When the bough breaks.. stock market, housing, collector car

wrong move

 

I probably should mind my own business but I hate seeing people getting set up and led down a garden path. My apologies beforehand.

Sean, as a numismatist, historian, and a student of currencies and money, I wouldn't recommend you buy the Russian Rouble, not now, not ever. It's completely valueless, this is a Russian plot to buck up a failing currency and an economic vacuum created by all that western capital being pulled out, just like their cynical attempt to attach it to a "gold standard". They found to their chagrin no one was buying that either. Once the EU finishes off with their oil and gas embargo and stops paying the Russians in Roubles, that currency will free fall since there is no value left in the Russian economy now that all the western capital pulled out. The Rouble will revert back to being unconvertible like back in the Commie era. A safer bet would be Cuban Pesos or North Korean Won or even Zimbabwean dollars, - all are already worthless and can't lose any more value, they're less volatile than the Russian Rouble.

The US dollar is a world reserve currency, if it fails, nothing has any value, nothing, not the Rouble, Chinese Yuan, Swiss Franc, nothing. Long story short, the simplified version is that it's all tied to the US dollar and that's the only reason the US economy hasn't imploded like that of Greece (because their debt to income ratio is actually worse than Greece's was). The western banking system is not in danger of falling apart, there are too many countries (China included) who are literally too big to fail. The Russians missed getting on that boat back in the 1990s and are in a position to fail, they have a natural resource based economy and virtually no industry left, - whatever is there and still running is Soviet era garbage and not worth a damn to begin with.

Silver is a lousy bet, there's still way too much of it out there still (I think I have about 20 lbs of the junk in various forms) and we just came off the generational high a few years ago. Silver's ship has sailed, and it won't rise in value again for another 20 years. Sure, there might be a blip here and there, but in order to make money off of that you have to be incredibly agile with your money. This is not a money maker unless you're prepared to ride out the next 20 years to the next silver bubble and factor in what inflation is doing to the price. (Which is why it appears to be gaining right now) There's also limited economic uses for silver, so no one is opening any mines. If you're going to buy any precious metal, stick to gold and buy it in the form of sovereigns or Gold Maple Leafs. You can buy and sell gold currency (sovereigns and Krugerrands) tax free. If you buy silver, you have to have tons of it, and the only one getting rich off of that is your bullion dealer, you'll get screwed on seigniorage and fees every time. And not to mention, the taxman wants his share too, and they always get paid even when you lose.

I used to do work for one of the bullion dealers around here, and have seen this too many times, this is an old scam. We used to laugh at all the "doomsday losers", and I've heard it all, all the conspiracy theories about "one world governments", "gold standards", all of it. This is a derivative of the same old BS that was going around in the 80s when I was a kid. Funny thing though, you'd think with everyone "getting wise", that things would change and it would get better. Well it hasn't, the same system that existed then exists now, and has existed for millennia. It's not going to change, the only thing that will change is when someone lifts all your wealth out of you legally because they sold you on a bad idea. Money is the root of all evil, and therefore it's the only thing people will screw others and kill for. There is nothing new under the sun that hasn't been tried before and there are millions of new gullible people who can get fleeced coming on daily. We see lots of guys who'd sink everything they had in silver while the price was climbing and the world was ending, and then watch them sell it back to us at a serious loss after the price fell off the cliff, taking fees on both ends. The world and the corrupt banking system are still here too, yet their money is now all gone. The precious metals markets run on people's misfortunes, don't be the next victim.

 

Marc, I have mentioned this before but a few years ago the bride and I were on a cruise that stopped in St. Petersburg. This was the only stop in four cruises on the same cruise line where the line would not convert any currency to that of the country where they stopped (rubles). The line's position was that when the customers found that they could get 10 times the "official" rate on the street, they would be BS at the cruise line.

 

Marc,
I have never purchased Gold Bullion coins and always wondered how much do you loose on the value when you buy/sell them.
Currently Gold is at $1890/oz. You can buy a 1oz Gold Bullion coin for $2113 right now. Right there you are $223 (10+%) over the price of an ounce. When you sell it what do the dealers pay to buy it from you, I assume less than the current market price of an ounce?

All this is based on the price of gold not changing after purchase but I am more curious about how much is lost by selling it back to a dealer? 1%, 5% of the current market value?

I always wanted to buy an old double eagle gold coin just to have one, not really an investment, but have never pulled the trigger.

 

Well said Marc we thank you for that insight.

 

The "spot" price for precious metals is basically used as a baseline, - whatever dealer will build his margins from that. Generally you can expect to pay 3-20% over spot when you buy, and you can expect 8-25% less than spot when you sell, - the dealers need to make money too. It all depends on the dealer, and everyone advertises that their rates are the best in town so shop around. We used to have a direct contract with the company involved in smelting it, so we got a better deal which allowed us to actually be more competitive than most, we were at the low end of the scale. Still, in order to make money on it requires a huge outlay in capital and if your margins are slim, the risk is higher, so the fees get more expensive. Market volatility also plays into this, the rates get to the stupid side of the scale if there's a bubble, and that's why very few people actually made money on Silver the last time it rose up. And lastly, there's demand; - if the suppliers can't keep up, the price they charge goes up. Most dealers can't afford to have a "rain check" list or anything like that, if they do, it's an extra charge to the customer.

And then there's "seigniorage', which is the fee that the smelter or coiner charges above the metal value for their profit. On Canadian government bullion coins such as Maple Leafs it can run to 13%. So when you factor that all in, the price of that metal has to jump by around 45% in order for you to be in the black when you factor in the charges on the "sell" side; - that's not including inflation, and that usually doesn't happen unless there's a "bubble", so most people end up paying on either end and tying up cash that could have been used in other ways to make money like on the stock market. This is the thing; when you buy bullion, you tie up a lot of cash and it has to sit there for a long time otherwise you lose. It's not a "sure bet" like a lot of people think it is. Only the bullion dealer makes money, as does the smelter. You have to hold gold for a very long time for it to pay off. Silver? Forget it. The only way to make a small fortune in silver is to start with a larger one.

And then there's when a government goes rogue. A few years ago, the Canadian Mint offered a "$20 for $20" silver coin that was supposed to be worth $20 no matter what happened to the silver price. Well, that was all fine and good until the bottom fell out of the silver price a few years ago, - then a coin worth $20 in silver (actually at the time of issue it was $18) dropped down to about $2.50. Now the government was taking it on the chin, so they dishonoured the program and quietly dumped it. They also did something similar with the Olympic series coins that were issued, - they were supposed to never lose value, - people bought them as heirlooms and that basically financed Canada's Olympic bids in Montreal and Calgary. Then they started losing money when people cashed them in, so they fully demonetized them and turned them into a bullion coin, - rendering them essentially worthless.

Some of the US Double Eagles were some of the prettiest coins ever made, - in particular the St. Gaudins, the last type. I've seen a couple, but could never get around the idea of tying up that much cash for one. The other thing is, US gold coins are about the only gold coins that carry a numismatic (collector) premium on them as well as their gold value. They cost a ton, but you can't go wrong with them, you'll always make it back.

The guy I worked for made enough selling bullion to send his kids to college and take a vacation to South America every year. Everyone who came in to buy, eventually sold it all back to him later at a loss. Many of them had ruined themselves speculating in a market they knew nothing about. They all had one thing in common; they read a lot on the internet and thought that the world was coming to an end. And for them, it more or less did.

 

I was one of the thousands who bought the Calgary Olympic silver coins, although just to own them and not for speculation. It seemed like a cool idea to own the set.

A few years later some lowlife, scum sucking dirtbags broke into my home and relieved me of them, along with several other items. Among those items was a 1919 five cent piece my nana gave me when I was about 10. Losing that sentimental coin hurt far more than the silver ones.

I've invested rather heavily in TP. Probably won't make anything off it, but it's comforting to know my hinder will be well taken care of.

I would accept your advice over any unproven internet chatter. Some of the worst advice anyone can hear begins with "I heard", followed by unsubstantiated statements and claims.

 

I do have a bunch of silver coins. I want to get rid of them, so will take the bullion price on the really beat up ones, and whatever I can get from a coin dealer for the "collectible" ones. It's looking like we'll get their "sell" price minus 10% (I think). We found them in my MiL's stuff after she died and we were cleaning things out. There isn't a lot, but I can't see just keeping it around.

 

Consider that your MiL probably paid the face value for those coins, Vs what you sell them for. You will get what is called "scrap value" for the beat up coins, which is different than "bullion price," in part because they are not 100% silver in most cases. Still, shouldn't be a bad return.

 

A good source for trading. https://online.kitco.com/

 

I do have a St. Gaduins double Eagle. I bought it many years ago for one reason - I think it's the most beautiful coin ever minted. It lives in my safe deposit box, and whenever I need to put something in or take something out of the box I always take it out of it's envelope and look at it. I don't care whether it appreciates or depreciates. It's mine, and I love it.

 

Excellent thoughts on gold and silver. I can only add two: the first, I remember the last time the economy was this bad (about ‘82), my parents, for the only time in their lives, sought out a dealer and bought Kruggerands as a ‘just in case’. They sold most of them by the end of the decade. The other concerns silver-considering the fact that no one under 60 feels the need to own silver flatware or serving pieces (or fine china) there’s tons of it being melted down. That supply is probably far from exhausted. I agree with others-until things go really really awful, put your money in dividend paying old school stocks of companies that make things people buy no matter how bad it gets (cigarettes for example). If the world goes so bad that Philip Morris fails, gold ain’t going to save you. Canned veggies, livestock, laying hens, ammo and skills will be what saves you.
Patrick

 

My dad LOVES that kind of stuff and has been in Coin World for decades. I'm not sure if he's still in there or not but he values people's coins all the time. He'd likely do it based on pics (they'd need to be uber high quality) if you're not wanting to ship them to Utah. Shoot me a message if where you live. He's likely got a contact somewhat nearby that he trusts?

 

Gold buffalos are very nice coins also, and can be had for a little over spot. Funny how silver premiums went through the roof but gold did not. Guessing there was a big demand for silver. I buy bullion strictly as a hedge for inflation, and only buy when premiums and prices are lower than normal. when buying large amounts, you can usually negotiate the premiums, especially when a dealer has just made a large purchase. I agree that it is not an investment vehicle, unless you happened to buy in during a slump. Luckily, I bought alot a few years ago right before silver had a big run-up, and premiums were a buck an ounce.

 

We had a new 9th worst yesterday with the dow down -1164 / 3.57%. The downward trend continues today but not with the same death spiral as yesterday. I think it safe to say we're seeing a reality check in the market.

 

Likely too many dollars chasing too few quality stocks with downward pressure from all sides. A correction upon a correction?

Pretty soon we'll all be millionaires but can't afford to fill up our Buicks.

 

Right now buy the good dividend stocks that you know haver been good for a long time some prices are not moving down hardly at all. But Peloton got crushed, Value is where you want to be or cash and just sit tight. Collect cash and sit on it for now.

The market is about back to where it was just before the pandemic hit If worried at this point sell a little bit and hold the cash untill it settles down then pick your new stocks or funds you like, this is the time to do homework and pick who is doing good.

 

Dividend payers who have been around a long time. They’ll still be here when the dust settles. This is the Carter years all over again; it’ll pass. Government may not fix it but old school businesses will ride it out. About a month ago I said ‘keep your powder dry.’
Patrick

 

And have plenty of it

 

Save for a ‘rainy’ day!