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

[Jacob Petersheim]

I had a Summer job once that paid $1.35, assembling scaffolds and painting State buildings. It seemed like good pay for a high school job.

 

[Jacob Petersheim]

I follow a local area metal detector hobbyist group, though I've never owned such a device myself. Something strikes me as odd though.

I see reports of the occasional silver coin but these are almost always relatively modern quarters or dimes. More often a copper penny, though some of these can be pretty old. Lots of other junk though, mostly mundane but sometimes interesting as historical artifacts.

Metal detector YouTube channels show much the same thing, though those in the Eastern U.S. often find really old and interesting items such as shoe buckles.

But the odd thing: Where are the silver and gold coins? I don't think I've heard of anyone finding a gold coin, not even one when digging an ancient homestead's bones turns up a small cache of coinage.


So while we're often told that gold and silver was the "coin of the realm" for a long time... most people probably seldom owned any of it bigger than a silver dollar here and there. They probably traded by barter in goods and some pennies most of the time. They even used "half penny" coins.

That, or if these guys do dig them up now and then... they stay very close-mouthed about it.

 

[Jacob Petersheim]

Something I hadn't thought about before is the difference between various silver dimes.

The older Mercury dimes tend to sell for a bit more than the newer Roosevelt silver dimes. Perhaps because people hope to pick through a roll or bag of Mercury dimes and find very nice individual specimens with collector value?

But by now they've all been pretty picked over, surely.

I suppose in barter/SHTF the Mercury is easily recognized as silver, though the clad non-silver Roosevelt is pretty trivial to spot by looking at its edge.

But the worst part I see with Mercury dimes is that by now these are so worn that a lot of their silver has been lost. Just stacking them up, 100 Roosevelt silvers piles to 6 more dimes of height than 100 Mercury dimes do. By weight this seems pretty much confirmed: Mercury dimes (on average) have 6% less silver left in them.

 

[Mary Stetler]

I have stopped worrying about it so much. Que sera sera,as Doris Day used to sing. My daughter gets excited over coins, though. She works in a big box store and sometimes gets interesting change to exchange. Will have to tell her about the dime difference.
As far as metal detecting goes, I found a lot of pop tops and fasteners, few coins but once found an old non electric Iron that you would heat on a stove.

 

[Jacob Petersheim]

India, like many other parts of the world, has always held gold as a store of wealth. If nothing else, as jewelry. Now they are making moves to invest "pension funds" (their Social Security, basically) into gold ETFs (exchange-traded funds).

I presume this is related to global market and currency concerns, perhaps seeking to diversify away from stocks and bonds.

While this is "paper gold" with everything that implies, money pouring into gold ETFs could be expected to push up gold mining and refining stocks, gold futures price, and the daily on-the-spot price of gold itself.

Those of us on the outside of the gold game might be seeing bad news. U.S. Dollar value is rather close to inversely proportional to the price of gold. With other currencies either closely or indirectly tied to U.S. Dollars (as global reserve currency) there are implications all over the globe.

India is #2 in "remittances" drained from the U.S. economy, which is a large enough flow to be on the tax radar there:

In the 2023 Budget, Finance Minister Nirmala Sitharaman declared a rise in the Tax Collection at Source (TCS) on foreign remittances, increasing it from 5% to 20% of the transaction amount.

I wouldn't be surprised to find that a share of that shores up their State Pension fund. They also have a proportionately larger base of workers compared to retirees than the U.S. and most western nations do today.

So unlike us, they probably have a big bag of money in there to try to shield from inflation.

 

[Mary Stetler]

India, like many other parts of the world, has always held gold as a store of wealth. If nothing else, as jewelry. Now they are making moves to invest "pension funds" (their Social Security, basically) into gold ETFs (exchange-traded funds).

I presume this is related to global market and currency concerns, perhaps seeking to diversify away from stocks and bonds.

While this is "paper gold" with everything that implies, money pouring into gold ETFs could be expected to push up gold mining and refining stocks, gold futures price, and the daily on-the-spot price of gold itself.

Those of us on the outside of the gold game might be seeing bad news. U.S. Dollar value is rather close to inversely proportional to the price of gold. With other currencies either closely or indirectly tied to U.S. Dollars (as global reserve currency) there are implications all over the globe.

India is #2 in "remittances" drained from the U.S. economy, which is a large enough flow to be on the tax radar there:


I wouldn't be surprised to find that a share of that shores up their State Pension fund. They also have a proportionately larger base of works compared to retirees than the U.S. and most western nations.

So unlike us, they probably have a big bag of money in there to try to shield from inflation.

Remittances to Mexico have declined substantially.

 

[Jacob Petersheim]

It seems that a lot of people are hard up for cash now and have been selling off a lot at the high prices both silver and gold are at lately.

I guess a lot of very pretty coins are going to end up melted down. They just don't sell well right now (people are almost boycotting foreign coins of late) and the fancier mint finishes that command higher markups seldom sell any higher than generic "for circulation" strikes do.

So the pretty coins are really for collectors or for "stackers" planning to hold them for a long time, when they will command better selling prices due to rarity. And "long time" appears to mean at least 5 years and more likely 10 or more years. For an old fart like me that would probably mean leaving them for my kids or something.

 

[Jacob Petersheim]

I've avoided posting video links here, but some of the coin dealer interviews are educational. Especially some of the smaller guys.

 

[Jacob Petersheim]

I was wondering where I would hide them if I owned 10 ounces of gold coins.

It seems like a thief after them specifically would pretty much know where people hide such things. They pull out and dump every drawer, look up under the emptied cabinets for something taped up in there, and maybe even take a crowbar to the drywall and tear walls and baseboards off. Of course any kind of safe would surely be hauled off first thing.

People talk a lot about burying things in the back yard. Maybe that isn't so nuts?

I thought about how I'd package the stuff. Gold is basically non-corrodible, but I think I'd put the coins into one of the plastic "tubes" they normally ship in. Then get a smaller thick-walled Mason jar with a stainless-steel silicone-gasketed cap. Put the coins inside, filling the jar up with unpopped popcorn, long recognized as a desiccant (who hasn't put a few into salt shakers?).

Then I'd get some of that waxed or urethaned "oilcloth" to wrap the jar, then stitch that up with braided/woven fishing line. Then maybe put that into a ziplock bag inside a second ziplock bag.


Even if the jar got busted over time I think the coins should stay safe.

Is that overkill? What ideas do you have? Maybe just some sort of stainless steel tin sealed up with Butyl rubber caulk? Thick plastic "ammo box" in two layers of ziplock bags?

 

[Don Alaska]

I was wondering where I would hide them if I owned 10 ounces of gold coins.

It seems like a thief after them specifically would pretty much know where people hide such things. They pull out and dump every drawer, look up under the emptied cabinets for something taped up in there, and maybe even take a crowbar to the drywall and tear walls and baseboards off. Of course any kind of safe would surely be hauled off first thing.

People talk a lot about burying things in the back yard. Maybe that isn't so nuts?

I thought about how I'd package the stuff. Gold is basically non-corrodible, but I think I'd put the coins into one of the plastic "tubes" they normally ship in. Then get a smaller thick-walled Mason jar with a stainless-steel silicone-gasketed cap. Put the coins inside, filling the jar up with unpopped popcorn, long recognized as a desiccant (who hasn't put a few into salt shakers?).

Then I'd get some of that waxed or urethaned "oilcloth" to wrap the jar, then stitch that up with braided/woven fishing line. Then maybe put that into a ziplock bag inside a second ziplock bag.


Even if the jar got busted over time I think the coins should stay safe.

Is that overkill? What ideas do you have? Maybe just some sort of stainless steel tin sealed up with Butyl rubber caulk? Thick plastic "ammo box" in two layers of ziplock bags?

It all depends on how far you want to go. The "crazy preppers" here go so far as to install false septic tanks in which to store their goodies. Burying in the ground near your home is not the best choice. Preppers I know believe "seekers" will be using metal detectors if the economy collapses. Using a vacuum sealer for small valuables with a moisture absorbers (for metals) is a good choice for small items. They also tend to hide their stuff in trees, either on their property or in the wilderness with landmarks so they can find the stuff again. Their thinks is that seekers won't be waving the metal detectors in the air. The downside is that a ladder of some kind will be needed to retrieve their stuff. A good safe that can be hidden and bolted or lagged onto the structure of a building might be a fairly easy and reasonable choice.

Again, I think it depends on how paranoid you are and to what extremes you can afford to go.

 

[Jacob Petersheim]

I guess I got too focused on weatherproofing once I considered the notion of burying the treasure. That's not really required for gold anyway. I suppose one might bury decoys (pennies, old bolts and nails) to discourage metal detectors.

But it seems to come down to 2 real factors: (1.) hiding it and (2.) making it hard to grab and run with. Obfuscation is normally considered a weak security strategy, so that does leave us something like a safe too heavy or too immobile to carry off.

 

[Jacob Petersheim]

It seems like a lot of the non-institutional market and banking observers are talking about the shift in reserve asset classes. U.S. Treasuries (Dollars in effect) have been losing favor with central banks for some time while gold acquisitions have been ramping for several years.

The runup in the stock market might represent flight from cash, which had been seen as a haven from volatility until interest rate cuts began to undermine that. U.S. rate cuts are feared as the nail in the coffin for cash, while the banks are getting worried because of their obligations (for example longer-term CDs at the recently higher rates of interest that must be paid).

"Trump's" Tariffs may not be a factor here one way or the other at all!

The U.S. Military used to maintain a silver stockpile roughly equivalent to 2 years' worth of mining. That was long ago sold off (early 1980s) and never replenished. It came to around 2 million ounces.

Silver is actually a commodity, since it has numerous practical (and military) uses. The theory was that any needed silver could simply be purchased in Dollars from almost anyone. Those days seem to be over.

These two old guys hash a lot of this out:

Other discussions I have listened to suggest the average person is really going to feel the pinch. These changes could be a bigger threat to trade than tariffs. Add in the hyperinflation expected in many currencies and the picture looks gloomy for Tom, Dick, and Harry.

 

[Jacob Petersheim]

I heard that U.S. statistics suggest that less than 0.5% of households own any physical gold aside from jewelry, and that even gold jewelry isn't common any more aside from a few rings, light chains, and earrings.

So I suppose the bulk of us are in good company.

 

[Don Alaska]

I think the tariff have little effect on inflation or, especially, on the flight from the dollar. The flight from the dollar is mostly due to the dramatic rise in government debt during the last administration, and the "Big Beautiful Bill" only added to that. Central banks and governments, long the holder of much of the American debt, are now seeing the possibility of a default. That makes the Chinese, Japanese, and Germans leery of increasing their holding in such, and most, especially the Chinese, are liquidating their holding of U.S. debt in favor of gold, silver, and other assets. Crypto is just another fiat currency whose value is determined by the demand and the faith that that demand will continue.

 

[Jacob Petersheim]

Anybody ever heard this one?

The Wizard of Oz is widely interpreted as a political allegory, particularly of the Populist movement and the debate over the gold standard in the late 19th century United States. The story's characters, settings, and plot points are seen as symbolic representations of figures and events from that era.
​

Here's a breakdown of the key allegorical elements:
​

Dorothy:​

Represents the "average American" or the naive citizen, caught up in the political and economic turmoil of the time.
​

Dorothy's Silver Slippers:.​

In the book, these were silver, not ruby as in the movie, and are interpreted as representing the Populist call for the free coinage of silver, an inflationary monetary policy that would benefit farmers and those in debt.
​

Yellow Brick Road:.​

Represents the gold standard, the prevailing monetary policy of the time, which many Populists believed was restricting the money supply and contributing to economic hardship.
​

Emerald City:.​

Symbolizes Washington, D.C., the seat of political power, and potentially the illusion of prosperity under the gold standard.
​

The Wizard:.​

Represents the US president, possibly William McKinley, who was seen as an ineffectual leader by some during this period.
​

The Scarecrow:.​

Represents the naive farmer, lacking the "brain" (education and understanding) to navigate the complexities of the economic system.
​

The Tin Woodman:.​

Represents the industrial worker, dehumanized by the industrial revolution and in need of "oil" (liquidity/money).
​

The Cowardly Lion:.​

Represents William Jennings Bryan, a prominent Populist leader who famously delivered the "Cross of Gold" speech advocating for free silver.
​

The Wicked Witch of the East:.​

Represents the Eastern financial interests, particularly those who benefited from the gold standard.
​

The Wicked Witch of the West:.​

Represents the forces of nature, particularly droughts and other natural disasters, that impacted farmers and contributed to their economic woes.
​

Toto:.​

Represents the Prohibitionist party, or possibly a loyal supporter of the Populist cause.
​

The story's conclusion, where Dorothy realizes she had the power to return home (to the East, representing a return to the status quo) all along, further reinforces the idea that the Populists believed that they had the solutions to the country's problems within their own grasp.
​

While Baum, the author, denied that the book was a political allegory, many scholars and historians believe that the story's underlying themes and symbolism clearly reflect the political and economic debates of the late 19th century.​

It's interesting that in this interpretation silver is cast as fiat currency. Stackers and proponents don't appear to see it that way today at all.

I recall that as a kid I couldn't comprehend how "primitive" societies had been using "cockle shells" (probably a metaphor as often as literal) as "money."

It is become more obvious to me every day now that all forms of money are entirely artificial "markers" used to lubricate the process of trade. Gold is probably only special in that it is:

• Rare
• Hard to find and extract
• So resistant to corrosion and chemical combination that reusing it without waste is trivial
• "Pretty" and distinctive
• Alloyable for durability but refinable to recover purity
• Easy to confirm authenticity (the old "bite the coin" softness trope for example, the Archimedes weight/volume ratio)
• Has few other practical uses (jewelry, some electronics)
• Widely recognizable by all cultures now and in the past.

 

[Don Alaska]

Anybody ever heard this one?

The Wizard of Oz is widely interpreted as a political allegory, particularly of the Populist movement and the debate over the gold standard in the late 19th century United States. The story's characters, settings, and plot points are seen as symbolic representations of figures and events from that era.​

​

Here's a breakdown of the key allegorical elements:​

​

Dorothy:​

Represents the "average American" or the naive citizen, caught up in the political and economic turmoil of the time.​

​

Dorothy's Silver Slippers:.​

In the book, these were silver, not ruby as in the movie, and are interpreted as representing the Populist call for the free coinage of silver, an inflationary monetary policy that would benefit farmers and those in debt.​

​

Yellow Brick Road:.​

Represents the gold standard, the prevailing monetary policy of the time, which many Populists believed was restricting the money supply and contributing to economic hardship.​

​

Emerald City:.​

Symbolizes Washington, D.C., the seat of political power, and potentially the illusion of prosperity under the gold standard.​

​

The Wizard:.​

Represents the US president, possibly William McKinley, who was seen as an ineffectual leader by some during this period.​

​

The Scarecrow:.​

Represents the naive farmer, lacking the "brain" (education and understanding) to navigate the complexities of the economic system.​

​

The Tin Woodman:.​

Represents the industrial worker, dehumanized by the industrial revolution and in need of "oil" (liquidity/money).​

​

The Cowardly Lion:.​

Represents William Jennings Bryan, a prominent Populist leader who famously delivered the "Cross of Gold" speech advocating for free silver.​

​

The Wicked Witch of the East:.​

Represents the Eastern financial interests, particularly those who benefited from the gold standard.​

​

The Wicked Witch of the West:.​

Represents the forces of nature, particularly droughts and other natural disasters, that impacted farmers and contributed to their economic woes.​

​

Toto:.​

Represents the Prohibitionist party, or possibly a loyal supporter of the Populist cause.​

​

The story's conclusion, where Dorothy realizes she had the power to return home (to the East, representing a return to the status quo) all along, further reinforces the idea that the Populists believed that they had the solutions to the country's problems within their own grasp.​

​

While Baum, the author, denied that the book was a political allegory, many scholars and historians believe that the story's underlying themes and symbolism clearly reflect the political and economic debates of the late 19th century.​

It's interesting that in this interpretation silver is cast as fiat currency. Stackers and proponents don't appear to see it that way today at all.

I recall that as a kid I couldn't comprehend how "primitive" societies had been using "cockle shells" (probably a metaphor as often as literal) as "money."

It is become more obvious to me every day now that all forms of money are entirely artificial "markers" used to lubricate the process of trade. Gold is probably only special in that it is:

• Rare
• Hard to find and extract
• So resistant to corrosion and chemical combination that reusing it without waste is trivial
• "Pretty" and distinctive
• Alloyable for durability but refinable to recover purity
• Easy to confirm authenticity (the old "bite the coin" softness trope for example, the Archimedes weight/volume ratio)
• Has few other practical uses (jewelry, some electronics)
• Widely recognizable by all cultures now and in the past.

I guess all metals including gold are, in a way, a fiat currency, since there value is determined by demand. There is a "value" placed on gold by international standards--I think it is $ USD at the moment, but that is far below what people are willing to pay for it. Some fear Trump will try to "revalue" gold to $10,000 to make our debt disappear, but I have no idea if that would be possible. FDR revalued gold, but FDR did many things the Democrats would decry as "tyranny" now.

 

[Jacob Petersheim]

FDR revalued gold

So did Nixon. Twice.

 

[Mary Stetler]

I guess I got too focused on weatherproofing once I considered the notion of burying the treasure. That's not really required for gold anyway. I suppose one might bury decoys (pennies, old bolts and nails) to discourage metal detectors.

But it seems to come down to 2 real factors: (1.) hiding it and (2.) making it hard to grab and run with. Obfuscation is normally considered a weak security strategy, so that does leave us something like a safe too heavy or too immobile to carry off.

I bought a beautiful leather money belt (zipper on the inside) but it is just too small for one ounce gold coins. Fifty centers silver would fit and gold sovereigns.

 

[Jacob Petersheim]

I hadn't ever known about this I guess.

When things went nuts at the end of the Roaring '20s the US saw the threat of hyperinflation. Those with cash outside the failing stocks and bonds market tried to preserve it by buying gold.

That was the reason why FDR made it illegal to own most gold:

FDR banned private gold ownership with Executive Order 6102 on April 5, 1933, requiring citizens to surrender their gold, coins, bullion, and certificates to the Federal Reserve. This order made it illegal to hoard gold within the U.S. and was later codified by the Gold Reserve Act of 1934, which transferred all gold ownership to the U.S. Treasury and was not lifted until the 1970s.

With gold rising in Dollars now (i.e. Dollars shrinking) and the extreme rise in The Debt as well as personal debt...

Is this a cycle that could repeat?

 

[Jacob Petersheim]

People are scary.

I watched some videos from "backwoods" small dealers in preserved produce, seeds, whatnots, and gold and silver. One I saw today said that some customers have told them "I don't need gold or silver. I invest in lead and copper so I can take what I need."

Ouch.