[ 2022 ] Gold and silver

[Carolinian]

Anyone here putting away gold and silver as an inflation hedge? What are you buying and how hard are you being hit with premiums over spot rising?

For myself, I buy 90% silver pre-1965 US coins (called "junk silver" in the trade) and some 80% silver Canadian coins for my silver purchases. For gold, it is all numismatic coins (ones actually intended for use as money instead of just holding bullion) rather than the bullion coins. While I have a fair number of US pre-1933 Eagles ($10 gold pieces with about a half ounce of gold) and some pre-1933 half eagles, over the past year it is almost all European gold that I have been buying - British sovereigns, German 20 marks, Austrian ducats and 4 ducats, French Napolean III 20 francs, Danish 20 kronor, Dutch ducats and 10 guilders, and Canadian 1967 $20 gold pieces.

I have found the lowest premium over spot for a roughly half ounce gold coin have been the restrike 1915 Austrian 4 ducats, which until recently have been available about 3% over spot and the 1967 Canadian $20 gold pieces which until recently have been about 4% over spot. Recently, the Canadian $20 has climbed to 5% over spot, but is still cheaper than the Canadian bullion half ounce Maple Leaf, and it contains more gold than the half ounce Maple Leaf - .5228 ounce versus .5 ounce. The Austrian 4 ducat pieces, however, have jumped to over 10% over spot. In fact one can buy four 1 ducat gold pieces now cheaper than one 4 ducat piece. Premium has gone up on all the coins I buy.

Premiums on junk silver have also jumped a lot. Premiums are not as bad on Canadian silver coins, but they have begun to vary quite a bit by denomination, quarters having the lowest premium, followed by dimes, then halves, and then silver dollars.

Inventory is also way down on both silver and gold, with a lot fewer options available. One firm that tends to often have the best prices on European gold I check several times a day because their inventory gets scooped up quickly.

 

[ScoopKona]

Not only am I not interested in buying, if someone gave me a ton of gold I would sell it and do something useful with the windfall.

Gold salesmen, every day of every year: "Gold is poised to skyrocket! So buy some from us! Because we clearly have no idea how economics work! We sell things that are going to jump in price tomorrow! Because that's what we do!"

 

[Carolinian]

Not only am I not interested in buying, if someone gave me a ton of gold I would sell it and do something useful with the windfall.

Gold salesmen, every day of every year: "Gold is poised to skyrocket! So buy some from us! Because we clearly have no idea how economics work! We sell things that are going to jump in price tomorrow! Because that's what we do!"

The first 4 ducat piece I bought I paid about $16 for it. It is now worth over $900. The gold salesmen you refer to are generally from overpriced sellers. You have to do market research to find the cheapest reliable sellers. I have three companies I primarily buy from, and they are NOT ones that are all over the radio and TV. In fact, I don't think I have ever seen an ad from any of them in mass media.

I also hold some foreign currency as hedge - Swiss francs, Norwegian kronor, and Swedish kronor, but not as much as I did when I was working in eastern Europe, as well as some rental properties, both as income producers and as an inflation hedge. Gold and silver is just one financial component.

 

[ScoopKona]

The first 4 ducat piece I bought I paid about $16 for it. It is now worth over $900.

Nice!

The only gold piece I own I picked up for free at the bottom of the ocean. (Mel Fisher was a good friend.) I don't care what it's worth today. I'm not selling it, so it doesn't matter.

The problem with gold is that it is notoriously flat over time. The cost of a decent toga at the forum in Rome was one gold coin. The cost of a decent suit today is the equivalent of one gold coin. And considering the purity then to now, it's actually lost a little value over the past 2100 years.

I can think of dozens of better things to do with money than invest in gold. I don't even want the stuff around. Easy to steal, impossible to prove ownership, can't be insured against loss in value due to economics, doesn't pay dividends. I'm diversified "out the wazoo." But not metals, commodities, crypto or NFTs. No interest. Truly, if someone gave me a ton of it, I'd find a buyer and be rid of it just as fast as humanly possible.

 

[Mongoose]

I keep some just a sense of security to use for barter if SHTF. History is full of failed currencies, usually a result of excessive spending, devaluation and hyper inflation. I hope I don't see it in my life time, and will simply hand it down to my kids.

 

[DrQ]

I've got 1999 gold eagles which I bought in 1999. I'm seriously considering cutting my holding in half when the market bottoms out and converting them to dividend producing stocks.

 

[ScoopKona]

I hope I don't see it in my life time, and will simply hand it down to my kids.

Other than people who own gold mines and people who make commission buying and selling gold, this is the only reliable way to make money with it -- inherit and sell. Otherwise, it's basically the Poconos Timeshare of investment.

I have a friend whose parents hold several kilos of gold at the bottom of a grandfather clock. (I've seen the stash. Lousy hiding place, if you ask me.) A whole bunch of coins in a burlap sack. I hope for my friend's sake their house doesn't burn or that grandfather-clock thieves don't target his folks. That investment has resulted in decades of "bupkis." It's just sitting in a sack, doing nothing.

Gold bugs are always, "But excrement could hit the fan!"

Great. That's why I'm on a self-sufficient farm in an easily defensible position. That's my hedge against excrement hitting fans. If someone makes a fortune buying low and selling high, that's great. Same with crypto and every other investment -- good on the person who beat the market. I don't worry about it. My hedge vs. inflation is patience.

 

[BJRSanDiego]

I keep some just a sense of security to use for barter if SHTF. History is full of failed currencies, usually a result of excessive spending, devaluation and hyper inflation. I hope I don't see it in my life time, and will simply hand it down to my kids.

When the SHTF, perhaps a case of whiskey may have better trading value. Or a case of MRE's.

 

[dioxide45]

If everything goes to crap, it isn't like you will be going into the supermarket to buy stuff with your gold coins.

 

[ScoopKona]

When the SHTF, perhaps a case of whiskey may have better trading value. Or a case of MRE's.

Knowing how to make antibiotics from scratch, grow food, filter contaminated water, etc. There's a large swath of Rambo-cosplay types who think they'll be top of the heap because they stockpiled ammo. If they break their wrist, they'll learn quick that the bush doctor holds all the cards.

 

[DrQ]

If everything goes to crap, it isn't like you will be going into the supermarket to buy stuff with your gold coins.

My plan was to brew beer for barter.

 

[dioxide45]

My plan was to brew beer for barter.

That may work, but might be better to have a salt mine (like in Jericho)

 

[easyrider]

What are you buying and how hard are you being hit with premiums over spot rising?

I bought all I wanted when precious metals were cheap. I see premiums are ridiculously high these days and people are still buying it up. The reason many people have precious metal is because it is a good way to store tangible wealth un-noticed . The high premium is just an extra cost to store this wealth un-noticed. What is interesting is how fast these physical products sell out these days.

Bill

 

[Brett]

Not only am I not interested in buying, if someone gave me a ton of gold I would sell it and do something useful with the windfall.

Gold salesmen, every day of every year: "Gold is poised to skyrocket! So buy some from us! Because we clearly have no idea how economics work! We sell things that are going to jump in price tomorrow! Because that's what we do!"

some cable channel 'entertainers' hype gold but I'm not sure gold is a good long term investment
https://www.longtermtrends.net/stocks-vs-gold-comparison/

sure, if one doesn't own a farm and expects "excrement to hit the fan" then hoarding gold might work

 

[Mongoose]

When the SHTF, perhaps a case of whiskey may have better trading value. Or a case of MRE's.

Whiskey is not a bad idea, but takes up a lot of space. The shelf life on MRE's is to short compared to other options.

 

[Carolinian]

I keep some just a sense of security to use for barter if SHTF. History is full of failed currencies, usually a result of excessive spending, devaluation and hyper inflation. I hope I don't see it in my life time, and will simply hand it down to my kids.

My wife who grew up in eastern Europe remembers a day when money that in the morning would buy an apartment by that same afternoon would only buy a bicycle. It happens.

 

[Mongoose]

If everything goes to crap, it isn't like you will be going into the supermarket to buy stuff with your gold coins.

Not one ounce coins or bars, but small increments (1/10 oz or grams) are easy to store, carry and acquire.

 

[dioxide45]

Not one once coins or bars, but small increments (1/10 oz or grams) are easy to store, carry and acquire.

But it isn't so easy to spend...

 

[joestein]

I keep some just a sense of security to use for barter if SHTF. History is full of failed currencies, usually a result of excessive spending, devaluation and hyper inflation. I hope I don't see it in my life time, and will simply hand it down to my kids.

My brother and I have this discussion every so often. He has a decent store of gold and silver - so when the SHTF he can barter. Similar to your view.

But if the SHTF hits the fan.... are you going to start to carry gold around with you? Shave off a bit here or there? I dont think it will be that realistic.

 

[dioxide45]

My brother and I have this discussion every so often. He has a decent store of gold and silver - so when the SHTF he can barter. Similar to your view.

But if the SHTF hits the fan.... are you going to start to carry gold around with you? Shave off a bit here or there? I dont think it will be that realistic.

Bartering with gold and silver probably isn't all that realistic anyway. If we are talking SHTF scenario here, what good is my gold going to do for someone down the street I try to barter with. Gold is just another "thing". I would be better to have a marketable skill or product used in daily life to barter with. Think food staples, toilet paper or the ability to build/repair a home.

 

[Mongoose]

My brother and I have this discussion every so often. He has a decent store of gold and silver - so when the SHTF he can barter. Similar to your view.

But if the SHTF hits the fan.... are you going to start to carry gold around with you? Shave off a bit here or there? I dont think it will be that realistic.

As with most things in life, balance is the key. The first priority should be to have a food supply so you aren't dependent on others. The nice thing about gold and silver is you can get it in any increment (1/2 gram gold ~$50, 1/10 oz silver $5 and up) and it will never be worth zero.

 

[Carolinian]

If everything goes to crap, it isn't like you will be going into the supermarket to buy stuff with your gold coins.

Every currency collapse in recent times has NOT led to a total societal collapse. There was still a functioning economy, even if the currency was in the toilet.

Take 1923 Germany, when it took a wheelbarrow full of paper money to buy a loaf of bread. The coins I have the most of are Imperial German 20 marks minted between 1871 and 1914 and containing .2317 ounce of gold (same amount of gold as a British sovereign but $15 to $30 cheaper to buy). The various Germans who possessed those very same coins in 1923 were in a heck of a better position than those holding paper money, stocks, etc.

Being in Turkey during the runaway inflation of the lira was also interesting, going into a McDonald's and paying big round numbers of lira for a Big Mac meal. It was very cheap in dollars to be a millionaire in lira. Their society did not collapse and their economy endured.

One place I read where gold is back to being used as currency is Venezuela, whose bolivar currency is in the crapper big time. The country produces gold and one can pan for it in streams. Packets of gold flakes are now being fairly widely used as currency and much prefered to the bolivar.

 

[joestein]

As with most things in life, balance is the key. The first priority should be to have a food supply so you aren't dependent on others. The nice thing about gold and silver is you can get it in any increment (1/2 gram gold ~$50, 1/10 oz silver $5 and up) and it will never be worth zero.

My brother also has a stock of dry beans and other type of dry items. He was a vegetarian for most of his life, so he is fine with eating that stuff. He says he can get by for 6 months on what he stocks.

 

[joestein]

Every currency collapse in recent times has NOT led to a total societal collapse. There was still a functioning economy, even if the currency was in the toilet.

Take 1923 Germany, when it took a wheelbarrow full of paper money to buy a loaf of bread. The coins I have the most of are Imperial German 20 marks minted between 1871 and 1914 and containing .2317 ounce of gold (same amount of gold as a British sovereign but $15 to $30 cheaper to buy). The various Germans who possessed those very same coins in 1923 were in a heck of a better position than those holding paper money, stocks, etc.

Being in Turkey during the runaway inflation of the lira was also interesting, going into a McDonald's and paying big round numbers of lira for a Big Mac meal. It was very cheap in dollars to be a millionaire in lira. Their society did not collapse and their economy endured.

One place I read where gold is back to being used as currency is Venezuela, whose bolivar currency is in the crapper big time. The country produces gold and one can pan for it in streams. Packets of gold flakes are now being fairly widely used as currency and much prefered to the bolivar.

I think the problems in this country are much more than just the currency, We have a greater divide and more social unrest than I have ever seen. I dont see anything getting better either.

I wish people could look at what is going on Ukraine and be a bit thankful for what we have here. Look at what goes on in other countries and see that things are pretty good relatively here in the US.

 

[easyrider]

Happenings will be interesting as gold is tied to currencies again. Sanctions really didn't disrupt the Ruble too much because the Ruble is backed by gold giving the Ruble a stable fixed price of 5000 Rubles per gram of gold .

Usually, silver prices go up in a recession and the world will be in recession as early as this summer. There is a shortage of physical silver because of the lack of zinc mining is what I read recently. Silver was recently in a backwardation trend meaning it shouldn't go much lower than now regarding price.

There is a huge demand for physical silver because it used in many products. Usually a shortage coupled with demand would mean a rise in price. Crypto's can't be trusted to hold value. Cash holdings get hammered by inflation. Global conflict in wealthier nations cause wealthy people in those nations to buy gold and silver. These are other reasons silver prices could increase.

I think we would be lucky to see $30 an ounce silver by 2023. I'm thinking $26-$27 is about it. I read forecasts that opine silver prices to go over $100 IF. Always an IF. Interesting is some of those IF's are turning into reality.

Bill