Book review of Screw the BS: How to Invest in gold and silver

This is a very short book - 76 pages.  Nevertheless, it contains good advice and background information on metal investing.

The author (Tony Chou) expects gold and silver to peak around 2017. For 99 cents (Kindle edition) you can find out why and what he thinks is the smart way to invest in metals.

By the way, he does mention numismatic coins - he doesn't recommend them, of course, but he does mention them.

What does he recommend? Physically backed ETF funds. I don't know that his 2017 peak prediction will be right, but I do agree with him on ETF stocks - if you want to invest in these metals, that's the way to go. Unless, of course, you think the world is going to collapse into chaos, in which case you should be buying junk silver coins and small denomination bullion gold coins - neither of which are recommended by Tony Chou, who suggests guns and food stockpiles instead if you really think that doomsday scenario is possible.  I agree with him on that, also. 

Buy this book at Amazon and help me support this site!

Clue for the second 2014 Silver Eagle Giveaway:  Goldine, Silver, or Brass:  a die gauge between the C and O in Continental identifies these.

Note:  All my coins are in a safe deposit box.  I keep nothing in my home. 

Contests and giveaways: http://coins.aplawrence.com/2014/05/contests-and-giveaways.html

The Bently Effect and the Saddle Ridge Hoard

I read this at Coin Week:  http://www.coinweek.com/commentary/opinion/bently-effect/

What really struck me was this paragraph (emphasis mine):

The Bently Effect is a set of circumstances that have come together to create the Perfect Wave in the history of the dated gold market. A market hungry for rare coins like 1864-S half eagles and eagles. A lack of availability of these coins (partly due to the fact that Mr. Bently had bought nearly every available example in the last 5+ years). A shift in taste in the dated gold market with Big and Western suddenly being the new “in” coins. The ability of Heritage to properly catalog, market and sell these coins (Kudos to whoever is managing the Bently collection and resisting the temptation to sell too many duplicate coins at once, as have other ultra-comprehensive sales in the past). And, last but not least, the power of the new Internet-driven market which has forever changed the coin business, in ways in which we still do not (in 2014) totally understand.

So - this person bought up a powerful pile of gold, which undoubtedly helped increase prices, especially as availability dried up.

Now Heritage is dribbling them out a little at a time - probably so as not to depress prices.

But eventually, unless the faucet drips ever so slowly, these will affect prices, I'd think.  That will be interesting to watch over the next few years.

It's also interesting to muse as to how gold prices might affect this. If gold goes down, it doesn't necessarily affect the price of rarer series and dates.  In fact, with lower prices making gold more generally collectible, the rarer pieces might even climb upward.  I'm not sure that there have ever been examples of that, but the data is certainly available to anyone who wanted to test that theory.

The Saddle Ridge hoard that will be popping up at Amazon in a few weeks will certainly affect prices too, but which way? Will the influx lower prices or will the mystique drive prices upward?

Note:  All my coins are in a safe deposit box.  I keep nothing in my home. 

This week's Coinweek Giveaway: http://www.coinweek.com/~cd53675ce0bee42

Also multiple contests going on at http://www.moderncoinmart.com/forum/forums/contests/

Apocalyptic dreaming

One of my favorite coin related forums is Modern Coin Mart. It's an unusual experience: unlike many forums, it's almost completely free of acrimony. I'm not saying that everyone always agrees, but that the disagreements are civil and even friendly.  There's no bullying, no "better than thou" put downs - it's a very polite forum.

It's also unusual in that a large percentage of its members are "stackers" rather than coin collectors. Stackers buy precious metals.  Some buy coins too, and the forum has plenty of numismatic topics, but stackers talk about rounds and bars and how silver is going to rise again (they hope).

Some see silver and gold as an investment, some see it as a hedge against inflation and some seem to be traders and speculators, jumping in and out as markets rise and fall. For others, however, there's another reason to buy precious metal: they believe that our economy will soon collapse and that the U.S. dollar will be worthless.

Sometimes that belief almost seems to be longing. I'm not saying that they want their non-stacking friends and neighbors to be destroyed financially, but that there is a twinge of religious fervor here. Like the crazies who pop up now and then insisting that Jesus and the Resurrection are coming THIS YEAR, these financial collapse believers are doing more than hedging their bets: they are certain that collapse is imminent.

Well, I can't say that's impossible, can I?  In fact, the relative probability is a heck of a lot better than angels swooping down with swords to slay the wicked. It is at least something that could happen, right?  I can certainly see a perfect storm of natural disasters and political mishaps that could trigger such a thing.  I can also see me picking next weeks Mega Millions number, but I'm not really expecting either one.

These folks are expecting it and when it happens, they'll have gold and silver assets. They won't be penniless - well, they will be, just as you and I will be, but they'll have gold and silver to barter with. They'll survive the economic and societal collapse of civilization.

Well, unless they don't survive the roving gangs of murderous thugs, the polluted water, poisoned food and raging disease that would accompany such a collapse.  I'm sure some of them have thought about all that too and are stacking canned goods right beside their silver bars - google "survivalist planning".

Shrug.  I insure my house against fire.  It's not really any different, is it? You and I have home insurance and mutual funds, they have stacks of shiny metal and soup. Same thing, really.

Note:  All my coins are in a safe deposit box.  I keep nothing in my home. 

This week's Coinweek Giveaway: http://www.coinweek.com/~cd535e2d686a500

Also multiple contests going on at http://www.moderncoinmart.com/forum/forums/contests/

Gold!

Together, these four coins are a little less than one ounce of gold.  They are all the gold that I own.

Note:  All my coins are in a safe deposit box.  I keep nothing in my home. 

I'm not a big fan of gold as an investment. I think it can be an excellent hedge against inflation, but there are times when it is over valued and those are not the times to be buying.  I think that right now, with gold at $1,294.30 per ounce as I write this, is one of those times.

I could be wrong, of course.  I'm no expert on this; I'm trusting my gut from a lifetime of experience. I think gold should be around $700 - $900 today and is only higher because of speculation and possibly manipulation by large stakeholders.

Why I think that is because of gold's purchasing power over time.  That's what really matters.  How many ounces of gold would you need to buy a home in 1908, for example? How many in 1975, 2008 and so on?

Depending upon the year you pick, that figure will vary widely, but it quite often settles around 250 ounces. That is, whatever the price of real estate, 250 ounces of gold would buy an average priced home.  So if you bought that average home for 250 ounces in 1908,  you would also pay around 250 ounces a hundred years later in 2008.  That's not an investment, is it?

Of course you can pick different years where it would have cost fewer ounces or more. By being in and out of the gold market at specific times, you could have made large profits - it would have cost less gold to buy that home.  Those who say owning gold is good always pick those times, of course.  But you can equally easily pick times when you would have lost purchasing power over time.

That's my point: if you buy at times where gold is low in purchasing power and sell when it is high, you make out. But when is it high and when is it low?  Real estate has cycles too, so you can't just compare to that.  Sites like MeasuringWorth.com can compare dollars to different kinds goods and labor, but as they explain, it gets very complicated.  Advances in manufacturing, food production and the whim of the public affect prices.  It is very hard to nail down what a "good" price for gold is at any given time.  Like many things, it's easy in retrospect, but really hard in the here and now.

Little of that is important to these coins. Numismatically, they are worth about $1,900 retail.  Part of that value comes from the gold itself, but obviously not all of it.  I'd rather own these coins than two ounces of raw gold.  They will have numismatic value even if gold prices plunged to $500 an ounce.

That's why I would always recommend buying numismatic gold over raw gold.  

This week's Coinweek Giveaway: http://www.coinweek.com/~cd53550787d934d

Also multiple contests going on at http://www.moderncoinmart.com/forum/forums/contests/