Metals, a Hedge or Investment Depending on Your Views... or a Sucker's Bet?

[Jacob Petersheim]

Most people can't afford to "stack gold", but silver is much more affordable. Precious and non-precious metals are simply a hedge against inflation. The Federal Reserve has a target of 2% or 2.5% inflation every year. That essentially means they are stealing 2% of your wealth every year, mostly to supplement the wealth of those already in the top 1% of the elite.

Yes, the "theft" comes in the form of Dollar devaluation.

If you worked and set aside a little over the years, stuffing it under the mattress or in high-yield savings or CDs, little by little as those years progressed the value of those savings were undermined. The better the interest you could get paid the slower your savings eroded in value, but typically high interest is only available when inflation gets high too.

That can chase your money into the Wall Street Casino in the attempt to do better. Surely that is just as planned as a social engineering tool like the Fed? Look at all of the fees up and down the line there, and it funds corporations that pay executives lavishly, fund their travel, and on and on.

Precious metals are too speculative (along with the profit-taking from you when both buying and selling) to really be called an investment. They pay no steady rate of interest so one's only hope is to hold them for the long term.

 

[Jacob Petersheim]

People really get burned buying metals in "fancy form." There are "collector sets" and "commemorative coins" and fancy coin treatments or coin designs that command high premiums at purchase.

Years later one tries to sell them and... they only bring something around spot price for the metal in them just like any standard coin. Since they are now also harder to sell, small coin dealers aren't as enthusiastic about buying them. A plain old U.S. Mint Gold Eagle is easier to sell, especially in an intact graded and certified capsule.

 

[Jacob Petersheim]

It looks like it could be a fun thing to do... but if we were that rich and fearless we'd probably be so financially secure that the idea of fiddling around with precious metals at retail quantities in person probably wouldn't even occur to us.

I wonder how many "stackers" are working stiffs buying just a little over a long time? And would they have been smarter to put it into banks or U.S. Savings Bonds?

Even if I had a stash of gold and silver, it isn't like I'd pull it out and make little castles of the piles or something. In the videos I see stackers wearing cotton or rubber gloves, fearful of skin oils, fingerprints, scratches, etc. Yet the coin shop dealers don't do much of that at the counter. Not even a squirt of hand sanitizer and a wipe on paper towels.

I'd probably stuff it into some kind of locked box with some desiccant packets, probably wrapped in unbleached cotton cloth. Then try to stash it somewhere "too clever" for a burglar. Of course they probably know every hidey-hole you might attempt to use.

I live vicariously a lot these days.

 

[Don Alaska]

You wouldn't need desiccant packets for gold, as it doesn't tarnish or corrode under normal conditions. I new a single guy in the early 1990s who put 10% of his paycheck into gold when it was a couple hundred dollars an ounce. If he has been doing that all this time, he could be a multimillionaire. How could you say that was not an investment? Some say the overall rise in the stock market is the same as buying gold long-term. It simply reflects the value of fiat currency declining.

 

[Jacob Petersheim]

True, the desiccant would be for silver and maybe some copper, though the latter is nearly pointless due to its low value-density.

Everything I've read suggests that gold is not an investment, but rather a "store of wealth" outside the banking system, as a hedge against money-printing.

It used to take a very long time for gold to increase in value beyond Dollar-shrinkage. Maybe that hasn't been true since the 2008 period?

 

[Don Alaska]

I think it is still a hedge against the shrinkage of the dollar, as are index funds. If you want real investment, you have to be able to choose individual stocks whose companies will grow over time more than the indexes.

 

[Jacob Petersheim]

There seems to be a lot of consternation about desires and plans among governments to find ways to take advantage of private holdings.

Everything from outright confiscation of savings to conversion of savings into virtual currency systems, often where the balances within savings accounts have "expiration dates" when the value reverts to the government coffers.

Then there is this idea of taxing "unrealized capital gains." This seems to mean annually taxing your stock portfolio, real estate holdings, etc. based on their value if you sold them outright on a given date. It could also cover things like tax-deferred accounts like US 401(k) and IRA account balances.


To being it back on topic, I suppose precious metals might be a way to remove wealth from the system and evade this. While large gold purchases, especially in cash, already require IRS filings a lot of gold sales have no record except for your bank (checking account) records. I don't think that's tallied up on any gold ownership ledger, but it serves as a paper trail for investigating money laundering and such during investigations.

So as such, at least some degree of anonymity remains. However once such savings clawback schemes go into place I imagine the harvesting and tallying of data will get far more complete on transactions moving forward.

BREAKING: NEW Plan To FREEZE Your Savings is SPREADING To The Rest of The WORLD!

It really seems to be all about the snowballing debt problems globally. Not just government debt, but also the defaulting on uncollectible consumer debt.

 

[Jacob Petersheim]

This goes into why gold has recently moved from hedge to investment. Mainly, it has begun to outpace the stock market.

The Real Reason Investors Are Buying Up Gold Right Now

 

[Don Alaska]

I think gold will always go upward over the very long term. It may have ups and downs, just as stocks and real-estate does, but the overall trend will always be upward due to currency inflation. One thing that may spike gold upward is the BRICS alliance. If they should develop a viable commodities-based currency that includes gold and perhaps silver, the prices of those commodities will rise rapidly, albeit perhaps temporarily. Crypto currencies can do the same, but they are essentially fiat currencies that have no underwriting authority and can rise or collapse solely based on demand.

While gold is constant, silver is consumed. Much of the solar technology you use is based on silver. Other technology also uses silver. Gold is sometimes used for sensitive contacts, silver is used throughout a mechanism and thus is used up at a much higher rate, so the chances of silver rising rapidly is much greater.

 

[Jacob Petersheim]

I have plenty of cables and cable adapters (solar-related stuff uses a wide range of connector types) with gold-plated contacts.

Electrical relay-contacts (the equipment uses a lot of relays internally, some you can hear click and clack to make "firm" contact after semiconductors detect applied voltages) often use coin-silver alloy contact pads.

Electrical relays use silver because it is an excellent conductor of electricity and is highly resistant to corrosion, making it ideal for making and breaking electrical circuits. Silver also has good thermal conductivity, which helps dissipate heat generated during operation, and it is relatively inexpensive compared to other high-conductivity metals like gold.

Silver is relatively soft, which allows the contact surfaces to deform slightly and create a larger contact area when pressed together, further reducing resistance and improving reliability.

 

[Jacob Petersheim]

Once you budding McDucks begin stacking, it probably doesn't hurt to be aware that silver can be delicate and should not be stored with gold.

Tarnishing and Corrosion:​

Silver tarnishes easily, and when stored with gold, it can transfer this tarnish to the gold, causing discoloration.​

​

Galvanic Corrosion:​

When two different metals are in contact, they can create a galvanic cell that accelerates corrosion, potentially damaging both metals.​

​

Alloys and Purity:​

Different types of gold (like 10k, 14k, 18k, etc.. up to but not including pure 24k) have different alloy compositions, and these alloys can react differently with silver, leading to potential issues.​

​

Physical Damage:​

Even without chemical reactions, storing items together can lead to scratching or denting, especially if they are different shapes or sizes.​

These are issues for bullion, numismatic coins, or jewelry items.

 

[Jacob Petersheim]

Silver has a lot of industrial uses, and many of them render the silver used into forms that don't make recycling economical at prevailing pricing levels.

One of these is photovoltaic panels used to create electricity from sunlight. Current technologies also use more silver in the more efficient configurations. I have 3 arrays of panels with 16 silver busbars per cell. Right now more common PV panels use from 5 to 9 to 12 BB/cell.

Unlike gold, you can't really apply heat and melt off the silver to get something easily refined. Heat encourages silver's combination with oxygen, nitrogen, sulfur, etc. which have to be subsequently removed through additional processing.

Because of this some people suggest there is a shortage of silver, and the need to recycle might drive the price/ounce upward.

 

[Don Alaska]

Silver has a lot of industrial uses, and many of them render the silver used into forms that don't make recycling economical at prevailing pricing levels.

One of these is photovoltaic panels used to create electricity from sunlight. Current technologies also use more silver in the more efficient configurations. I have 3 arrays of panels with 16 silver busbars per cell. Right now more common PV panels use from 5 to 9 to 12 BB/cell.

Unlike gold, you can't really apply heat and melt off the silver to get something easily refined. Heat encourages silver's combination with oxygen, nitrogen, sulfur, etc. which have to be subsequently removed through additional processing.

Because of this some people suggest there is a shortage of silver, and the need to recycle might drive the price/ounce upward.

Exactly what I said earlier. Silver is used and goes away, while gold is more or less constant and can be recovered. More silver is being used than is being mined, so the price is going up and probably will continue to do so.

 

[Jacob Petersheim]

I visited a coin shop briefly the other day.

Some of that stuff is very pretty, for example the U.S. Gold Eagle coin in "Ultra Cameo" finish. The backdrop area is mirror polished and almost red at some angles, while the foreground images and text are a shiny satin finish.

I took a couple of photos, but the lighting was imperfect, along with my photography skills. If I can clean one up I might post it, but I'm sure you can look them up at bullion dealer web sites anyway. Such uncirculated proof coins are "slabbed" as well, to prevent fingerprints, scratches, and provide a grading of appearance on a 1 to 70 scale. The plastic capsule gets in the way a little.

 

[Marie Mallory]

Most people can't afford to "stack gold", but silver is much more affordable. Precious and non-precious metals are simply a hedge against inflation. The Federal Reserve has a target of 2% or 2.5% inflation every year. That essentially means they are stealing 2% of your wealth every year, mostly to supplement the wealth of those already in the top 1% of the elite. The Fed was founded to make a few people very rich , and was designed according to some to only last a century or so before collapsing. It was sold to the American people as a way to prevent depressions, but the establishment was followed a little over a decade later by one of the worst depressions in history...the Fed doesn't work.

Anyway, metals, real estate and a few other hard assets are simply ways to prevent the Fed from stealing your money, nothing more. There can certainly be scams involved, but if you buy from a reputable agent or dealer, there is little to no risk involved and lots of benefits. The only downside is that you have to be able to spend your wealth and it would be difficult to impossible to buy a week's groceries with gold coins or bullion. Many pawn shops and metals dealers will convert your assets back into currency, but it takes time and isn't always convenient. Real estate is even harder to convert back to currency as usually significant sums are involved.

I read long ago that the Federal Reserve isn't federal at all, it was created and controlled by rich men.

 

[Jacob Petersheim]

Not only isn't it "federal" but it isn't a bank and it has no reserves.

What it does apparently have is a claim on U.S. Government gold reserves at their assigned valuation (something like $42/ounce right now). This claim is that in exchange for allocations of the gold they provide the Dollar-enumerated cash. It's a little more complicated than that though, and it has been a long time since these printed IOUs (cash) have been redeemable in gold or even silver.

 

[Jacob Petersheim]

The Gold Eagle has been issued annually since 1986. American Gold Eagle coins debuted 53 years after the last gold coins were struck by the US Mint, the 1933 $20 Gold Double Eagle. The modern American Gold Eagle is a 22-karat specimen with 91.67% gold content, 5.33% copper, and 3% silver. Each has a total of 1 Troy ounce of gold.

These are some of the easiest gold coins to sell. Those in the market know them well, know the specs such as exact dimensions and weight, the mint and privy marks, and even the "ping" chord they sound when struck if genuine. While there are far too many good counterfeits (mainly out of China with core metals such as tungsten) common tests can quickly reveal them.



Some years' minting use different depictions of the eagle, such as the bird in flight. This serves as yet another factor in authentication.

 

[Jacob Petersheim]

Oddly (to me) the U.S. Mint is producing coins in gold and silver depicting Superman, Wonder Woman, and Batman. I've heard that far cheaper clad-coin issues will follow later.

It seems to be related to a program to interest younger people in coin collecting. For all I know right now the clad issues will be in the form of U.S. quarters or perhaps half-dollars.

 

[Jacob Petersheim]

Pocket change can be interesting as well.

Roosevelt dimes still look familiar because even the modern mintings are nearly identical in design to the pre-1965 90% silver coins.

Mercury dimes might require a few more memory cells, but many of us still roaming the Earth can remember using them.

In bulk at "melt value" these have about $2.70 of value each as silver these days. Of course wear means they have less silver and if very worn they'll bring less at melt. Yet at the same time, specimens in very good condition can easily go for twice that (and more, much more) to coin collectors, especially within a consecutive-year set or perhaps "rare" years and mints.

I believe that Canadian dimes before about 1969 were 80% silver. States near the border often had these intermingled in their change, and most stores would take them as 10 U.S. cents with no question. They didn't always work in a vending machine or payphone though!


If you took a sack of these "junk silver" dimes and sorted them out by type, year, etc. your fingers will get blueish black from silver particles... not to mention the other accumulated crud of ages. You aren't really supposed to clean a coin and it can impact the value quite a bit to collectors.

 

[Jacob Petersheim]

Maybe somebody can clarify this for me, but there seems to be a distinction between a "coin" and a "round" of metal. I think this is close:

A coin is almost always struck in minting, a round might be struck or cast.

A coin always is (or once was) legal tender, a round never is. The round is simply coin-like in shape and features.

Both coins and rounds have been minted by private organizations as well as governments. Today coins are almost entirely the province of government mints though.

Private "tokens" are a third thing. Not coins, but not merely rounds of metal. Historically these were used in "company towns" and frontier villages for strictly local trade. Today they are most common for things like gaming or transportation.

A round is just a standardized unit, a hunk of metal. Though "standardized" mainly just in weight and purity, usually without guarantees though some "private mints" who issue them have a high community reputation.


I suppose I shouldn't be too surprised. Every hobby seems to garner its own lexicon and lore and conventions. I found that similar things exist among people who collect old porcelain mini-dolls and doll heads. Or (and this can overlap with the latter) people who collect old crap found along riverbanks and beaches and even in old dumps. Until just a few years ago I don't think I had ever heard of "mudlarking."