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

Jacob Petersheim said:
As far as I can tell bullion metals are treated as "collectibles" and taxed on sale as Capital Gains or Losses. Those held less than a year are Short Term and taxed as normal income, a year or more are Long Term and taxed at capital income rates.

At purchase you are supposed to keep a record of the date and "cost basis" (basically the purchase price plus storage costs, insurance, appraisal fees, etc.). If received as a gift you're supposed to record the date and the valuation at the time of receipt as well as various fees as for purchased bullion (holding costs).
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I'm no tax pro, so none of that's advice and might even be wrong. I'm puzzled by things like how you spread out the cost of a safe over a pile of coins.

Say I buy a safe for $5000 and store 200 ounces of gold. Then I add 10 more ounces. Then I sell 5 later on. How much of that $5000 applied to that 5 ounce sale for tax purposes?
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Interesting. This is one more time I could not get here by clicking on the link in my email. I got to 'what was I watching...'
Here, there was talk in the state house of allowing metals to be used as currency not investment. Long ago each state had its own.
 
We don't hear as much about platinum.

Its price per troy ounce is currently far higher than silver's, but only roughly half that of gold.

Platinum is harder and more durable than gold, though it scratches more easily because it's a soft metal. Platinum's density and high purity make it resistant to wear and breaking, while its softness allows prongs to absorb force and securely set diamonds. Gold's hardness depends on its karat, with higher karat gold becoming softer and more easily scratched, similar to platinum.​
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Platinum is denser and tougher than gold, making it more durable and resistant to loss over time.​
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When platinum scratches, the metal is displaced, creating a "patina" finish that gives it an antique or worn appearance. This can be restored with polishing.​

Weird: "Harder but softer."

My guess would be that platinum is normally used in pure form in jewelry, while a lot of gold gets used in harder alloys like 22 Karat, 18, 14, even 10.

"White gold" is typically gold alloyed with silver, palladium, and/or nickel.

You can buy coins and bars of platinum but it doesn't seem to be anywhere near as widely traded or hoarded as gold and silver. It seems to have been known and used outside of Europe in ancient times, but never had much prominence.
 
There are a lot of weird details involved in precious metals that most of us probably haven't dealt with much in daily life. One of those is the weights and measures involved.

Troy ounces are used here, and those are about 9.7% heavier than the everyday Avoirdupois ounce of weight we know better.

Instead of 16 ounces, a Troy pound consists of 12 Troy ounces! The main reason I can find for that is the convenience of the Babylonian base-60 number system inherited from the dim reaches of antiquity. This has numerous advantages over even the Decimal approach used in the Metric system of weight and measures that we think of as "modern." One important reason for this is divisibility - there are so many whole-number factors which can be used.

Other practical vestiges remain in our culture today. 12 inches to a foot, 12 and 24 hours, 60 minutes, 60 seconds, a dozen dozens is a gross (144), we even use 360 degrees to the circle.

Hmm, might we have inherited this from somebody long ago with 12 fingers and toes?
 
Some good Federal tax and reporting information related to the buying and selling of bullion.

The bit about the Bank Secrecy Act is interesting too.


Of course things vary much more at the State level, where every jurisdiction has its own tax policy. One thing dampening the holding of metals might be the State sales taxes on buying it in some places.

Gold and silver (and platinum and palladium) have an odd status. Often treated as collectibles, other times treated as money, still other times only treated as money when minted by the government as money and created with a face value.

The 1 ounce American Gold Eagle is a 12K coin with a face value of 50 Dollars. The 1 ounce American Buffalo is as 24K coin with a face value of 50 Dollars as well. They don't actually weigh the same, because one is pure gold and the other a more durable alloy, but both have 1 Troy ounce of gold in them.

But the Mint also produces commemorative medals in precious metals that are never considered to be coins or currency.
 
Jacob Petersheim said:
There are a lot of weird details involved in precious metals that most of us probably haven't dealt with much in daily life. One of those is the weights and measures involved.

Troy ounces are used here, and those are about 9.7% heavier than the everyday Avoirdupois ounce of weight we know better.

Instead of 16 ounces, a Troy pound consists of 12 Troy ounces! The main reason I can find for that is the convenience of the Babylonian base-60 number system inherited from the dim reaches of antiquity. This has numerous advantages over even the Decimal approach used in the Metric system of weight and measures that we think of as "modern." One important reason for this is divisibility - there are so many whole-number factors which can be used.

Other practical vestiges remain in our culture today. 12 inches to a foot, 12 and 24 hours, 60 minutes, 60 seconds, a dozen dozens is a gross (144), we even use 360 degrees to the circle.

Hmm, might we have inherited this from somebody long ago with 12 fingers and toes?
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I have enough trouble with centigrade and farenheit
 
Dealers are talking about the Big Burn (or Big Melt) of 2025.

Many of them are buying a lot of scrap silver (tea sets, Sterling flatware, etc.) and 90%, 80%, 40% silver coins. They dump this on refiners who melt it all down and then extract 0.999 fine silver from that.

So much is being "burnt" now that refiners are falling behind. Some offer dealers 30 day terms on payment to slow the rate it comes in.

Very sad that a result of this is a loss of history. A Franklin half dollar or a "Mercury" (Winged-Cap Liberty) dime will become an even rarer sight. Not to mention the loss of the tea sets and flatware.
 
Mining stocks seem to have become popular among "stackers" of late. How much of this is purely Wall Street's marketing though I can't be sure. Trump's Executive Orders and pronouncements might be factors as well.

"US GoldMining" has a "Whistler Project" outside of Anchorage, mining copper and gold. There seems to be a major push for a road in order to make the mining operations more accessible.

Hard to say what is real and how much is hype. But at my age erratic and risky stocks aren't a place to park my resources.
 
Coin shop story:

A few days ago an old lady was cleaning stuff out that belonged to her husband before he passed. Among this there were some bags of old 50-cent coins.

She asked a neighbor to help her taken them to the bank after she put them into paper rolls. The neighbor took one look and said "Stop!" These were Walking Liberty Halves, and 90% silver. She had 550 of them and the bank would have given her face value.

The neighbor helped her find a coin shop, and "Coin Shop Chris" (YouTube) says they were able to give her 30 times face value for these coins.

She was overjoyed, and the coin shop was happy to have the inventory (silver is getting tight now at $45/ounce).

Crazy Coin Shop Chris is a funny YouTuber. Not the sharpest knife in the drawer, but he has some experience now as a coin shop employee. And he comes off as very honest, concerned about people, dedicated, and enthusiastic. Sometimes he gets excited and stutters a bit. Seems like a real human being.
 
If you don't look at these things you may not know that the old 60/40 retirement investment allocation advice has changed.

For the past 18 months the noise level is increasing, suggesting 60% stocks, only 20% bonds, and 20% precious metals now instead.

That's because bonds, especially Treasuries, have become more risky. 60/20/20 is also for pre-retirement investing. In retirement you need to rebalance away from stocks for stability, since you won't have decades to recover from crashes. That leads to a retirement rebalance that looks more like 50/10/40!

I can't see how this is practical. Even if you have the 60/40 today these are mainly in illiquid forms such as 401(k) and IRA plans (in the US). Sure, there are some Gold IRAs out there but are those really anything like holding metals physically? Gold ETFs are referred to as paper gold and usually you have no claim to the physical backing metal at all.

Converting by taking cash distributions from your plans means paying big taxes. Worse yet, once you sell he metals for cash down the road for expenses - you pay gains taxes yet again. If an individual takes losses on selling metals, there is a very small cap on the losses you can even claim.

Having a big gold hoard makes you quite a target for criminals, vault or not. There seem to be vault services you can rent, but the rents and fees might eat you up.
 
The 1 ounce gold coin used to be the... gold standard for investing in physical metal. These had the lowest premiums (mark up) and were the easiest to resell later.

As prices and the "real value" (i.e. currency devaluation) increase though those 1 ounce coins are becoming impractical for peons.

People who do this seem to acquire metals bit by bit over time. This avoids the need to "save up first" in depreciating fiat money as metals prices keep on rising.

Because of this, fractional gold (1/2 ounce, 1/4 ounce, 1/10 ounce, even 1/20 ounce coins) are growing in demand. And just recently we're now seeing fractional silver become less of a unicorn.
 
Jacob Petersheim said:
The 1 ounce gold coin used to be the... gold standard for investing in physical metal. These had the lowest premiums (mark up) and were the easiest to resell later.

As prices and the "real value" (i.e. currency devaluation) increase though those 1 ounce coins are becoming impractical for peons.

People who do this seem to acquire metals bit by bit over time. This avoids the need to "save up first" in depreciating fiat money as metals prices keep on rising.

Because of this, fractional gold (1/2 ounce, 1/4 ounce, 1/10 ounce, even 1/20 ounce coins) are growing in demand. And just recently we're now seeing fractional silver become less of a unicorn.
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I decided one day about 10 years ago to buy precious metals after getting a small inheritance from hubbys mom.
I called 'forgot' who I called but I ask them to sell me $5000 worth of dimes, they were rude, said I'm not going back there and counting out $5000 worth of dimes.
You'd think somebody in the business would have a counting machine, huh?
 
Marie Mallory said:
I decided one day about 10 years ago to buy precious metals after getting a small inheritance from hubbys mom.
I called 'forgot' who I called but I ask them to sell me $5000 worth of dimes, they were rude, said I'm not going back there and counting out $5000 worth of dimes.
You'd think somebody in the business would have a counting machine, huh?
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It is pretty routine now to find dealers in local coin shops and even online dealers selling pre-1965 silver dimes in rolls and in bags of $100 and $1000 face value. Not only dimes, but also silver quarters and half dollars. Silver dollar coins are rarer now though.

At current prices one silver dime has about $3.35 in silver unless it is worn quite slick.

Today buying/selling for 90% silver is still by face-count, but with prices rising this is shifting to measured by weight.
 
Jacob Petersheim said:
It is pretty routine now to find dealers in local coin shops and even online dealers selling pre-1965 silver dimes in rolls and in bags of $100 and $1000 face value. Not only dimes, but also silver quarters and half dollars. Silver dollar coins are rarer now though.

At current prices one silver dime has about $3.35 in silver unless it is worn quite slick.

Today buying/selling for 90% silver is still be face-count, but with prices rising this is shifting to measured by weight.
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Guess its a good thing they didn't want to count them then, huh?
 
Those "Coinstar" machines and the like that tote up coins you dump in are set up to reject silver US coins. The clad coins we have now are a different weight.

Not that I'd trust them to pick out the silver for me at today's price. A silver quarter is up there now, well over $8 each.
 
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