Peter Schiff on Numismatic Coins
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this came in my inbox and found it out on the web. probably a very good topic for this forum, too
curious as to comments.
has there been a big switch to bullion via selling your numismatic gold and silver coins? not a poll
if there is a inflation, i do think that will only help the "slabbed stuff"
i know the wise folks here can separate their collection from their "bullion" so no need to defend one's position, just curious. i know the seasoned collectors here can and will continue to profit.
Schiff on Numismatic Coins
curious as to comments.
has there been a big switch to bullion via selling your numismatic gold and silver coins? not a poll
if there is a inflation, i do think that will only help the "slabbed stuff"
i know the wise folks here can separate their collection from their "bullion" so no need to defend one's position, just curious. i know the seasoned collectors here can and will continue to profit.
Schiff on Numismatic Coins
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Comments
However, I'm not about to dump a significant amount of my best Modern Bullion. No way. It's still a double-edged blade. The bullion aspect buffers the numismatic component, and vice versa, but they both love a strong bullion market.
I knew it would happen.
I disagree. The two groups of people are not mutually exclusive, and neither are the two groups of coins.
It is possible to put together esthetically pleasing sets of gold and silver coins that trade at or near their bullion value, including recent commems (along with a few classics), "junk" silver (including some Barbers), and Morgan and Peace dollars. That way, collectors can enjoy their coins for their numismatic merits, while fully participating in any rise in the price of precious metals.
My Adolph A. Weinman signature
Shhhh Pete, when you don't know, you don't know, better off not saying anything then.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
I don't get involved in the optons market, etc. That's because I am ignorant of it, save for knowing that while some profit on their investment, you can also lose your shirt.
As long as you don't buy coins on credit, at the least you still have the coin, no matter the return.
Enjoying the aesthetics and history of a coin is what it comes down to in the end.
The reality is that rare US gold coins are still rare regardless of economic conditions. I appreciated that Peter gave a tip of the hat to the reality that the base metal in gold coins at least sets a bottom value unlike baseball cards. I know he has followers and his advice is not to be discarded lightly but he's maybe a bit out of his element here, methinks.
Pre '33 US gold is freakin' beautiful, artistic, historic and man it is cool stuff to collect. It can also be (as beautifully stated) like having a shark in your wallet though because you don't just majically become successful at recognizing a pristine fresh original circulated rare US gold coinage at a fair price...you gotta take a beating or two along the way and those beatings (call them lessons, if you continue on) can cost more than a thousand buks or so. It is not a hobby for the inexperienced or unstudied and it's like the Tai Chi Master stated..."Pain is an excellent teacher.". As an example, I've got a '36 classic 5 in 40 that will make a nice relic for my heirs because it will never be worth more than I bought it for; but the long 1 in 1836 and the hand engraved die with it's quirks and the original condition of the coin and the pcgs holder and potential for upgrade and a very experienced dealer...and...and ended up with my wallet having a shark attack but that was in my earlier days. Anyone that collects in that area will likely have a similar story unless it's just people that grab up a bunch of generic saints in 65 and call that the rare coin collecting.
Modern US bullion/collector material e.g. the fractional buff class of coinage, the uhr's, the gold eagle sets; the buyers were all well rewarded for their efforts, sight unseen, and the price isn't dependent on spot. It doesn't take rocket science to take the mint offerings at issue price...think hocky puck here. It just takes the willingness to study up, not get hyped, look for value and desirability, and grab you some. I can't believe I only got one set of fractional buffs.
The Schiff article ought to scare the hell out of anyone that's standing on the line holding a bunch of numismatics in this crazy economic environment we are in. It should be easy to get scared, the pool of potential buyers certainly has to be getting smaller and it seems very doubtful that anyone is using credit cards to buy pre '33 these days. Lots of pressure on descretionary income so there just has to be fewer buyers. In that light, Peter has to be on the right side of the equation. Understanding that rare US coinage will always be rare and common material will always be common, regardless of age, is something his article does not address. If you look at the pcgs 3000 generic or MS gold coin index, it is easy to see that we are not in times of excessive profits for collectors so one has to pick and choose their targets with considerably more selectivity and do it while trying to grab as much bullion or generic gold coin at as near spot as possible. Purchasing numismatics as a hobby may well be in a quiet period right now, from my personal point of view. It seems kind of like the real estate market right now in that the sellers won't sell at a discount and the buyers won't pay what it takes to pry it out of the owners hands.
It does seem like a good time to let go of some of the lesser of the herd at this point, though. Distill the hoard into something much more quality driven. We, as collectors, tend to accumulate and trimming the herd in times of economic uncertainty is certainly a strategy. It wouldn't be a stretch to trim the collection at this point and put some of the numismatic premium into straight PM...hummmmmmm my precioussss.
JMHO
Got CASH?
In my mind he's a hack with little understanding of the numismatic market. Pretty much like everyone else on Wall St.
Right now the premium on numismatics is really, really low. Better to switch from bullion to numismatics now. But that won't help him sell what he's pimping.
I believe this is a very fair statement... and I agree w/PS on the vast majority of subjects.
He doesn't need me to back his opinions... but it MAY be possible that he is speaking to a different level of saver/investor than we normally see in this and the coin forum.
In some ways... I see gold/silver stocks in the same way... not that the novice should ignore the sector, its just that they should DYDD or get good advice.
Lucky for those that reads this thread... there are a number of excellent people here that can help them!!!
<< <i>I lost all respect for Schiff during the 2008 crazy times. He predicted it a couple of years in advance. He told everyone it was coming. He said to buy gold and silver and his Euro stocks. when the downturn came his portfolio went down just as much as everyone else's; maybe even more. So if you see the train coming and have time to move out of the way and still get creamed by it, you are even dumber than the guy who never saw it coming.
In my mind he's a hack with little understanding of the numismatic market. Pretty much like everyone else on Wall St.
Right now the premium on numismatics is really, really low. Better to switch from bullion to numismatics now. But that won't help him sell what he's pimping. >>
good point.
but he did say that that was not his ultimate call (2008), that being the collapse of the international dollar standard. we were all gnashing some teeth back then. his numismastics call is in gold and silver. i think in times of inflation these will naturaly rise, but will the spread betwen a bullion $50 eagle and a MS70 UHR as a modern example (PCGS FS of course) be as high as it is today??? i don't know.
i am un-educated in <33 gold.
During the crisis he stated no such thing that this wasn't his ultimate call. His portfolio was down something like 80% during that time (if memory serves)
Now in hindsight he says that wasn't the train he was talking about. Guess what, if the dollar totally collapses like he is talking about (or alluding to) we are all up you know where without a paddle.
The fact that Peter Schiff is gearing his comments towards the general public who may have no clue about the difference between numismatics and bullion - is irrelevant. If he can't educate the public regarding the various options available for their money and the distinctions between those options, then what kind of investment advisor is he, really?
The fact that his actual recommendations got hammered in 2008 doesn't speak well for his expertise. I did real well in 2008, without him. Anyone who thinks for themselves and knows about the distinctions between rare coins and bullion probably did as well.
I've noted this before, but this forum is a great resource and it helps to see different sides of the same coin being presented in different ways on a daily basis. If you have an opinion, you can see how well it stands the test of public scrutiny. Bravo once again for PCGS as host.
I knew it would happen.
Listen, it's very simple. People who know nothing about numismatics have no business buying numismatic coins for "investment"! It's more sensible for them to buy gold & silver bullion if they're to place money in tangible assets, at least, they'll know with certainty the current values of their purchases.
This quote is where he hits the nail on the head:
<< <i>Finally, the comparisons often omit the dealer’s high markups and markdowns that would more than wipe out the alleged profits for retail investors. >>
The buy/sell spread is the real enemy for 'investors', even knowledgeable ones. Conservatively, a 20% markup over the buy price takes many years to overcome. Most markups are more than 20%.
His calls have been extremely accurate.
I believe no one saw the massive sell off of ALL assets in the Fall of 2008.
His portfolio and many others, did bounce back though.
And one last point, he's not God you know, he can't be right all the time.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
Now take the average adult novice that is reading some investment newsletter. If they don't already collect coins, all will be zero for three, likely bottom 20% in all areas even after a year or two of time. Unless the novice starts spending endless hours on the hobby, they will likely still be bottom 20% in one or more areas after five years. This means they will almost certainly do poorly in terms of return on numismatic investments. They are up against knowledgeable expert dealers and expert veteran collectors. Who is going to win that game? The adult novice mostly interested in investment return, or the veteran expert collector with a true love of the hobby?
There is a a much larger group that does poorly financially in coins. The group that loses money also shares certain traits. They tend not to care about the hobby, their main interest is in the investment return. They tend not to know much about grading, and don't want to learn. They tend to lack dealer contacts, with many buying exclusively from one firm at above full retail pricing.
A newsletter can not teach a person how to grade coins, or even begin to give more than the basic basics about the large task. A newsletter can only touch on the market knowledge, the market experience required to make intelligent numismatic purchases. Even if a series or specific date/mintmarks are named, too much depends on the particulars of each coin, each grade, each series and the price paid. A newsletter can not give a person dealer contacts. Even if decent dealers are named, many newbies will end up with the bottom of the barrel coins from said dealers and still do poorly, though less poorly than if they start buying from shady dealers.
Right now the premium on numismatics is really, really low. Better to switch from bullion to numismatics now. But that won't help him sell what he's pimping.
True enough. But it's also true that the premiums for MS63-66 generic gold has shrunk with every new high in gold. This trend started in May 2006 with gold at $735. That's when $1's to $10's basically peaked. With each new gold high they've taken 2 steps forward, 3 steps backwards. Now almost 5 yrs with declining premiums. That's a long time to hold on with falling prices with gold nearly doubling again. This past "run," if you can call it that started back in Feb at $1044 gold. With the price of gold climbing 36%, and silver about 100%, generic gold couldn't even match bullion. In a number of cases the prices only increased 10-15% in that period...and have been falling once again for a month or more. Schiff's comments are probably more geared towards common foreign gold as well as later US mint products. But they could be applied to pre-33 US gold as well. Yeah, it's a good time to buy generic gold because of low premiums. It's also still a great time to buy classic commems too which peaked at least as far back as generic gold.
Only the $20's bucked the above trend by establishing a new peak in late November 2009 under heavy promotions. But they have fallen back about 20% since then with gold >10% higher. It may be that like gold stocks which have had a very shaky record over the past 3-5 yrs will finally get their mojo back, like generic gold. Time will tell. The investing public still seems more comfortable with gold bullion and GLD....not slabbed mint state gold or gold mining stocks.
roadrunner