25 Yrs ago today the First American Silver Eagle was struck....

mariner67 · October 30, 2011 11:44AM

"..at the San Francisco Mint. With a drumroll from the Sixth Army Band and a cry of "Hi-Yo Silver Away!' Treasury Secretary James Baker struck the first American Eagle silver coin at the U.S. Mint's San Francisco Assay Office."
One million were minted before they were put on sale that year on November 24. Production capacity was 50,000 coins/day. Silver was $5.58 an ounce at the time.
"Demand is expected to come from investors who distrust the stability of other currencies or economic systems."
Previous to this the Treasury Department refused to consider bullion coin production because they did not want to be involved in creating a secondary U.S. currency!

Excerpted from today's San Francisco Chronicle.

The US Coin forum suggested this cross topic to note the part about not wanting to issue "a secondary U.S. currency"!

Wingsrule · October 30, 2011 11:58AM

Some benchmark changes since that date:

Item Close 10/30/86 Close 10/28/11 Gain
Dow........1878.37.......12231.11.....5.51x
S&P.........243.71.........1285.09.....4.27x
Nasdaq....361.10........2737.15.....6.58x
Gold.........406.50........1743.40.....3.29x
Silver............5.58............35.29.....5.32x

(excludes reinvested dividends)

jeremym · October 30, 2011 12:53PM

Wasn't it really 26 years ago? 25 anniversaries means that they've been around for 26 years...the first anniversary comes after it's been around for a year.

mariner67 · October 30, 2011 1:49PM

The San Francisco Chronicle article was from Oct 30, 1986.

gecko109 · October 30, 2011 2:24PM

<< Some benchmark changes since that date:

Item Close 10/30/86 Close 10/28/11 Increase
Dow........378.37.......12231.11.....31.32x
S&P.........243.71.........1285.09.....4.27x
Nasdaq....361.10........2737.15.....6.58x
Gold.........406.50........1743.40.....3.29x
Silver............5.58............35.29.....5.32x

(excludes reinvested dividends) >>

Your DOW numbers mean nothing. The 30 companies from 1986 are not the same 30 today. The DOW replaces the underperformers and losers with winners. It does so quite frequently.

57loaded · October 30, 2011 2:33PM

<< Wasn't it really 26 years ago? 25 anniversaries means that they've been around for 26 years...the first anniversary comes after it's been around for a year. >>

count on your fingers and toes, eyes and nose. i think the OP has it correct unless i'm really missing something. married in 1986 would be celebrating 25 years of marriage, this year, no? married in 1986 celebrating one year of marriage in is ...............drum roll..........1987...?

1986 first coin struck, baby is born, get married
1987-1 been "around" for one year, birthday, survived
1988
1989
1990
1991
1992
1993
1994
1995
1996-10 been "around" for 10 years, 10 year old birthday, survived...etc
1997
1998
1999
2000
2001-15
2002
2003
2004
2005
2006-20
2007
2008
2009
2010
2011- 25

Justacommeman · October 30, 2011 2:37PM

<< 

<< Some benchmark changes since that date:

Item Close 10/30/86 Close 10/28/11 Increase
Dow........378.37.......12231.11.....31.32x
S&P.........243.71.........1285.09.....4.27x
Nasdaq....361.10........2737.15.....6.58x
Gold.........406.50........1743.40.....3.29x
Silver............5.58............35.29.....5.32x

(excludes reinvested dividends) >>

Your DOW numbers mean nothing. The 30 companies from 1986 are not the same 30 today. The DOW replaces the underperformers and losers with winners. It does so quite frequently. >>

I believe the DOW was around 1800 (not 378) in October 1986 . It broke 2000 for the first time in 1987. I remember as I was a young buck in NYC cutting my teeth in 1986/1987. MJ

botanist · October 30, 2011 3:15PM

<< 

<< 

<< Some benchmark changes since that date:
Item Close 10/30/86 Close 10/28/11 Increase
Dow........378.37.......12231.11.....31.32x
S&P.........243.71.........1285.09.....4.27x
Nasdaq....361.10........2737.15.....6.58x
Gold.........406.50........1743.40.....3.29x
Silver............5.58............35.29.....5.32x
(excludes reinvested dividends) >>

Your DOW numbers mean nothing. The 30 companies from 1986 are not the same 30 today. The DOW replaces the underperformers and losers with winners. It does so quite frequently. >>

I believe the DOW was around 1800 (not 378) in October 1986 . It broke 2000 for the first time in 1987. I remember as I was a young buck in NYC cutting my teeth in 1986/1987. MJ >>

MJ is correct, the Dow was then around 2000, and going on to 3000. It was during the time I was regularly listening while working to the radio show called Smart Money with the Dolans. The Dolans kept telling their listeners they thought the stock market was overbought, and not to buy stocks until the Dow declined to about 1000, and anyone who heeded their advice missed out on the remarkable Reagan-era boom in stock prices.

fiveNdime · October 30, 2011 5:06PM

the year 2011 is in

<< ...............drum roll.......... >>

the 21st century

Wingsrule · October 30, 2011 9:37PM

MJ and Botanist - you are correct. I fubared a few digits trying to add all the decimal points to get the columns better aligned. And the "Gain" column reflects the total change in points divided by the original value.

Phil - based on your comment then, none of the indices mean anything, since the S&P 500, Nasdaq, Wilshire, Russell, etc. ALL replace losers and underperformers.

ttown · October 30, 2011 10:24PM

Wake me up when the DOW gets back to 14,000+ and the NASDAQ gets to over 5000. Really the stock market has been treading water for over a decade. Now you've reinvested dividends but did you take out the loads, transaction cost, and account fee's. Fun with numbers the DOW's right about where it's dumped twice in the last decade to half it's value without ever setting any new highs like PM's. Your assumption is you brought and held which no one does in their right mind anymore so how can you reinvest dividends on something you may or may not have in any point in time. Seems we always get these claims when the stock markets up, six months from now it could be down half and we won't hear a peep. Theirs a big difference between stocks and PM's they've made new highs many times in those 10 years while the market hasn't even sniffed a new high. You must work on wall street; the guys really making a killing.

gecko109 · October 30, 2011 11:32PM

<< MJ and Botanist - you are correct. I fubared a few digits trying to add all the decimal points to get the columns better aligned. And the "Gain" column reflects the total change in points divided by the original value.

Phil - based on your comment then, none of the indices mean anything, since the S&P 500, Nasdaq, Wilshire, Russell, etc. ALL replace losers and underperformers.

>>

They dont mean anything when comparred to the long term performance of a commodity. With the commodity, you are with it through thick and thin.....ups and downs. The indices just throw out the losers and replace with winners. If you want to compare long term gold to long term indices, then let me cash out all my gold every 3 year high and then rebuy on every 3 year dip, and repeat 8 times.

OR

Take the exact 30 companies that comprised the DOW in 1986 and track their prices over the past 25 years.

Wingsrule · October 31, 2011 12:02AM

mariner67 - sorry your thread got derailed so quickly. I was trying to illustrate the various changes in the world since 1986 (referring the price of silver at the time).

And no, I don't work on Wall Street. I just like numbers. And facts.

mariner67 · October 31, 2011 4:22AM

No problem....a purpose of these boards is to stimulate exchange of thoughts!
Best!

Justacommeman · October 31, 2011 4:29AM

<< No problem....a purpose of these boards is to stimulate exchange of thoughts!
Best! >>

You are a very good sport. MJ

So at the end of the day if you would have invested in any of the major stock indices or in pm's you would have done very well during this 25 year period. That is fact. Also, if you would have added bonds into the mix you would have done well there also as they have been in bull mode for 30 years. You would have beaten inflation

MJ

jmski52 · October 31, 2011 4:46AM

I should'a kept Pixar.

gecko109 · October 31, 2011 5:18AM

<< 

<< No problem....a purpose of these boards is to stimulate exchange of thoughts!
Best! >>

You are a very good sport. MJ

So at the end of the day if you would have invested in any of the major stock indices or in pm's you would have done very well during this 25 year period. That is fact. Also, if you would have added bonds into the mix you would have done well there also as they have been in bull mode for 30 years. You would have beaten inflation

MJ >>

How do you invest in an index? I thought you invest in stocks or mutual funds? If a person bought $1,000 worth of each stock that made up the DOW in 1986, what would that $30k be worth today? Only 11 of the current 30 DOW companies were even part of the index back in 1986. Just goes to show that the DOW is a "rigged" game as far as long term performance is concerned.

Wingsrule · October 31, 2011 5:41AM

How do you invest in an index?

Here's a few:

DIA Dow 30
SPY S&P 500

they have been around for years.

Here's more, some of them added more recently.
Text

Edited to fix link

gecko109 · October 31, 2011 5:45AM

<< How do you invest in an index?

Here's a few:

DIA Dow 30
SPY S&P 500

they have been around for years.

Here's more, some of them added more recently.
Text

Edited to fix link >>

Were any of those available in 1986? Thats what MJ was talking about.....investing in an INDEX for the past 25 years.

Wingsrule · October 31, 2011 5:53AM

I was responding to your question of "How do you invest in an index".

Back in the 80s, there were mutual funds that allowed you to do the same as the items I listed. I do not recall, nor do I care about what the particular symbols were. ETFs nowadays are like higher-tech mutual funds that allow you the ability to trade them all day long, not just at the COB. You can buy/write options on them. Many other differences as well.

gecko109 · October 31, 2011 6:02AM

<< I was responding to your question of "How do you invest in an index".

Back in the 80s, there were mutual funds that allowed you to do the same as the items I listed. I do not recall, nor do I care about what the particular symbols were. ETFs nowadays are like higher-tech mutual funds that allow you the ability to trade them all day long, not just at the COB. You can buy/write options on them. Many other differences as well. >>

And I was responding to MJ's comment about investing in an index over the past 25 years.

But I do have a question for you while you are here. If I have a group of 30 companies in 1986.......and a group of 30 companies in 2011........but just 11 of those "1986 companies" are in my 2011 group......

.......then what is the use of tracking the value of those 2 different groups over a 25 year span as an indicator of performance?

Thats like if I tell you what the price of silver was in 1986, and then tell you what the price of gold is in 2011 and make some claim as to how well gold has performed since 1986.......is it not?

Wingsrule · October 31, 2011 6:55AM

Indices change over time. And as those changes occur, the NAV (net asset value) of those indices change also, bad when stocks underperform and good when they do perform. As companies get bought, go out of business, etc., the composition of those indices change accordingly. That what your expense ratios go to pay. Those are facts and they are clearly spelled out in the specific prospectus for a fund.

In the case of the DIA and SPY, if you were to study their returns since inception (whether is is 5, 10, or xx years), those correlate extremely closely with the stated objectives of the instrument. For example, if the DOW 30 average went up 20% over a given period of time, so would the DIA (less expenses and other fees as explained in the prospectus), regardless of how many changes were made to the index over that same time period. If you can point out facts that do not support this, please let me know and I will gladly unvestigate that counter-position.

It is not possible to use solely the info you listed (silver price in 1986 and gold in 2011) to infer the performance of either investment without additional facts.

"Facts" being the key word, not "opinion".

gecko109 · October 31, 2011 7:31AM

The "fact" is that its useless to compare one basket of stocks from 25 years ago with a completely different basket of stocks today as far as performance over time goes. And thats exactly what the DJIA tracks. If the 30 components of the DJIA remained fixed over that time frame, only then is the relevance understood. But simply stating that the DJIA has gained xxx% over the past 25 years is a totally useless and idiotic statistic.

Like I attempted to explain earlier, its like taking a basket of 30 grocery products (eggs, bread, cheese, milk, etc) from 1986, adding up their price.......and then forming a new basket of 30 grocery products (caviar, Kobe beef, artichoke hearts, saffron, etc) from 2011, adding up their price and exclaiming "see, the price of grocieries has risen!".

It simply makes no sense to track the DJIA performance over time if the index continually discards companies like AIG and other massive failures just to replace them with the newer, better performing companies.

derryb · October 31, 2011 8:20AM

charting any price over time is misleading unless it is adjusted for inflation.

Wingsrule · October 31, 2011 8:31AM

The "fact" is that its useless to compare one basket of stocks from 25 years ago with a completely different basket of stocks today as far as performance over time goes.

Whatever. But I refuse to return all of the profits I have made over those 25+ years on the Dow, S&P and Nasdaq indices and similar tracking funds. While some may consider it useless, I have found it to be very profitable. And many of those instruments were held through periods where the components changed. In fact, that is a good time to hold them, if you do it right.

Wingsrule · October 31, 2011 8:32AM

charting any price over time is misleading unless it is adjusted for inflation.

I like the way Tulving shows those 1980-era prices for various PMs compared to their inflation-ajusted levels. Based in that, gold is still $550 or so from an ATH.

Timbuk3 · October 31, 2011 8:52AM

Thanks !!! for the reminder, information, and Happy
Birthday U.S. Mint for the ASE's

Justacommeman · October 31, 2011 9:14AM

Gecko sometimes I think you just like to hear yourself type...........MJ

pf70collector · October 31, 2011 9:36PM

Hmm biggest gain in the stock market last week. Seems the media is all over it. Except that gain was just halfed today.

Wingsrule · November 1, 2011 7:53AM

It simply makes no sense to track the DJIA performance over time if the index continually discards companies like AIG and other massive failures just to replace them with the newer, better performing companies.

More facts:

The standards of the DJIA clearly explain what will happen to the index when various things occur to the companies that make up said index. They are doing exactly what they said they would. They are operating based on stated facts.

GM was trading at $0.75 per share when it was removed from the Dow.
Citigroup was trading at $0.38 per share when it was removed.

And the DJIA was seriously taken down in value as those companies' stock prices plummeted. Same story with AIG. I remember reading somewhere that AIG's drop was responsible for a loss of 500-600 points alone, but I do not remember the time period over which that drop occured. It would be relatively easy to figure out the exact number.

25 Yrs ago today the First American Silver Eagle was struck....

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