the stable price is $20 an ounce and people are trading it regularly, then I made a little money.
But if silver spikes to a high amount, I personally don't know how many people, other than maybe ebay, will be buying a lot of it. I know I wouldn't. I don't even buy silver when it is over $7 an ounce.
Personally, I don't think there is any way to protect yourself from financial Armageddon. I also don't expect things to get to the point where I'll spend the day defending my coins at the point of a gun while munching on a rat. But a well thought out coin collection with a lot of gold and silver in it should be a good inflation hedge. From stories I read, this is the sort of investment that helped a lot of people preserve wealth most recently in Turkey when their currency collapsed, and in various South American countries that experienced inflation in the past. People sometimes forget that coins don't have to outperform stocks to be worth holding, they only have to outperform cash, which can lose a considerable amount of value during serious bouts of inflation. Assuming civilization survives, the point is to get from here to the other side of any financial crisis with most of your wealth intact, not to break out a couple of walkers every day to buy lunch. Gold and silver bullion coins, and numismatic coins of all types are a decent way to do this.
I don't see anything wrong with the AGE's. They are 22 Karat or whatever, But they still contain one ounce of gold right?
The $50 AGEs do.
There is nothing wrong with AGEs, maple leafs, St Gaudens, Liberty, Indian, Krugerrands, or any other type of well-recognized gold coins. The smelting issue is a non-issue because as a practical matter, a 90% gold coin is a superior form of gold to begin with. So collect what you like. There is no such thing as bad gold (or silver) as long as you can establish the precious metal content and don't overpay for the coin. The potential numismatic gains from collecting scarce coins at reasonable prices is an added bonus, and pleasure.
Right now Id put 50% of what I had into Palladium.....30% into silver and 20% into gold (the price is too unpredictable at this point for gold).
Pallladium is pretty low and most likely will rise again at some point.....silver could possibly take a leap in price soon......gold is pretty questionable as far as Im concerned......too many factors coming into play to be sure if it will go up or down.
I never invest in one metal.
no less than two and I suggest doing some research then playing with Gold, silver, Platinum and Palladium.....all four.
And honestly, you may even find that base metals can be worth investing in as well.
"The $50 AGEs do."
Right so they contain one ounce of gold + the silver/copper mixture.
That's right. One troy ounce of gold = 31.104 grams. The $50, 1 oz gold AGE is actually 31.104 X 24 / 22 = 33.931 grams (22 karat).
Or, going the other way, the $50 AGE weighs 33.931 grams. Since it is 22 Karat gold, it is 22/24 X 33.931 = 31.104 grams of gold, and 2/24 X 33.931 = 2.827 grams of silver/copper. 31.104 grams of gold plus 2.827 grams of silver/copper = 33.931 grams total.
All fantastic ideas.
Something that most aren't looking at though about precious metals. They can be reformed into other useful items
I thought about getting a bunch of packs of various vegetable seeds from walmart for planting food. We have some pretty good dirt around here. Also canned goods will keep you going when you dont have good food to eat for a time.
Water is the issue because most wells run on electricity. The thing is, if the american economy collapses, we will be in trouble anyways. Imagine walking 20 miles to get to the next town. Thats an all day affair unless your a marathon runner.
I live 3 miles outside of town, which is a good start.
Im gonna stick with silver for now until I see how certain metals fluctuate. Remember, silver has been used as currency for over 2,000 years.(yes gold too, but your not gonna buy a 6 pack of pepsi with a $450 eagle (or would you?))
I will say though, the main point of having precious metals is because the paper money will be worthless. The circulated coins of today will fall in that category too because of their mixed concoction of allows. Well, Id rather barter for a silver eagle than an IKE or SBA dollar.
Interesting thoughts from all of you.
I like common date EF, AU, and lower grade MS $20 Liberty and (sometimes) St. Gaudens pieces. They are often over looked by collectors, they can be had for a reasonable premium over melt value, and they will always possess some numismatic appeal. Plus they are fun to own!
But, to the topic at hand:
If gold rises in value you win by having these coins. If the economy strengthens and collector coins remain desirable you win. If the economy tanks and precious metals become necessary as a bartering tool you win. The only way I can see you losing with this method is if you pay too much, have to sell quickly, and the price of gold hasn't moved up or has possibly dropped some. But, as one poster mentioned before, the goal is to purchase at a reasonable price, hoard for 10, 20, or 30 years, and then see where things are.
I agree with your observation, but I don't own any of the coins you mentioned. I visited a local dealers and spoke to him about buying common date EF and AU Liberties at prices approximately the same as a similar sized bullion coin (for many of the reasons you mentioned), and he just curled up his nose and talked me out of it. I was told and shown an MS64 1924 St Gaudens and he told me it was what I should buy. Since he was more knowledgeable than me, I didn't buy the EF or AU Liberty, but didn't buy the St Gaudens either. I figure he's probably right, but I still like to look at those $5, $10 and $20 EF and AU Liberties. I just don't know what to do.
Don't let him tell you how to or what to collect...its not his collection....the only reason he showed that too you is because it was much more $$$...I may be wrong but even the good dealers look to make a buck.
By all means, collect what YOU like. And you're right, dealers do like to make a buck - that is the business they are in after all. But be assured - he is going to make a buck on the AU or EF coin as well.
And there is also another reason a dealer may make a suggestion like that. He may actually be trying to look out for your welfare. For if the time ever comes to sell that XF/AU coin - it will be a whole lot harder to sell it and get back what you paid for it. The vast majority of the time you will end up with less than you paid.
But with the MS coin - not only will it sell in a heartbeat, it is likely you will even show a profit.
It mostly depends on why you are buying what you are buying.
I too have purchased MS-62/MS-65 pieces because I don't believe in placing all of my eggs in one basket. I'd prefer that we never have to use our collections as bartering tools, and I like the nicer coins as much as anyone! I hope that if I do have to sell one day I will get a nice return on my investment, though it isn't the principle reason I collect. I collect coins because I enjoy them, and if collectiblilty is your primary motivation you'll want to acquire the nicest coin your budget will permit. But, from reading your post, I gather that you are more interested in a bullion-type investment, at least at this stage.
Speedy and GDJMSP have given you some sound advice: Buy what interests you most. That should be your guiding force. Me? In my last post I listed some of the reasons I collect these particular pieces, but I also like handling some of my coins. I get an immeasurable amount of pleasure and satisfaction from doing this. My favorite Liberty is used as my avatar- an 1899-S EF45 Double Eagle. The history, the design, the weight, the color- heck, I could go on and on. Sure, I have nicer ones, but EF/AU examples are perfectly conditioned coins for this. They are not museum-quality pieces and I can enjoy them as such. Also, EF/AU specimens are a lot less likely to go down in value with measured, careful handling than a mid to upper-end MS piece.
A 1924 MS-64 St. Gaudens is certainly a nice coin (the first DE I ever bought was a 1924 MS-62), but overall it is a fairly common Double Eagle. The 2004 Red Book lists the field population at over 1,000,000 coins, and over 100,000 of those at MS-64. Accordingly, it might not re-sell with a satisfactory profit (if that is your goal) if not given enough time. If you buy EF/AU coins at a reasonable premium over melt the actual dollar amount you could stand to lose is much lower and the profit still lucrative, assuming in either case that you aren't under any pressure to sell at a bad time. A convincing argument can be made for either approach. Again, it depends upon the individual's reasons for collecting gold coins in the first place.
GDJMSP makes a great point...most of the time a MS coin will sell faster than a XF/AU coin...I know my dealer always shows me coins that he knows I can't buy and more than likely never will buy because of the price...but he shows then to me so I can look and learn a bit about them...he showed me a $3 gold pice in AU55...he said he had only ever had 2 and this was 1....so in that case...if I would have had the 1,200.00 to 1,500.00 he was wanting it would have been a great idea to get it...coins like that don't come around to offen.
I have to agree with you again. On the one hand, the higher grade coin will outperform the lower grade provided the value increases at a greater percentage rate in the future. I think this has generally been the case over the past 40 years, but is no sure thing to continue. I suppose one could buy three AU coins for the price of one MS65 these days. Is it worth it? I don't know. The trick is to guess correctly that at some point in the future, one MS65 will be worth four or more AU coins -- no sure thing. I think GDJMSP is entirely correct that the MS coin is easier to resell. Maybe this can be partially overcome by carefully purchasing circulated coins at a very small premium to the bullion value, and maybe not. I really don't know the answer to this one. Maybe buying one of each is the way to go.
I've been thinking about this and there would be some cases when XF coins would sell better then MS....when your around me if you had a 1909-S VDB in XF and MS63 the XF would sell lots faster around me and some other collectors...that is because it would be more in the grade range I want and it would also be cheaper... ;--)
But I think in the long run the better the coin, the better it will sell...take this--I collect PF66 Franklin halves....I bought a PF67 NGC Proof Franklin....no it is NOT in my collection of PF66 halves...its a coin I will one day sell to buy another PF66 Franklin...but the higher the grade the better it will sell.
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