Gold and Silver Coins: Investment and/or Insurance?greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
I have read here and elsewhere that Gold and Silver bullion coins represent an insurance strategy against temporary or greater Year 2000 related bank failures. Some also suggest that such coins are an interesting investment strategy in the light of a potential Y2K panic (ala Yourdon, author of "Time Bomb 2000") or predicted recession (ala Yardeni, Chief Economist, Deutsche Bank Securties) that drives up the price of Gold and Silver. Though I realize that Gold and Silver coins are not a First Thing (Water, Food, Heat, and Shelter), I would like to hear your opinion on whether they are a good investment and insurance against the technological and economic unknowns of 2000. Do you also think that U.S. American Eagle bullion coins have an advantage over coins from other countries and others forms of bullion and metal?
My assumption is that the American Eagle bullion coins would be a better choice in terms of local transactions in the United States-- especially between people who cannot test or do not know how to verify the weight and value of gold and silver bullion or any other form of these metals. Because the American Eagle bullion coins are a legal form of U.S. currency, produced by the government's mint, and marked with the symbols of legitimacy, it seems that the average person is more likely to accept these coins at their actual value than a Canadian Maple, a bar of bullion, or a bag of metal dust. Beyond their apparent liquidity in private transactions, I wonder what other institutions would buy bullion coins or exchange them for cash -- other than coin dealers. Will banks take them?
Today (April 3, 1999), the Monex web site listed the price of Gold bullion at $281.00 (U.S. Dollars) and Silver bullion at $US 5.04. Also according to Monex, The U.S. American Eagle one ounce gold coin opened at an asking price of $US 297.60 and the U.S. American Eagle one ounce silver coin opened at an asking price of $US 6.97. While my personal budget for preparations does not seem likely to include the Gold American Eagles of any size (one ounce, half ounce, quarter ounce, or one tenth ounce), the Silver American Eagles seem to be an attractive insurance and investment strategy. Probably, this kind of coin is more affordable to the general population too-- including those who depend on public assistance. Does anyone know what Silver bullion was at in the fall of 1988?
I did some initial research on the price of the one ounce Silver American Eagle coin: I searched the Internet (including Ebay) and called both coin shops and official dealers recommended by the U.S. Mint. In the Ebay auctions, the general price for this coin was about $US 12 per coin from the coin dealers. I was quoted the same price by local coin dealers. Some of the official dealers offered the coin for $US 10 each for a quantity of 100. I'll keep calling around, but I'd appreciate if anyone knows of coin dealers that are selling the one ounce Silver American Eagles for less and in quantities less than 100. Have any of you joined together to make a total purchase of 500 coins or more in order to get a better price? Is there anyone out there who is still making plans to get a modest stash of silver coins?
Sincerely, Stan Faryna
-- Stan Faryna (email@example.com), April 03, 1999
My understanding is buying gold/silver is way of "preserving wealth"/insurance vs. an investment. Silver Eagles were selling @ $7.95 each a local coin dealer in my town. If the purchase if over $1000.00 there is no tax. I check my bookmark to try and locate the site that list the price of gold/silver over the years.
-- quietly lurking (firstname.lastname@example.org), April 03, 1999.
We don't have much $$$ to invest in anything, however, we have put quite a bit into silver eagles for the purpose of having recognized cash (not paper) in the event that such is needed in months to come. Both gold and silver are at nearly all time record lows right now. Even if there was no threat of collapse looming on the horizon, it would be a good investment over the long haul. Bullion may not be currency, but it does come stamped with the weight and purity so it can be compared with coins. If our financial system does go down, gold will still be gold and silver will still be silver - oz. for oz. Bye the way, you can purchase both in smaller coins that the eagle.
-- winna (??@??.com), April 03, 1999.
Here are a couple more options. 1999 American Silver Eagles have been in short supply for a couple of months due to demand. This site is advertising to sell at $8.50. Gold and Silver Coins
I do not know if they have any available.
I have used "Blanchard and Company" to purchase them in the past but again I do not know if they are taking orders for American Silver Eagles.
-- Ray (email@example.com), April 03, 1999.
Forgot to post the phone # for Blanchard and Company. They are one of the largest precious metals dealers in the country. I do not believe they have a website.
-- Ray (firstname.lastname@example.org), April 03, 1999.
Blanchard web site: //www.blanchardonline.com
Silver coins are getting scarce. Junk silver coins are up 25% from their price last fall. I bought a 750 Silver Eagles for $6.35 or so each last summer.
I believr that at this point there is a shortage of silver blanks. The price has risen to cut back on orders.
If y2k is bad, silver prices may go very high, so paying $10 each may not be such a problem.
I am not thinking of gold and silver coins as a way of paying for things. I figure that somebody with lots of loose cash will want coins at the last minute. I will be there to meet that need.
-- David (email@example.com), April 03, 1999.
consider reading the recently released book by Wade Cook, "Y2K Gold Rush"...gives some basic investing, buying tips on gold and some references to silver. I knew nothing about either commodity before reading the book but now have been armed with right type of information to make an educated purchase.
-- billy boy (firstname.lastname@example.org), April 03, 1999.
Like it or not, here is my two cents worth.
The only reason to buy gold is if you expect either an economic catastrophe or total collapse. In the case of an economic catastrophe, the govt. will shortly pull in all gold bullion and coins as backing for new money. Your loss, as you can then only use such items under the counter, at very inflated prices. And jail is not a good place - and would be what you are risking. In the case of total collapse - there is no reason to suppose that someone with just enough for himself will give you anything for gold. Check out a few of the history books about great sieges and such - sure the nobles were trading gold to peasents for food - at prices you would not begin to believe. A bottle of rare champagne for a smoked sausage, a heavy gold chain for a few pounds of grain - can you REALLY buy that much gold? I sure can't! Moreover, the price ratio these dealers are offering between buyback and sellback (if nothing really bad happens) is a killer - you will loose between 10 - 20% of your investment. Honest, I get a better deal at the casinos pulling the silver medallion slots.
So the only reason to buy gold instead of something you could barter is to try to carry value through a time when cash was going nuts with inflation - but not bad enough to cause gold holdings to become illegal. Pretty fine line to shoot for if you think things are going to be bad. (Personally I don't think it will get that bad, but that is how I feel about gold as an investment anyway.)
And about cash - the value of our money depends heavily on its value in the rest of the world. Most everyone agrees the USA is top dog when it comes to Y2K readiness. So our money may well even deflate rather than inflate. Something to think about.
-- Paul Davis (email@example.com), April 03, 1999.
you can probly make a case anyway you want to. i figure it is like insurance. i have , like some say a few bucks,but this is what i have purchased[5/27/98] 2/715oz containers of 90% silver coins @$5.02/oz[ monex.com] 100 gold eagles [8/10/98] @ $300.78ea [momex.com] 500 silver eagles @ $6.37ea [southerncoin.com] as you can see the silver has appreciated but gold has done nothing. i will probly never use but i have it, and will pass it on to my kids some day. also a good site to get infomation is kitco.com
-- bob (firstname.lastname@example.org), April 03, 1999.
I expect gold to trade at higher prices in second half of 1999 as:
1. Increased demand as an inflation hedge and as a store of value, esp overseas in developed countries. Gold is portable, so if Y2K appears to be as bad as many on this list believe, it will be a means to transport ones assets to a safer venue.
2. Gold future contracts have been sold short in last several months by big Wall Street firms like Goldman Sachs and others. Much if not most of this will need to be covered by buying back the contracts later in 1999.
If Y2K hits uniformily hard across all markets (Which I personally feel is doubtful - some areas will be less affected than others and a market will be reestablished in quicker order than others), gold may not trade for a period of days, weeks or months. But once trading is resumed I expect gold and silver and all other commodities incl diamonds and gems etc to trade much above pre-Y2K levels due to:
1. Inflationary effect of all the dollars pumped into the market by the Fed pre-Y2K to stall a run on the banks. And/or:
2. Increased demand for commodities esp oil and petroleum goods. Historically, oil aka black gold has traded in a trend coincident to the price of gold. Usually a rise in one is coincident or signals in impending short term rise in the other.
As I expect one of the main outcomes of Y2K in the USA will be economic impact - I believe gold, silver and other hard marketable assets will dramatically increase in value over next 12-18 months.
-- Bill P (email@example.com), April 03, 1999.
Thanks for all the replies to my question about gold and silver coins as an investment and/or insurance against potential economic and Y2K problems. I was very glad to read that people are getting the American Eagle one ounce silver coins for less than $US 10. Quietly lurking mentioned prices as low as $US 7.95; Ray, $US 8.50; and David, $US 6.35.
I realize that some of you bought your silver coins last year, but hope that you will post the names, addresses, and phone numbers of buisnesses selling American Eagle silver coins at fair prices. Thanks to Ray for the phone number and web site of Blanchard and Company. Myself, I will try to remember to come back to this post and post any more pertinent information about pricing and businesses that I come across in my research.
Paul Davis mentioned some issues about selling your coins back to a dealer. Specifically, he states that one might loose as much as 20% of one's investment. I am assuming that this would be an issue if the price of gold and silver remain mostly unchanged between the time you buy the coins and sell them back. Am I right, Paul? Of course, Paul doesn't paint a pretty picture of the dollar if you hold cash and things get really bad in 2000.
Bill P, who seems to be in favor of gold coins (at least), provides several reasons why he thinks that Gold will trade higher in the second half of 1999. If the IMF and others continue to lead a sell off in actual gold stores, will these kind of activities keep gold prices relatively unchanged? What could be done by the government or others to put a stop to potentially soaring prices of precious metals like gold, silver, and platinum?
Billy Boy recommends that we read "Y2K Goldrush" by Wade Cook. He says this book gives "some basic investing and buying tips on gold and some references to silver." I don't know much about gold and silver as an investment, so I'll probably get this book. Has anyone else read it? Maybe, Billy Boy can give us some gems that he gleaned from this book.
Sincerely, Stan Faryna
-- Stan Faryna (firstname.lastname@example.org), April 04, 1999.
i have read many articles about the capping of gold prices they say it is being keep in a range of $290-300/oz by the us government. this is being done by lease to mine companys so the y can have a fix on cost to stay in business. also this gives them a income from a dormit item with no income. if you want to read some good articles go to HTTP://WWW.GOLD-EAGLE.COM/EDITORIALS.HTML
-- bob (email@example.com), April 04, 1999.
Does Warren Buffett ring a bell? He is the second richest man in the world. He is also a Bilderbergh and a member of the Group Of 300. The last verifiable quanity of silver that he has purchased in the last 18 months is 129.7 MILLION ounces of silver. He has taken PHYSICAL possesion of the buillion. Rumor has it that he is adding to his position.
Silver and gold is a steal right now. It can't go much lower and is probably setting on the bottom. I will not buy gold because of the possibility of confiscation. I am buying silver. Don't buy from a coin dealer. Buy direct through MONEX. You will pay a 2% commission in quanity and 3% in lesser amounts.
The reason for the huge hike in prices of silver eagles in Feb and March was because the US Mint only shipped 149,000 coins in February. In March they shipped 718,000 coins. So look for them to come down some this month.
This is a once in a lifetime opportunity to gain alot of wealth. Take advantage of it why you can.
GODS Will Be Done
-- flierdude (firstname.lastname@example.org), April 04, 1999.
Gotta agree with your strategy on silver. I have a question - are you just buying physical or are you or do you think it's a good idea to buy any 5000oz silval call contracts for say December '99. I'm asking this as I'm considering doing this myself, however I'm not at all sure of being able to collect if things deteriorate. My other concern is Buffet himself, if he ever unloaded his silver the price would surely plummet - if he is as you say a Bilderburger then this may be a possibility seeing as the Bilderburgers and their ilk ARE artificially pegging the price og Gold. why not silver too?
-- Andy (2000EOD@prodigy.net), April 04, 1999.
Stan: Here is a previous thread about Gold and Money that you may find interesting. Hope it helps.
Andy: FWIW, I think your concern regarding being able to collect is a valid one.
-- Rob Michaels (email@example.com), April 04, 1999.