What if everyone could finance 90% of their coin purchases at 5% per annum?

MrEureka · October 7, 2008 10:06PM

Would you buy more coins than now?

How would it affect the coin market?

Longacre · October 7, 2008 10:08PM

I would buy as many coins as humanly possible, and then wait for the governmental bailout of the coin industry.

291fifth · October 7, 2008 10:08PM

Coins should never be bought on credit.

messydesk · October 7, 2008 10:25PM

I would probably end up buying fewer coins. First, I don't buy coins I can't pay for. Second, the demand for coins would go up since dealers would be leveraging themselves further with a lower interest rate and buy more coins for increased prices, which they'd then pass on to their customers, many of which would see prices on the rise and also borrow at 5%, whether they could afford it or not (you did say "everyone"). And then one day, the bubble would pop. Then I could buy more coins.

MrEureka · October 7, 2008 10:29PM

And then one day, the bubble would pop. Then I could buy more coins.

Assuming there's no bailout, of course.

UtahCoin · October 7, 2008 10:30PM

I have never bought a coin on credit.....
I have never bought anything other than a house on credit.... (then paid it off as quickly as possible)
In today's economic cesspool, I would not want to be in any debt....

57loaded · October 7, 2008 10:37PM

<< I would probably end up buying fewer coins. First, I don't buy coins I can't pay for. Second, the demand for coins would go up since dealers would be leveraging themselves further with a lower interest rate and buy more coins for increased prices, which they'd then pass on to their customers, many of which would see prices on the rise and also borrow at 5%, whether they could afford it or not (you did say "everyone"). And then one day, the bubble would pop. Then I could buy more coins. >>

wow, that sounds familiar, doesn't it?

Lakesammman · October 7, 2008 10:41PM

Depends on the market.

In a bull market, it's a no brainer.

In a declining market, makes no sense.

PerryHall · October 7, 2008 10:52PM

<< Coins should never be bought on credit. >>

pheh · October 7, 2008 11:28PM

Balloon meet safety pin.

MrEureka · October 7, 2008 11:44PM

Balloon meet safety pin.

I don't disagree. But I don't see that as a problem. Some people will make money and some people will lose money. And coins may change hands, but so what? The coin will always be the coin, owned and enjoyed by someone.

notwilight · October 8, 2008 1:11AM

With that much cheap money priced would go up forever!!!!

messydesk · October 8, 2008 1:50AM

<< And coins may change hands, but so what? The coin will always be the coin, owned and enjoyed by someone. >>

Will the increase in the number of coins changing hands also increase the probability that any given coin will be messed with and/or ruined?

RWB · October 8, 2008 1:50AM

Coin collecting is a hobby fueled, for the most part, by discretionary income. The long-term investor has other means available to finance purchases, and the collector has no business getting himself in hock for a few pieces of silver. Given the common pricing structure of coins, the buyer is “upside down” for years.

adamlaneus · October 8, 2008 1:53AM

When I charged my Heritage purchases to my HELOC card, this is exactly what I ended up doing.

Lots of coins at a 5% rate.

I had thought that this card has a 30 day float like other credit cards.

Nope. Interest paid every day you owe money. No float.

So, I paid a few bucks of interest. I had thought that I could avoid interest entirely by paying it off before the float expires. Nope.

It is unlikely I will use that card ever again.

MrEureka · October 8, 2008 1:57AM

Will the increase in the number of coins changing hands also increase the probability that any given coin will be messed with and/or ruined?

Absolutely. Good point. There goes my perfect analogy...

lathmach · October 8, 2008 3:15AM

All I need to know is this................
How much money are you willing to loan me, Andy?

Ray

ziggy29 · October 8, 2008 3:29AM

Could I go out and take out a coin equity loan on it when the value increased?

COALPORTER · October 8, 2008 3:29AM

Depends. Can I receive the coins now, or do I need to wait until they are paid off?

If considered doing some larger purchases with credit from Heritage or DLRC. I would still have the cash to cover the coins at anytime, but this may allow be to maintain a larger cash balance and manage cash flow and earn a return. If i can earn a return greater than the 5%, then it would be a good idea.

coinut1799 · October 8, 2008 4:13AM

For a really young kid Utahcoin makes a lot of sense!

Robb · October 8, 2008 4:16AM

<< Coins should never be bought on credit. >>

+1

GrumpyEd · October 8, 2008 4:29AM

Gotta agree with Utahcoin.

Maybe the only people that could justify using credit would be dealers that know they can sell it fast with profit.

Elcontador · October 8, 2008 5:05AM

If I can't pay with a check or charge it and pay the CC in full when the balance is due, I can't afford the coin, so I pass.

291fifth · October 8, 2008 5:38AM

<< When I charged my Heritage purchases to my HELOC card, this is exactly what I ended up doing.

Lots of coins at a 5% rate.

I had thought that this card has a 30 day float like other credit cards.

Nope. Interest paid every day you owe money. No float.

So, I paid a few bucks of interest. I had thought that I could avoid interest entirely by paying it off before the float expires. Nope.

It is unlikely I will use that card ever again. >>

What is a HELOC card?

adamlaneus · October 8, 2008 5:43AM

HELOC: Home Equity Line Of Credit. A credit card with a high limit and a low interest rate secured by your house.

I got one many years ago as a safety net. Before I had four other safety nets.

And, my Heritage purchases were actually more than the limit of my typical credit card so I used this one.

That's when I discovered there was no 'float'. Whereas I can use my normal credit card without paying interest at all as long as I pay it off in time...one cannot avoid interest on a HELOC card. Not with the terms I signed apparently. My education cost me $2.60. Heh.

BillJones · October 8, 2008 6:21AM

I have never purchased coins on credit. Many years ago I did buy coins on time where I paid a dealer X amount a month for something until it was paid off. I''ve not done that for years although dealers have offered me that option on numerious occasions.

7over8 · October 8, 2008 11:14AM

I dont know guys, for all of you not buying on credit, just who can afford to be in the FLIPPIN business with USM Moderns?

You guessed it, the guys charging up those pieces of plastic, they are smokin'...................

Hmmmm......who's telling fibs?

AUandAG · October 8, 2008 11:24AM

If I did that, I'd lose 5% of my wealth every year.....lousy choice.

Pay cash, sleep well.

bob

coltgus · October 8, 2008 1:41PM

O.K. Suppose someone bought 1 million worth of coins putting up 100k and borrowing 900k at 5%. What happens if the coins decline in value by 10% or more ? The buyer at that moment has 0 and the lender is getting nervous. Suppose the coins decline 20%. The buyer might stop paying. In other words coins are not good collateral for a loan and a lender wouldn't do it. This is why on stocks you have to put up 50% and as we have seen recently even that is dangerous. In the 1920s margin on stocks was just 10% which caused the wheels to come off when the market started declining.

BlindedByEgo · October 8, 2008 2:00PM

<< I would buy as many coins as humanly possible, and then wait for the governmental bailout of the coin industry. >>

I was thinking along the same lines, but what I would do is to package the coins up as an investment pool, sell shares in the pool to another entity I owned for the anticipated value in 20 years. From this I would pay myself a hefty commission on the unrealized gains, and then take the pool public. I would find a counterparty to buy my shares in exchange for a special bond issue from them, and then use a small part of my hefty commission to pay the premium on a CDO. If I repeated this a hundred times over or so, I could pool the bond issues into a larger investment pool, which I could use as collateral to acquire a large cash loan and buy Spain. Spain or Milwaukee. I haven't decided.

oxy8890 · October 8, 2008 2:48PM

What if everyone could finance 90% of their coin purchases at 5% per annum?

Then the numismatic industry would need to be bailed out as well

Of course mordern crap would be valued at three or four times it's current worth but that's another story!

What if everyone could finance 90% of their coin purchases at 5% per annum?

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