Collecting strategy : silver or gold coins ?
Skipper53
Posts: 723
I've been collecting silver coins ( Morgans and Franklins) for the last couple years.
My chief motivation has been finding beautiful coins, but I also have had the
investment value of the collection in the back of my mind.
Now that gold has topped $400 and seems to be continuing the upward trend,
my question is , should I switch to gold coins ?
Per coin , we're talking a lot more money but, could it be the way to go as both
a nice collection goal and, or investment ?
Your opinions are appreciated and, usually taken to heart.
Thanks ,
Skipper
My chief motivation has been finding beautiful coins, but I also have had the
investment value of the collection in the back of my mind.
Now that gold has topped $400 and seems to be continuing the upward trend,
my question is , should I switch to gold coins ?
Per coin , we're talking a lot more money but, could it be the way to go as both
a nice collection goal and, or investment ?
Your opinions are appreciated and, usually taken to heart.
Thanks ,
Skipper
0
Comments
<< <i>Collect the coins you like >>
Ditto.
Edited to Add: If you DO happen to enjoy collecting gold coins -- especially modern ones -- and you DO happen to, coincidentally, start collecting right now when gold is at a high, you could conceiveably get burned a little bit if gold drops in value over the next couple of years. However, I just threw this in as a disclaimer. I still wouldn't worry about it. Just collect what you enjoy and forget about the price of precious metals.
Check out a Vanguard Roth IRA.
Sumner 1984 I believe David Hall agrees with you .
So don't rush out and buy modern gold eagles or commems to catch spot gold's rising tide -- you're going to get killed by the premium the U.S. Mint (or dealers) charge over the spot price, along with the transaction costs. (And where are you going to store all that bullion, anyway? It's impractical unless you have a quality safe or insured deposit box at a financial institution.)
Now if you want to invest in gold coins because you think their numismatic values are going to rise, that's a different question, and frankly the astronomical premiums rare (and some modern) old gold coins fetch has virtually nothing to do with the gold content or the spot price of gold, but instead is derived from all the other qualities discussed here (e.g. condition, rarity, etc.).
Personally, I prefer collecting gold coins. I prefer the rarity of gold, the cachet of gold coins and prefer the way gold coins age. Simply put, more fun with gold.
However, I've been impressed with the silver, nickel and copper collections I've seen these boards, and especially the high-grade, proof and prooflike old silver collectors have. (I've even picked some up for myself.) Also, I bet people here have earned sizeable returns by collecting recent copper and silver coins, like the Type 2 Lincolns and the 1998 SMS Kennedys. These returns have nothing to do with commodity prices.
In any event, here's a portion of a recent Forbes article for the silversmiths:
The Case For Silver
by James Grant
Gold may well be a better monetary asset, but the white metal has many more practical uses, from the arts to medicine. And its consumption exceeds its output. Silver, No. 47 in the periodic table, is the Boston Red Sox of precious metals. Many are its winning attributes, and loyal are its fans. It ought to win, and it will win, but it hasn't won in a long time. Following is the thumbnail bullish case for the commodity variously known as the "white metal," the "poor man's gold" and--with a nod to its storied volatility--the "restless metal." . . .
What is the bearish case for silver? That was delivered in the form of a Sept. 25 announcement by Eastman Kodak. Henceforth, the film-and-camera giant said, it will invest much less in conventional photography and much more in the digital kind. The silver price, around $5.30 an ounce at the time of the news, crumpled. Two weeks later the quote was $4.81.
As there is a Red Sox Nation, so there is a Planet Silver. Upon hearing the Kodak news, the inhabitants of this small spheroid sighed. Defeat was snatched from the jaws of victory--again.
But wait: The apparently devastating bearish news was absorbed and brushed aside. True, 200 million ounces of silver are earmarked for photographic film every year, about 24% of estimated world consumption in 2002. But the market knows all about digital imaging. The market knows that conventional photography, although it will not be tomorrow's technology, will not just disappear tomorrow, either. It will dwindle, even as new applications for silver come to the fore. As a result the silver price has turned back up. The metal trades today at about where it did when Kodak unloaded its news.
What are these new applications? "Invisible silver," a transparent coating of silver on double-pane thermal windows, is one. But the major looming use for silver is the ancient monetary one. The metal that used to be money will serve as a store of value once again.
The dominant global monetary asset is, of course, the dollar. But what is a dollar? It is a piece of paper (or an electronic impulse) of no intrinsic value. The dollar is money by dint of government fiat. The eminent monetary theorist Ben S. Bernanke, now a governor of the Federal Reserve Board, has
observed that the cost of producing a dollar is trifling and that the government can produce as many dollars as it wants. He so stated in his official capacity during the recent deflation fright. So saying, Bernanke has lent the establishment's prestige to the fringe-dwelling gold and silver bugs.
. . .
Gold is a better monetary asset than silver, but silver has better supply-and-demand characteristics than gold. Since the Silver Institute began keeping track in 1990, silver consumption has annually outpaced silver production, and not by a little. The cumulative 13-year difference adds up to 1 billion ounces.
You can't just print silver: You have to dig it up. And you don't just dig it up, either. You have to find it. And without the necessary prerequisites (land, labor, capital, environmental permits) you can't just find it. Hence, relative to the great and growing supply of dollar bills, there isn't a lot of silver to go around.
William A. Fleckenstein, a silver bull from way back and a director of Pan American Silver Corp., a mining company, says that a reasonable estimate of the total aboveground silver stock would be 20 billion ounces. Perhaps two-thirds of that 20 billion are unavailable to the market, at least at prevailing prices. Best estimates of "liquid" silver--bullion and nonnumismatic coins--run to no more than 400 million to 1 billion ounces, at the high end, only a little more than $5 billion worth.
In 1980, in an epic miscalculation by the Hunt brothers, the price of silver peaked at $49 an ounce. I am counting on the serial epic miscalculations of the Fed and the Treasury to push the price, if not back to $49, at least a little closer to it.
James Grant is the editor of Grant's Interest Rate Observer. Visit his homepage
at www.forbes.com/grant.
Lower mintages means rarity in the future.
With older coins , mintages may be high but
surviving coins may be rare, due to circulation,
meltings, etc.
I believe the value of a coin collection will be,
A: The rarity of the coins
B: The demand for those coins
C: The enjoyment the collector gets from those coins.
It appears there is an equal split of opinion between
Gold
Silver
and whatever turns you on !
I believe there will always be a market for both
silver and gold coins.
Thanks for the reponses and good luck to each of you !
Regards
Mike Rogers
ultramike@collector.org
SHOOT FIRST-QUESTIONS L8TR...
If its nice and you REALLY like it " buy it " sure beats laying awake wishin you had, PLUS you will never forget or FORGIVE YOURSELF for letting it get away-and remember you can always pedel it to regain most of $ . Just one of many of " buying politics I utilize.
Besides I really lost sleep and beat myself up yo learn this simple procedure !~!
Liberty: Parent of Science & Industry
Unless you're buying coins where bullion value is a large part of their value or
you expect sufficient increases that it's a large part of their value than it makes
little sense to worry about the melt value of a collection anyway. There are no
gaurantees that any profits which may materialize from the trading of bullion will
go into gold or silver coins as they did in 1980. Profits would likely go into what-
ever is hot at the time even if that happens to be the stock market, bonds, or
copper indian cents.