Economics of silver

drjules

Hey it's Friday afternoon and I can't focus on the last bit of work I need to do before I go home, so I checked the price of silver. It's about $5.60 per oz and that got me thinking, if silver was $5.50 per oz ten years ago doesn't that make it a pretty bad investment as it doesn't keep pace with inflation? Does the investment value of coins / prices in Krause change with inflation?

Just a little thought to take you into the weekend, but I guess everyone else is already there

Dr J

BigAlan

Historically, metals are more speculative than investment.

Stork

I don't know what to think about silver, I believe ever since the Hunt brothers had their fun it has been a little skewed.

Gold is considered more of a store of value -- in a portfolio not to 'grow' like a stock, or produce income like a bond, but to hold value. Gold prices tend, in theory, to move opposite of bonds, so when interest rates rise, the price of a bond will fall, and the price of gold will rise. The falling dollar has also had an effect on the price.

So, to buy as an investment per se may not make sense because it may not change in price much. But overall, owning a little gold could smooth out the swings in value of an investment portfolio. So the theory goes, at least the way I learned it and remember it in my most simple-minded and basic sort of way.

The gold/precious metal followers have abundant theories about the multitudes of reasons for the price fluctuations and make for amusing and interesting reading. (Some of the short selling/futures contracts issues come to mind).

As for Krause, I suppose price changes depend ultimately on supply vs. demand, factoring in whether a particular coin has numismatic value or bullion value.

I'm sure there are many more intelligent answers to these questions out there, this is a definite non-pro answer!


Cathy

wybrit

I've never been enamored with bullion as an investment. Gold has a similar history to silver. If one had bought gold during the Jimmy Carter years, that person would still be waiting to recover the loss, to say nothing about the effect of inflation. Alan is right, bullion is speculative and thus must be watched closely.

As for coin valuation, bullion value is probably a secondary variable in the equation. The bigger variable, though, is demand. There is less silver in a dime than in a sixpence for dates before 1920, yet with few exceptions, any date of dime is worth far more than the sixpence in a like condition.

Inflation has little to do with the prices of world coins. British coin prices were essentially flat for what seemed an eternity until about seven years ago when they began to take off. Yet during the same seven year period, inflation has been extremely low (college tuitions being a notable exception!!) and one need look no further than the typcial person's salary cost of living raise year over year to realize that. Valuation has to do more with number of collectors having money to spend.

Bruce

I would never buy a coin as an investment. I collect coins as a hobby. My investments are with the local "investors group"

NJMark1

I also do not see my coin collection as a investment. I view money spent on coins in the same vein as a vacation or movie ticket strictly for entertainment purposes

Mark

Coulport

At least you can sell your coin collection and raise some cash as I have seen many people do.

Let's see you do that with a movie ticket stub or vacation picture.

laurentyvan

I view money spent on coins in the same vein as a vacation or movie ticket strictly for entertainment purposes

Good attitude! I tend to share the same viewpoint, albeit recognizing that it's not quite that simple...

I've always thought that if nice coins are purchased, any collector should be able to recover the majority of what he originally spent (plenty of exceptions to this I'm sure) by selling the coins through private sale. At a dealer, sure, a collector will take a big hit selling common world coins, regardless of metal content.

But it is nice to know that silver has a value as a precious metal, and that value can be realized (recently sold a bunch of beat-up silver frankies for a decent price based on silver content alone).

0john0

What I DO like about holding gold bullion is that I can pass it on to my kids without the government taking a heafty percentage when I die. The problem being that gold does not predictably increase in value, so I guess I will have to wait until my days are numbered and then convert all holdings to gold. Hopefully this is all a few decades away, as I don't even have kids yet.
-john

rhound1977

<< <i>I view money spent on coins in the same vein as a vacation or movie ticket strictly for entertainment purposes

Good attitude! I tend to share the same viewpoint, albeit recognizing that it's not quite that simple...

I've always thought that if nice coins are purchased, any collector should be able to recover the majority of what he originally spent (plenty of exceptions to this I'm sure) by selling the coins through private sale. At a dealer, sure, a collector will take a big hit selling common world coins, regardless of metal content.

But it is nice to know that silver has a value as a precious metal, and that value can be realized (recently sold a bunch of beat-up silver frankies for a decent price based on silver content alone). >>



I don't buy coins based on speculation, it's a form of entertainment and fun, but you do have something to show for it...... I have made money and lost money selling coins, and all of what I have sold, bought me more coins anyway....

drjules

Thank you for the interesting responses

Dr J