A stupid question.....

ocon4008

I was reading an article on NIA....

Inflation to Make All Americans Billionaires By 2020

They speculate hyperinflation could drive gold to $6,200 an ounce and silver to $775 an ounce. Just for the sake of conversion let’s assume it happens exactly as they speculate, and no arguments, exactly as they speculate.

If this happens obviously we see a huge increase in the price of common gold and silver coins because of the increase in the spot, but will we see a corresponding increase in rare coins as well?

For example a common 1897-S Morgan PCGS MS 60 – 63 is $40 - $50 will become $600 just for the silver; that is a 1200% increase.

What will happen to the say the 1893-S? in PCGS VF – 30 it is worth around $5000, in AU we are talking $30,000. Do they double?, triple? or stay the same? Anybody else want to see a 1,200% increase????

What about common date gold coins?

OPA

Yeah, I can't wait for my millions to spend on $500 a gallon gas, $1000 pack of cigarettes.


I guess I'll have to keep my clunker, because the next one is going to cost me???

BBN

ridiculously high PM prices will drain the numismatic value of coins. If this scenario happens we would probably see many silver coins melted. We may see a lot of Washies, Frankies and mercs meet their fate. If this did happen it would be time to once and for all kill the fed and run everyone out of government.

cladking

No.

It looked like it did in 1980 but that was only because the coins that were hottest just
happened to be mercs, walkers, morgans, and gold. People were plowing their vast profits
back into the coins that were hot.

This time there aren't the vast profits because the public already sold most of their silver
and gold and haven't replaced it. Collectors often have some profits but they'll be buying
the things that are hot now (like bust) not what was hot in 1979.

jmski52

A couple of points. Most Americans won't be buying precious metals, so most Americans won't be billionaires. They might be millionaires and destitute.

I expect coin premiums to evaporate and then to be re-established as the dust settles. Undoubtedly, some collectors will only be holding rare coins and will be forced to sell if they aren't also holding precious metals to support their financial position. The prices realized on their rare coins may be great, but the rest of their assets may be garbage, leaving them no choice but to start selling. If that scenario does occur, the coin market may have some bargains from forced liquidations.

I think that it takes a healthy economy to support healthy rare coin premiums.

roadrunner

Bust and type coins were hot in the 1977-1980 coin market. Gem common date seated quarters were fetching $5,000 to $20,000 from MS65 to MS68 (today's standards). Gem Barbers and choice/gem Bust material was hot too. While gold bullion increased 8X in price from the bottom of the market in Dec 1976 to January 1980, selected gem rare type coins did just as well. If one looks at rare coins from early 1975 to early 1980 the best ones advanced from 15X-20X....far outpacing gold. Now that doesn't mean rare coins will do the same thing today. People, banks, and businesses are far more broke today than they were in the late 1970's. Hard to say how this plays out.

Gold bullion prices don't really have any relationship with the general price structure of the economy, just with the fiat money. Gold went up 10X-25X in the 1970's depending on what starting point you use (running start price of $60-$80 or the fixed $35 price) yet general prices only went up a tiny fraction of that amount. The world didn't fall apart because gold went from $35 to $875. It was a barometer to let everyone know things were out of whack. Gold is just another currency when currencies go bad. Silver shares a bit of gold's monetary status but still retains its economic pricing ties as well....oil too. But again, if silver goes up to dizzying heights, the general pricing of goods in the economy will probably not follow with the same size multiples. Don't count on $1,000 cigarettes any time soon, unless of course the rise is solely due to state and govt taxes. Gold could hit $6,000 and it won't really affect anyone except those who hold it in reasonable quantity...which is a very small fraction of the population. PM's are a means to figure out what things are really worth when currencies go haywire...as well as an insurance policy against that event.

That $775 silver implies a GSR of 8 to 1, which seems improbable imo. That's half the value of 16-1 which was the arbitrary level that govt's fixed it at during bimetalism. About the only way to get there is if world silver stocks are basically gone and what's being relied upon is annual mining production of about $12-$20BILL, or about 650 MILL ounces. As silver prices start hitting >$100 or $200/oz those who use silver in industrial will be looking for alternatives.

Interesting that the NIA claims to have called the July bottom in gold and silver. I should have been following them!

roadrunner

meluaufeet

I'm not a fan of NIA...

But I realize that they have followers and I will respect their opinions.

CoinCrazyPA

RR, very well stated.