Gold coins are at an all time high demandgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
"Jim Irwin can't help laughing when talking to some of his customers at Shaker Coin Stamp & Jewelry. As the stock market has become increasingly volatile and the Year 2000 draws nearer, Irwin has seen sales of gold coins soar. "They think Armageddon is coming," Irwin said. "My wife and I always think they're crazy. Now we're not so sure." Well, maybe not Armageddon, but something sure is feeding gold fever: The gold market two months ago saw its lowest prices in nearly 20 years. Investors have stomached double-digit losses in their stock portfolios. And then there's the Year 2000 issue, which some doomsayers think could turn financial accounts into vapor. Coin dealers locally and nationwide report a near craze in gold buying. First-time customers. Long-time customers. Rich. Middle-class. Mattress-stuffers. Gen X computer whizzes. "Some people are in disaster mode," agreed Val Holmes, partner at Carat Coin Collectibles in North Olmsted. "It's partly because of the recent stock market drop," Holmes said. "Some people lost 10 to 20 percent of their money in a couple of weeks. They got a little scared, and now people want to put money into a sure thing." . . . Bryan Kissling, senior vice president at Everen Securities Inc. in Westlake, agreed it's good to have 5 percent to 10 percent of holdings in a commodity such as gold "to hedge yourself against rampant inflation or some extreme financial crisis." But he said he'd personally recommend energy stocks, which have performed better than gold. People who bought gold coins 15 years ago have lost at least 20 percent, he said. Besides, buyers of gold coins don't earn dividends, and buyers have to pay varying commissions. And financial turmoil at all corners of the world increase the possibility that countries such as Russia could sell their reserves, flooding the market to either lower values or hold them in check, Kissling said. Liquidity and dividends actually make gold stocks more attractive investments, he added. Still, demand for America's gold coins, the Eagle, is so high that employees at the U.S. Treasury minting facility at West Point, N.Y., are working overtime and weekends. Bill Miloher of Executive Coin Co. in Stow, northeast of Akron, said his sales of gold coins have increased tenfold in the last six months. "Some people buy one at a time, some ten a time, one guy just bought $300,000 worth," he said. He doesn't look for sales to slow until prices reach at least $400 an ounce, compared with the current price hovering around $300."
-- Goldi (firstname.lastname@example.org), October 23, 1998
Yeah, I bought lots in 97 after selling my mutual funds as they were starting to look pretty pricey. I like gold maple leafs because they can be sold one coin at a time for grocery money as the price goes up. Also they don't leave a paper trail in case the tax man shows up at your door.
As for gold mining stocks they are simply paper just like any old stock. If gold goes up the government can levy extra taxes on them just like they did with oil companies in the 70's. And since gold companies have forward sold most of their production for the next 3 years they can't be expected to show increased earnings if the price of bullion goes up. Also buying gold stocks is not unlike buying a derivative. It doesn't take physical gold out of the market.
With US trade deficits surging it's only a matter of time before those foreign holdings of dollars or "claim checks" start coming home to roost, lowering the US dollar and increasing inflation. And if that doesn't happen right away you can bet the Fed will help bring it on just to avert a major global recession. With gold at 18 year lows it looks pretty much like a win-win situation. Yeah gold under the mattress sure beats $6 Trillion of US debt any old day.
-- A Cumm (email@example.com), October 24, 1998.