A sudden avalanche of folks have been asking about this pitch again, so I thought I’d re-share and update my thoughts on something I wrote in the Friday File for the Irregulars back in October of 2013 … so yes, this is getting a little old. Much of this is from that original note, or from my update back in January of 2014, though I’ve gone through and updated my thoughts (and some of the numbers) a little bit.
From my quick glance, the core of the spiel from the Stansberry folks hasn’t changed much for this “Secret Currency” since then, other than to call it the “#1 Cryptocurrency” now that that term has entered the popular lexicon (and indeed, the ad is not dramatically different than it was when I first covered similar ads of theirs five or six years ago).
The one thing that’s particularly different in the last year or two is that they use the curiosity about Bitcoin to catch your attention —
The ad back in 2013 started out as a “warning” about Bitcoin:
“Urgent Message for U.S. Investors:
“Do NOT buy Bitcoin until you watch this public message
“This is the true story of alternative currencies in America — the one you won’t hear anywhere else. The story only wealthy families know. Please take five minutes to watch this message and avoid making a very costly Bitcoin mistake.”
And then went on to compare Bitcoin to a host of past internet failures or value-destroyers like Webvan and Pets.com and Groupon, and then makes the argument that the “secret currency” does the same things Bitcoin does (provide some privacy, get away from the US dollar, etc.).
Which is sort of true — I have some experience with both this “secret currency” and with Bitcoin, I tinkered with Bitcoin myself for a to see how it worked and whether it might be a viable alternative to using credit cards, and I’m not all that impressed with how useful it might become at the moment… though I still have maybe half a bit coin sitting in a “wallet” somewhere.
This is how they introduce the ad now:
“America’s #1 Secret Cryptocurrency:
“This is the true story of alternative currencies in America — the one you won’t hear anywhere else. The story wealthy families know — and which could climb 300%+ over the next few years.
“Don’t buy Bitcoin, Litecoin, Euros, Swiss francs, Chinese Yuan, Gold, or Silver until you take 5 minutes to watch this message.”
What follows was published for the Irregulars as a little closing bonus in a Friday File about a year and a half ago, when Sjuggerud was pitching the “secret currency.” He’s still pitching the same thing, so the basic spiel is similar now.
*********
[excerpted from Friday File, 10/11/2013]
I’ll close with a look at a teaser that many of you have asked about this week — it’s circulating pretty heavily these days, from Steve Sjuggerud, and similar teasers have tended to come up, in my experience, whenever the market is in a state of high uncertainty. That’s certainly the case today.
Sjuggerud has been pitching something similar to this for many years, though not so much lately until the last month or so — and a similar pitch has come up twice now, both in the ads that were signed by Steve’s brother that I covered last month (teasing, among other things, investments with exposure to the Australian dollar and the “perfect hedge” of buying a house with a mortgage) and, more recently, in a new wave of ads for this “Like Gold … Only Better” investment.
Sjuggerud’s brother called this “Rich Gold” and described it this way:
“It’s a secret many rich people are taking advantage of, but it’s basically ignored by the middle class.
“You see, most people think that all gold bullion is the same.
“But the truth is, there are two very different types of gold bullion.
“Regular bullion essentially just follows the price of gold. When gold goes up 10%, regular bullion goes up 10%. When the price of gold goes up 20%, regular bullion goes up 20%.
“But there’s a second type of gold (my contact called it ‘Rich Bullion’) that follows a very different pattern.
Are you getting our free Daily Update
"reveal" emails? If not,
just click here...“‘Rich’ bullion has a tendency to absolutely skyrocket in value, many times higher than ordinary bullion, in times of financial distress.
“For example…
“From 1970 to 1972, the U.S. government’s debt increased by about $50 billion (source: U.S. Treasury Dept.). And the price of gold during that period went up 80%.
“But from 1972 to 1974, right after these increases, ‘Rich’ gold bullion shot up an incredible 348%….
[more examples, bla bla bla]
“… this type of gold could not only protect your money… It could make you 500% or more over the next few years.
“Keep in mind: These two types of gold bullion look very similar. Almost identical – except for one very important identifying difference.
“And this difference has made ‘Rich’ bullion a prized asset among a lot of wealthy investors throughout history.”
And the more recent ad that’s running this week has a more inflammatory headline:
“Outlawed for 41 years… Now LEGAL Again
“This Unique Gold Investment Launched the Largest Family Fortune the World has Ever Seen…
“And Could Return 665% in the Next few Years”
Sound familiar? Here’s a bit more:
“Without giving away the secret just yet, I can tell you the secret currency is — as you might suspect — a form of gold.
“But it’s not your typical gold investment. Not by a long shot…
“It has nothing to do with mining stocks, mutual funds, options, futures, or bullion.
“Instead, this is a kind of currency used for centuries by the richest families to profit on financial windfalls created by governments around the world….
“This investment is like gold, only better — with the potential for much higher returns….
“The last time the Salomon Brothers brokerage firm included the Secret Currency in its annual investment survey, this investment ranked No. 1 over the prior 20-year span, with an annual return of 17.3%. In other words, it was the single most profitable thing you could do with your money over the previous 20 years….
“I believe an investment in the Secret Currency today could potentially double your money in the next six months.
“A 5-times or 10-times return over the next few years wouldn’t be surprising. Remember: The last time the conditions were even close to this good (in 1987), investors made 665% profits. Of course, nothing in the investment world can be guaranteed, but we believe the Secret Currency is one of the best investments in the world right now, in terms of risks, safety, and potential rewards.
“I think it makes sense for every American to own at least a small stake, with a small percentage of your overall holdings.”
So what are they talking about? Well, it’s still … collectible gold coins. That’s distinguished from bullion gold coins, like the modern American Eagle coin, which are priced based on the gold value they contain plus a couple of percent for the convenience of having them in coin form — they’re not rare, and people don’t pay big premiums for them.
But some collectible coins are quite rare, and fortunes have been made (and kept) by gold coin enthusiasts throughout history, including the many families Sjuggerud’s ad name-drops to get your attention. These are the coins, generally the most widely held are pre-1933 US gold coins, that will always be worth at least what the bullion goes for (since they could be melted down) but are generally sold at steep premiums to the bullion price because of their scarcity and/or condition. Most of these coins didn’t spend time rattling around in pockets, so all the ones you see are likely to be in very good shape but the gradations in condition are critically important to their value to collectors — you’ll generally see the best of the coins given a “Mint State” number and encased in plastic with an authentication certificate from a coin grader (MS-70 is “perfect” and pretty much unheard of for gold coins of this age, but a MS-61 coin will often get a solid several-hundred-dollar premium per coin (over the melt value) — and a MS-65 US $20 gold coin from the 1920s or 30s, which will look pretty much perfect to a non-collector and which contains just under an ounce of gold, could easily be worth twice the melt value (or far more, if it’s a rare date).
Steve Sjuggerud has been recommending gold coins for about ten years, and I’ve written about those teasers for years as well, but this time around he isn’t terribly specific in the ads about exactly which coins he’s recommending — he has liked several different kinds of gold collectible coins in the past, to my knowledge they’ve all been pretty high-volume well-known US coins (meaning there’s a ready market for them, they’re not “liquid” like stocks or bullion are liquid, but they’re pretty easy to sell at decent prices).
Probably his most successful recommendation in this vein has been the graded (MS-64 or MS-65) pre-1933 US $20 St. Gaudens Double Eagle coin, which rode up dramatically with the price of gold over the past decade but has, like gold, come back down a bit. His argument is that gold collectibles will continue to hold value far better than the gold bullion that they contain if bullion prices stay flat or drop, and that they are likely to become substantially more valuable, at much higher premiums to melt value, if we have another currency crisis or, as the gold bugs like to say, a severe disruption like a gold confiscation plan from the government a’la FDR in 1933 (that’s not going to happen, by the way — there’s no need for a revaluation of gold like FDR spurred with his confiscation plan, because the currency is not backed by gold as it was then … we can revalue the currency every day by printing a few trillion more dollars, and we’re already doing that).
There are manias in the gold coin collecting world as there are in any other collectible, so sometimes these coins have been extraordinarily valuable — coin enthusiasts like to cite times when these Double Eagles in average condition were going for multiples of the gold price (I’ve heard $4,000 for the coins in 1989, when the gold value would have been less than a tenth that amount), so that’s the real value proposition: they can’t be worth less than bullion since you could always melt them down, but they can go up a lot faster than bullion if the collectors get excited.
But over the years some of Sjuggerud’s chatter about gold coins for his subscribers has gradually come out and become more “public” — so I’ll just let you check out his words from 2010 and decide for yourself. He has a free 2010 version of much the same recommendation up on his website here, with presumably a similar logic and plan to what he’s pitching now, and coincidentally the prices of both gold (around $1,300) and the MS-64 PCGS St. Gaudens (around $1,800), are relatively close to where they were then (gold’s at $1,200, the MS-64 PCGS St. Gaudens is about $1,550 — so you can see that the premium can certainly shrink over any given time period). Check it out and see if you like the logic of buying these kinds of coins.
Personally, I do hold some coins that have collectible value beyond their gold or silver content, but that’s been more or less an accident and I haven’t made myself an expert on this stuff and don’t plan to, so I don’t make big investments in collectibles — I’d urge you to make the study of such things a serious hobby if you plan to invest serious money into these kinds of assets, whether they’re classic cars or old musical instruments or Victorian bed pans or, yes, old or rare gold coins.
*********
And back to the present — right now from Apmex or other big dealers it looks like the MS-64 St. Gaudens are offered for about $1,500 or so with gold at $1,200, so if you had bought in October 2013 and had to sell now you’d be looking at something like a $300 loss on the collectible coin versus a $100 loss on the bullion. Those numbers are not particularly accurate, either the prices I jotted down today or the ones I checked 18 months ago, but that’s the kind of leveraged action collectibles can sometimes provide when sentiment shifts about gold — the collectible coin market is obviously influenced by the bullion market, but it’s also influenced by supply and demand of specific coins, among other things, and is far smaller than the gold market with wider bid/ask spreads and a less consistent price from dealer to dealer.
I wouldn’t tell anyone to bet their portfolio on either gold coins or Bitcoin, but gold is embedded in human culture as a traditional store of value and has been for thousands of years, and it is shiny and physical, so that gives it the leg up over Bitcoin if you’re talking about a “hard asset” with a controlled or constrained supply (gold is constrained by the amount already produced and the mineable deposits found, historical gold coins by the amount actually minted, and Bitcoin by algorithm and controlled release over time). Bitcoin’s longer-term potential and the reason for most of the venture capital interest in the technology is not just the non-manipulatable supply that’s not controlled by governments (I wouldn’t be 100% sure about either of those things), but the possibility that it could radically revamp money transfer technology and make it faster and cheaper, undercutting bank and credit card networks.
So far, from what I can tell, Bitcoin is not particularly fast or cheap for any real world applications and it’s a terrible way to transfer money if it can fluctuate 5% in the time it takes to move from your bank account in dollars, into Bitcoin, to someone else’s bitcoin wallet, into their bank account in whatever their currency is … of course, if you just keep your money in Bitcoin then it’s notably faster but can still take many minutes to confirm a transfer, which rules it out as a means of purchasing goods even for those few merchants who are, either for ideological, experimental, or publicity-seeking purposes, accepting Bitcoin for the sale of actual goods.
But does that mean you should eschew Bitcoin for collectibles? Or buy collectible gold coins as a store of value? Your call. I’d rather depend on bullion as a store of value than on collectible coins or bitcoin, since the latter is so unproven and possibly ephemeral and the former requires more attention and expertise than I particularly want to give or build … but it does sure seem that collectible coins have sometimes been very lucrative investments, particularly when purchased for not much more than their melt value and at times of economic pessimism when they were unloved. I’m relieved that my ability to pay the mortgage next month does not depend on any of those three asset classes going up.
Have a favorite? Let us know with a comment below.
I was doing some research on the topic of ancient human civilizations and came across the latest findings of what may very well be the first civilization of humankind. It existed 200,000 years ago in South Africa and what really caught my eye about this ancient civilization was they were big into gold mining! Now, one has to sit up and take notice at that, that gold’s importance to humans goes that far back and what are the chances that today’s paper or digital money can dislodge something which is so deeply entrenched within our collective unconscious.
Lucy,
Some Tinfoil Hatters propose an alien race came here 400,000
years ago to S Africa to mine our gold.
http://www.youtube.com/watch?v=IIrH-2HGDds
You will probably not be able to find any great ancient civilization, anytime or anywhere,
that did not value gold highly.
Gold is the go
but when you have the Morgans and the Sachs using it as a derivatives tool and selling 1000’s of times the 1 oz of gold then theres a problem
so when they realise that they have created so much deficit and that they can never repay the physical gold to the buyers they crash the price – this was done recently were 24 billion dollars of gold was sold – but not one OZ physically moved anywhere. But the market got
BUT they never sell 1 oz of gold
It all done on computers and HST
China India and a few other countries are buying the physical gold because they know that the paper gold will end the same way as FIAT currencies
The CHinese have also been counter fitting the Krugerrand gold coins
The eventual outcome will be all the worse by manipulating the price of gold to low levels.
We are mortgaging the future to help the Asians acquire real assets
Investing n coins is a lot like investing in art. You have to become very knowledgeable about the subject. For example, as you point out, a coin graded MS70 is “perfect”. One graded MS69 is “almost perfect”. The difference is that an MS70 coin will sell for $1000; the same coin graded MS69 may sell for $100. Then there are the questions of who grades the coins (there seem to be two standard agencies now), what’s the reputation of the dealer, and how liquid is the market.
I can buy a stock at the opening bell and sell it at noon. With coins, not so easy. US silver and gold coins are works of art, and markers of history. That’s why I buy a few. now and then.
One small and very overlooked law originated by Rep Ron Paul might explain a perfectly wonderful use of Gold and especially Silver Eagle Proofs. The IRS taxes such coins at their melt value only when withdrawing them from a tax deferred account such as an IRA. Let’s say silver is $20 an ounce but the Silver Eagle proof is valued at $80….which would you rather pay taxes on including the 10% penalty tax if you should ever need to convert to a Roth IRA or withdraw from a Traditional or Inherited IRA? Hence the reason to convert an IRA into silver eagle proofs as they command a higher premium than the price at which they are taxed. This saves alot of money on taxes were the IRA simply bullion, stocks or cash. One other use is the $10,000 export limit at customs….the law counts the face value of the coins…not their melt value nor retail value…splendid. I do not sell precious metals and use banks, online brokerages but believe it prudent to have 10% to 30% of a portfolio of a currency that has indeed outlasted any and all fiat currencies since the dawn of human civilization..the precious metal haters are obeying the governments and banks who advise us to shun what they are stockpiling at the lowest prices they can manipulate by issuing paper ETFs to satisfy most investors. Remember, if all of your money is mere digits on a screen, it is open to governments and criminals the world over and anytime the banks are closed, the internet isn’t functioning…do you really, actually *have* any of that money? Like the guy who returned from an Alaska fishing trip to find his online brokerage account had been hacked from India…turning his $180,000 account into $200,000 debt on margin. Some of us prefer to have at least some of our hard earned money off the radar and under armed guard where it can only be taken from our cold dead hands, not by some spindly creep hiding behind a computer at the NSA, a Chinese cryptography center in the Ministry of Intelligence or in his moms’ basement.
You are correct, investing in coins is not the same as investing in stocks. I have been buying graded silver coins for many years. A good place to buy them is ebay but you need to be careful and only buy from top rated sellers with thousands of items sold and 98-100% approval ratings. The china and aussie coins have appreciated the most since they limit annual production of each coin therefore limiting the number of coins available. It is amazing to see what china panda coins graded ms70 are selling for. Coins i bought in 2004 for $60-70 are now worth $400+ and the price seems to go up each year when the new year comes around. I prefer first release or early strike coins, stick with the ms70 grade as the lower grades tend to go up and down in price depending on bullion prices which are falling.
Coin dealers are the penny pinchers of the world, IMO! I like the Chinese pandas but it’s just not liquid enough for my investment budget! I need to be able to get in and get out! The coin market is too slow for my financial goals! Maybe when my finances are a bit more secure and I get a good deal from buying quantity but otherwise it’s another buy and wait for inflation!
Exactly-It is not like buying stocks or commodities, as Travis says it is a hobby. I have been collecting coins since the 60’s and really have never sold or liquidated any of my coins. There is also the storage problem. Where do you keep or hide them. But it is a hobby with substantial returns. My point is this, Buy and hold for the long-term, it truly is not a typical investment plan and should not be regarded as such. Dealers are known for taking advantage of sellers, so avoid them if possible and use ebay. I buy china and aussie graded coins each year and watch past year coins go up and up and up.
Stansberry continues to have a real problem with the truth. Stansberry says that his “secret currency” is “like gold.” That is not honest because it IS gold. And it is not at all secret. Stansberry says is not old fashioned, but that is obviously very untrue also because his “secret currency” is good old fashioned gold coins — very old fashioned indeed — with nothing secret about it, and nothing particularly safe about it either. Gold and gold coins have plummeted in value recently, as they have crashed many times before because gold really has no intrinsic value other than the imaginary value of people who like it. Gold is used by almost no industry today other than jewelry.
In his weird brainwashing web pages, Stansberry talks about Bitcoin going down, while Bitcoin has in reality gone up more than 1,000% in the past year, and Bitcoin has increased an average of 2% per day for the last 4 years. The truth is that gold has crashed recently, while Bitcoin has shot up. Bitcoin is being used by more and more merchants, businesses, investors and consumers every day.
Stansberry is trying very hard to steal the excitement and enthusiasm for Bitcoin, and flat out lie about his offering because gold coins are quite old fashioned and much less exciting than Bitcoin. Stansberry’s marketing is based on hype and distortion. Other gold coin peddlers simply tell the truth and say they are selling collectible coins. Collectible coins are a great part of an investment portfolio for anyone. But try taking a millions dollars of old gold coins on an airplane with you. Try hiding $1 million of old coins; not easy. Try paying for your store purchase or making an online purchase with old gold coins. Try using the old gold coins for anything new and exciting — not gonna work. That is why Stansberry is trying so hard to steal the thunder from the real exciting, secret currency. Bitcoin really is exciting: A value that has skyrocketed more than nearly anything else in the world. Bitcoin really is secret. You can hide $1 million in your wallet. You can even hide $1 million in your brain! You can buy millions of products and services with Bitcoin. If you bought $10,000 of Bitcoin a few years ago, then, CONGRATULATIONS!!! — you are $ millions richer today! That is real excitement. The future of Bitcoin gets even more exciting. With the world’s largest distributed calculation network, Bitcoin is based on the world’s most powerful ledger and the strongest encryption standard. This allows the technical Bitcoin protocol to become one of the most powerful tools in the future of finance, law, government, administration, and many other important areas. Bitcoin can destroy central banking. The earth-shaking revolution of digital money is only the beginning for Bitcoin.
Do not rely on bogus Stansberry “research” when it comes to Bitcoin or anything else. Do your own REAL research. Find out why top bankers, investors and business mogals like billionaire businessman Sir Richard Branson are so excited about Bitcoin today.
Corey Chambers, TheBitcoinBlogs.com
Good comments Corey…
And always keep in mind that Stansberry belongs to the James Dale Davidson empire.
I do have to take issue tho with your statement, “gold really has no intrinsic value other than the imaginary value of people who like it. Gold is used by almost no industry today other than jewelry.”
The “people who like it” just happen to be the most powerful people AND COUNTRIES in
the WORLD such as China, Germany, Rothschilds, US, Russia, Oil Magnates, etc.
China has the target of becoming the #ONE producer and amasser of gold w/i five yrs.
Now why do u supposed they’d want to do that?
Oh, and if u do a little more research, u’ll find there are perhaps a hundred or more
uses for gold by industry and especially the hi tech industry. And there are more
uses being discovered perhaps every week or month.
All that being said, technically, gold is still a ‘fiat currency’, no matter what the
gold bugs say. It only has the value that ‘people’ place on it so on that we can both
agree.
About Bitcoin, it has also endured it’s crashes and bubbles and will continue to
do so. It ran up near $1500 sev wks ago and is now back to around a thousand: A FIFTY PERCENT plummet!
Re its security &/or anonymity? Absolutely fictitious as we’ve witnessed with the US/NSA confiscating millions and arresting several such as the ‘Silk Roaders’ and others.
And what happens if/when the internet goes down? …POOF! Where are my Bitcoins??!!
Just a quick reply to address this common attack, that if it did upfold would make nearly everything to do with money insignificant within the big picture. So, it’s really a non-issue…but here it goes anyway. It is funny how often it’s mentioned, without regard to the real impact of what they are actually saying as a “what if”.
First, if it’s just control of the Internet that is feared, the Tor and similar dark webs (a few in development right now) would go underground and the powers-that-be would then have NO chance of any regulation or taxation. So, and I hate to even mention this, you’re throwing out there the possibility of the Internet or the grids going down or both? Well, either would change the world to the extent that I guess many people can’t comprehend.
Just the Internet going off line alone, though even then there’s a few other possibilities as long as the grid is up, this would significantly impact money, the economy, money, banking, security, energy, on and on to the point that the value of bitcoin (even if everyone adopts cold storage for the bulk of their wealth that would be available when everything goes back online) would be the least of our worries here and abroad. The entire financial system and economy would come to a screeching halt, affecting just about every person on the planet, not to mention the misanthropic elitist sociopaths would be devastated, as well, with their cash funnels shut down instantly! The whole argument just doesn’t make any logical sense. That is of course unless there’s some sort of global catastrophe maybe a massive EMP then just forget about it… NO amount of money, not even gold, will matter much at that point as most can surmise I imagine.
I’ll take a pass on the electronic currency, I want less dependence on faceless
3rd party technocrats, not more.
Gold is not a “fiat currency”. Gold has all the properties that define “MONEY”, which properties include several other things besides universal acceptance. By the way,
many forms of “money” are not accepted universally…including dollars.
The invention of the computer chip, the internet, and Keynesian economics have not changed this and never will.
I wouldn’t put one single dollar into bitcoin or any of those other variations. For one thing don’t you think that every major government on the face of the earth and probably some of the smaller ones are working right now to crack the bitcoin code so they can access it anytime that they want to? Last week for example, hackers managed to corrupt the digital feed to a number of bitcoin outlets. Meaning that if you have your money in bitcoin and you go to the grocery store that takes them the transaction wouldn’t go through. What are you going to eat then huh?
Good comments RM.
And to underline it, Bitcoin hit a low today near $200.
OTOH, don’t completely throw the baby out with the bathwater.
There are now dozens of other cryptos and soon, probably HUNDREDS.
Iceland and Canada on working on their own officially govt sanctioned ones
soon to be introduced.
No one can now ‘put the toothpaste back in the tube’ so stay on the sidelines
to see how this all plays out.
My thesis ~ The CIA/NSA &/or IMF/FR could well have dreamed this up themselves
as a future template/protocol for some type of future global digital currency.
* “Run it up the flagpole to see who salutes…”
In my view much discussion of’ what if’ has no point Remember “Some Highly Improbable Things” happen. [ Often known by acronym] We use money as means of exchange because of difficulty in carrying goats & chickens to perhaps buy beans. If a goat keeps you from starving seems it would be greater worth than any coin. Coins are notoriously hard to digest.
I saw bitcoins quoted at .19 cents. Are we talking about the same coin(s)?
I plan to buy a few. I hope they go up, of course.
1 bitcoin goes for about $450 at the moment, but there are lots of these alternative currencies jockeying for attention now.
Sadly, the problem with the information these people provide is that by the process of giving their secret info to their subscribers they in effect create competitors for themselves. Let me explain from my internet marketing experience. If these people do have a “great” money making why would they give that idea to you out of the kindness of their hearts? plus of course whatever FEE they are charging for the info. The problem with great money making ideas is SATURATION. As soon as the IDEA is out of the bag everyone and their uncle will jump on it and the potential for making money will become more difficult and if not impossible.
Sadly also as soon as these great ideas become known to just a few will make them worthless.
Just like the the California Gold rush and the Yukon and Alaska Gold Rushes. Yes people did become rich from finding gold but ONLY SOME and there was never any guarantees. But who really makes GUARANTEED MONEY during a gold rush? The people selling shovels, food,supplies,medicine etc etc etc.
Plus what Stansberry is doing is nothing new. The US Gov plus other Governments and even corporations having been use such “scare tactics” tools to cause the general population to do what? CONSUME.
It is a known fact that when people panic they CONSUME more and do impractical things like make wrong decisions they would not have done otherwise. The people in control have been doing for hundreds if not thousands of years. So what else is new?
Sad part is the truth is “there’s always a sucker born every minute.”, and there’s an equal amount of scammers more than happy to separate the fool from his hard earned money.
Bitcoin. Quarkcoin, So much time to invent new ways to “keep score” of online transactions. Except for one simple fact … we already have such a method, and its called “money”. Geez folks, you are spending a lot of time trying to reinvent a mighty big system. All so you can evade taxes. I have an idea: pay your damn taxes and spend time thinking of great tangible assets to own.
Great advice Tom!
I have been collecting coins for quite a few years (longer than Steve S has been plugging them!) and even though the basis of what is being plugged is decent the realities are somewhat disconnected. Yes, there have been times that the demand for certain coins has far outstripped the supply driving prices way up but for the most part those are anomalies with some exceptions. Some coin collecting caveats that apply to purchasing a common item like MS-65 Saint Gauden’s:
‘One man’s MS-65 is another mans MS-64’. Let’s say you go to a dealer and buy a MS65 coin graded by one of the main grading services NCG. The coin is nothing spectacular, just an average one. The dealer who sold it will often represent it as a high end coin and charge a premium. When you go to sell it it will be described as a low end 65, maybe even a 64 and you will be paid accordingly. Often the same dealer will then take the coin and resell it as a high end 65.
‘Money is made on the buy side’. Like selling anything, it is easier to sell something if you bought it cheap enough to resell at a seemingly value price. And in the coin market an naive seller will often sell an item for less then the true market value. The dealers goal (and it is the goal of any business so not knocking them and there is inherent risk in buying commodities like gold) is to maximize profits while minimizing risk so the closer the dealer can get a coin to the melt value the better. You could buy a coin for say 1500..00 and immediately try to resell if and will get offers that will take a couple hundred out of your pocket.
‘What we need is a well managed promotion’. There have been times in the past that prices of a type of coin shave gone through the roof, but only temporarily;y. An example of this is back in the 80;s older commemorative coins called Classic Commemorative s became the next hottest thing…everyone was snatching them up as fast as possible and paying ridiculous prices for them. Although the coin market is fairly liquid all’s it is still fairly thin….a small group of dealers can start buying up items sending up prices and as everyone else jumps on board sell of what they have and leave the hapless collector holding the bag. Classic Commens have gone no where much in price for years.
‘These coins are rare at this grade level’. Are MS-65’s less common than MS-64’s? Sure…but no one can tell you really how many there are. Many coin collectors are secretive types and don’t let folks know what they have. Every once in a while a hoard of a certain type of coin will come to market and drive down prices. Also….there are a lot of un-graded coins out there that can be graded at one point which increases the supply. The major (NCG and PCGS) third party graders (TPG’s) have population reports but for many coins they are very inaccurate. Many times a MS 64 / borderline 65 coin is cracked out of the plastic and resubmitted over and over until it comes back in a 65 holder. So it is really a low end 65 borderline 64 worth 64 money that someone is going to pay 65 money for (see the first comment above).
‘There are no free lunches in coins’. Mostly true..for the most part if it sounds like you are really going to make out on it chances are you will not. Yes dealers do make mistakes and occasionally someone cherry picks a dealer for a huge windfall but these occurrences are few and very far in between and either you really have to know your stuff or you just got lucky.
I could go on a bit however I’ll summarize everything with a ‘buyer beware’. The coin market contains a lot of sharks and if you are not knowledgeable the chances of you drawing the short straw are pretty decent. My advice is to collect coins for fun and because you like them. If you want to start investing in rare coins go get some books and learn about them, stay away from the commodity items like the MS-65 Saints, collect the keys in as high a grade as you can afford, and find a dealer you can trust. They are out there!!
K
Excellent input Kevin, thanks!
If you are looking to enlighten yourself when it comes to Bitcoin investing, I would suggest attending Inside Bitcoins in NYC from April 27-29th: http://insidebitcoins.com/new-york/2015
I am all for holding some non-numismatic, physical gold coins as disaster and inflation hedge, but it is end-of-the world insurance, it is not an investment…as an investment, and you’ll get eaten alive by the spreads and commissions. It will always be accepted by someone, but you’ll probably pay more than the theoretical spot and get less than spot when you sell. Best to have some and sock it away and forget about it, and hope you never need to use the stuff, because if you do you we are all going to be in a pretty bad situation.
I think silver may be more useful for everyday transactions in a crisis situation. I like junk silver and plain coins.
I’ve got both and it gives peace of mind whether the spot is going up or down.
The collectibles are probably OK if you love coins and want to really learn about them…but it’s not for me.
And I forgot, you will also have to pay sales tax in most jurisdictions
As an alternate currency the only one that I would get excited about would be a private gold-backed security, denominated in grams or ounces. You know, a gold reserve note like what the US dollar used to be. I’m kind of surprised no one has done this yet.
We’d have a fully exchangible item backed by a universally accepted store of value.
(You know, like the US dollar or pound sterling used to be).
Apple or Sprott or a big miner or streamer, somebody with credibility with tons of cash or lots of gold, could issue them. For me the only real disadvantage to physical gold coins and bullion is that large denominations are difficult and risky to keep around the house.
I suggest that those with faith in the dollar, euro, or other fiat currencies read The Big Reset. Sorry I don’t remember the name of the author, gave my copy to my kids.
One morning a couple of months ago I woke from a nice dream, wherein the world had settled upon a global digital currency backed by gold, one milligram being the basic unit (rather than the U.S. $1.00 as is the basic unit now, since the U.S. still issues the world’s reserve currency.) The gold stayed in vaults, and all transactions were digital which is what we’re moving towards anyway. No more currency wars between nations, no more currency market rigging, and lots of certainty for everyone rather than chaos. Just a dream – but a nice one. Today I found this recent comment today by Travis, which I think explains pretty well why it has little chance of coming true:
http://www.stockgumshoe.com/reviews/true-alpha/forget-bitcoin-whats-wall-street-dailys-private-currency-sweeping-america/#comment-4405042
Lot of very interesting information by most all of the above folks. I started buying some $1 Silver Eagle coins in the past; but aside from being beautiful to look at; I wonder if (as Frank says above “Some Highly Improbable Things” happen) am wondering where and how I could use those coins to purchase food, etc.? If our currency is disrupted/devalued am not sure what a 1ounce silver coin would be worth at the corner marketplace. One person commented about the possibility of a coin (or bullion) being counterfeited and that is scary. Have heard the best way to prove the authenticity is by drilling into the coin/bullion. That, too is scary. If I took the coin(s) back to the local Dealer where I purchased the coins, he may honor them as being real more so than the local grocery/retailer – but it seems there is no way to even guess what he would give me. Nor can I imagine what a bottle of water, loaf of bread, or a gallon of gas would cost me when using my coin(s) at a local store. No way of knowing if any stores would be open or if they would accept silver or gold. Suppose the same could be said about bit coin, etc… As for high grade or rare coins one would have to find someone interested in buying those. Might be near impossible, not to mention hoping to get a premium price. I am retired Post Office and have seen many very old stamps being used for postage. I asked them why and they said that it’s very hard to get even the face value from collectors. I did buy a couple books of the forever stamps, but our mail system is in trouble and I may outlive my forever stamps. I am not a “prepper”, but it seems the logical choice in a worst case scenario may be to start looking at some of the 25-30 year shelf-life food/water and seeds. As for just being able to keep or gain income on my savings/investments I find it hard to put faith in any of the items mentioned. I also compliment your posters on this site. Hard to find one who is just being a troll.
Travis you are doing a great job and providing a wonderful service – Thanks!
I think the more rational “Armageddon” plan is the same as the natural disaster plan, fuel and food and whisky. Where hard billion may come into play is hyperinflation/persistent inflation/faster currency devaluation, not the complete breakdown of modern society.
Could not agree more! (Also wish I had a hard billion, rather than just a little hard bullion. I nominate yours the most entertaining Gumshoe typo of the week.)
Good catch!
I want to say that the Stanberry folks are not the only ones making claims, Robert Williams of wall street is also promoting royal bank of Canada and others with a new currency being those points that we collect when we use credit cards, and that we can invest on them too because they are going up, and we could be millionaires,
Travis please, when you have time please ceck a certain Joe schriefer , he works for agora financial and on January 21,ST/15 he was touting about a program called the ultimate retirement invented by Zachary sheith , saying that we can make money 100% garanteed with their information based on email upon options expiring, the cost $ 2.000.00 but it was on special at 50% off, thank you frank.
I found this site to be very informational ….I buy silver, gold and bitcoin. Yes, the Chinese are overtly and covertly buying as much gold as they can.
http://hiddensecretsofmoney.com/
When I was a child I remember an old saying….”He who has the gold, makes the rules.”
Anyone else remember that? 🙂
Sure ! That’s The Golden Rule !
Hmmm… is that Bitcoin? or Bit-con? And how do you think 3-D printing will affect silver and gold coins, especially since gold and lead are similar in weight and density?