Go easy Chris, he’s going to hurt enough!
RocketDoc, that's a good overview of the metal situation IMO. Comments:
"If"? Of course the government will not allow PM to compete. Again, PM is a black market wealth holding device.
The current market for physical gold and silver has much too wide a spread to be useful in transactions.Agreed. I believe us peons now only use gold as a backup store of value, which is much like governments use it. It's just prudent to keep 10% of one's investments in PM. And it's not a coincidence the that government with the world reserve currency (US) has double the gold supply of the next contender (Germany).
The gold spread is at least 5% and the silver eagle spread is more like 10% . To be useful this spread needs to be closer to 1%. That will only occur if there is a legitimate market that exchanges fiat for PMs with no tax on "gains" and quality assurance with no default risk.I think it's high time for US citizens to wake up to the reality the gold market is an "underground" market today due to predatory taxes. It's now just how well-off individuals or governments store some of their wealth (say, 10%). It's NOT a practical transaction currency. It's very practical for "tribes' of people to trade it back and forth.
If the government is not interested because it has a pecuniary interest in the alternative system, it is unlikely to occur on a viable scale.
Gold and silver will remain private money with transaction costs.I believe the future will leave PM as the private store of value for the purpose of trading with-OUT transaction costs. Like drugs, this revolution will not be admitted, let alone reported. Gold Eagles & Krugerrands will remain an excellent way to store wealth - they can, using a Fisch, be traded privately among friends with full assurance of being valid. Unlike the USD, which can be devalued by the day. Slowly, painfully, Americans will likely start to learn to work outside the system merely to shield their net worth from the government and court systems. Gold coins kept/traded privately allow for avoiding taxes, medical debts, student loan debt recovery, and child support seizure...the latter which cannot be shed via bankruptcy for life. Honestly, I would be surprised if black-market gold is already being used in larger numbers than we realize. I hope I'm wrong, but these are not safe times, and gold and guns are a common response.
RocketDoc,
You have some good points there. Here in Ohio I stopped purchasing new silver last year because they now tax purchases. You can still sell your PM’s without paying taxes. They had removed the tax on PM’s for a number of years, but then when they started looking at their budgets, guess what got re-added… So yes, new taxes on PM’s could get added at any time, and then they are no longer a good idea. This is very likely.
As for electronic money, I suspect it’s very likely a fed backed crypto currency is in our future. They can tax it, and track it 100%.
As for PM spreads, go get 20$ out of the ATM machine and see what they charge you. The average spread around here is 2.50-3.00$ per transaction.
The real magic for gold and silver happens when the average person on the street stops trusting their dollars will have value tomorrow. People won’t want to hold dollars for any period of time. And I suspect there will be a large number of people that will blame the government, and everyone else. Therefore, I suspect people will be less concerned about many of the rules they are required to follow.
-Travis
I’m glad you mentioned the sales tax issue. I haven’t heard much discussion on this. It’s a major deterrent now for me in Wisconsin to add 5.5% sales tax on any purchases of gold or silver. Some online vendors were slow to get their systems into place on this and there remains an ever shrinking group that still do not charge sales tax, but I hesitate to mention names here. I can respond privately if interested. Even ebay charges on everything now. Adding over $100 to an ounce of gold on top of regular premiums is tough. You’re already technically in the hole on the premium before adding this. I suppose it deters the flippers and arbitrageurs the most, but still stings me whenever I add to cart and see that add-on even though I’m in for the long haul. I have purchased less because of this.
As a recent signup, I hope the commentors (behind the paywall anyway) will take a more constructive tone than “Anyone who buys ____ is a moron”.
I’m here to learn about the pros and cons of various “alternative investments” without a lot of personal judgments being thrown around. As a gold owner, I started out buying physical because “if you don’t hold it you don’t own it”.
That sentiment remains true but what if you had wanted silver during the March meltdown when it was like $12? Everyone here knows you couldn’t possibly aquire phys at anywhere close to that price.
Well, the proprietor of TFMetals Report did an interview with the CEO of OneGold and they were talking about a crypto backed silver product that could be converted later into physical that was delivered. There were small fees involved, but if I had known such a product existed I would have been all over it. I would have used the phys conversion option but the point is the crypto element made it possible to get a paper price for phys!
On another hand, I own some sprott gold/silver trust shares because I already had money in a tax sheltered account and, frankly, Im worried about a special “its not fair” tax of 90% being levelled on physical gold holdings. On a third hand, I converted some of that into GDX shares because Im also afraid that one call to the Canadian Mint and that Sprott gold will be handed over to Canada’s central bank with a single phone call (right before the big revaluation). So thats not even gold but a paper product (ETF) wrapping a paper product (shares) that give leverage on the commodity. Now I can worry about the government nationalizing the mines!
There are other advantages/disadvantages to all sorts of products and technologies. All ways of holding, including crypto (which I own none of).
But people getting all evangelical about one investment or form to the exclusion of all others rather misses the point of the “Resilience” training that Chris and Adam are trying to teach here. My final destination has been to own “a little of everything” so that I have some exposure and I dont get wiped out if one thing or another happens and Im confident they cant all happen.
Getting a mix of investments hedges against the various risks. Physical gold and silver has risk of confiscation and theft, so getting additional exposure through ETFs like PHYS or PSLV as well as mining indices like GDX is good. We can do analysis to try to predict which investments will do best, but having broad exposure also means you’ll likely get good gains on the way up.
This amateur’s two cents…
Speaking about crypto-backed Silver product(s).
I recently spotted on Kitco.com their new offering:
https://online.kitco.com/kitco-vault-chain-silver#sell
From their website: INTRODUCING: VAULTCHAINTM SILVER
VaultChainTM Silver is a Kitco exclusive! You can buy Silver digitally, and your digital silver actually represents physical silver held at the Royal Canadian Mint. Even more exciting, VaultChainTM Silver uses a blockchain distributed ledger, which gives you real time tracking, transparent auditability and data accuracy. If true, it carries some advantages over the promoted Hard Assets Alliance's product (https://hardassetsalliance.com/products-pricing/) because they (HAA) have very high commissions and, for silver, high storage fees.). There are pros and cons for Kitco’s VaultChain offering – but, if you don’t intend to immediately get ownership of the product (silver), it is digitally allocated by the BlockChain technology– and one does not incur the storage fees. For silver, I see significant total expense reduction, as compared to the offering of Hard Asset Alliance. There is still spread between buy/sell, but no storage fees. Does anybody have any experience with this offering from Kitco? -PeterVery interesting video about not giving gold away. Although, I suspect desperate people learn quickly… lol.
Once I had a large supply of post '64 (not much silver) Kennedy half dollars and wanted to get rid of them. So, I used them at the grocery store to pay a large grocery bill (around $150). Anyway, I had a bag of the half dollars and started counting them out. The cashier, who was early 20’s, did not know what they were. She quibbled with me, insisting they were 4 to the dollar. I told here they were half dollars and that was 2 to the dollar. Not only did she not recognize them, but she could not do the simple math to figure 2 to the dollar so that I could pay my bill. The people in line behind me became upset at me for using the half dollars to pay my bill. They felt I was wasting their time. I stated that half dollars are legal currency, for paying all bills in the USA, and stayed until the cashier figured it out.
It’s really unbelievable the lack of financial education our population has these days. So, it doesn’t surprise me that a person had rather have a free Snickers bar than a free tenth ounce gold coin! … and it will take some real changes for people to start bartering with silver coins at their real value. Many can’t even figure out how to use coins at their face value, let alone have the math skills to calculate their metals value.
Worth a watch
https://www.youtube.com/watch?v=TnOcRRJHTmk
https://www.youtube.com/watch?v=zSzaz-OjxdI
https://www.youtube.com/watch?v=mnVqKaK4TLE
Several years ago I purchased $450 in half dollars from the bank to check for silver coins. Found 1 0.900 half dollar in the entire lot. The rolls were stored on my dresser in the bedroom, and as luck would have it, we were robbed during this time. The thieves took a bunch of stuff from the bedroom, but did not touch the rolls of half dollars.
Armstrong has mentioned that different generations value wealth differently. Gold and silver work well for the boomers, but the millennials have little interest in them. My thinking is that the best strategy is to liquidate your PM’s at some point during this bull market (not yet!) cause your children won’t see these valuations again.
Many thanks for nice comments on my above post. To most people money is an economic or technical issue while in fact it is a central political issue. Why people cannot see this is intriguing. My employees care about their pay but I cannot make them see that the ultimate value of it can be altered to their detriment. The owners of society definitely do not want us discussing how they keep score.
As a long time PM investor I can share my experience of losing significant sums of money while making the right long term call. I held Vanguard Precious Metals and Mining Fund from the Fall of 2009 until today and it has gone down from about $22 share to $8 despite the run up recently. Vanguard changed the fund from 80% mining and bullion to 25% in 2018 after a 10 year fall in its price, ensuring holders would not profit when it rebounded. Someone else owns the mining shares I used to and Vanguard is proud of the opportunities it has opened up for me in the Global Economic Cycles space…
Correction: $436/oz. 2004 You inspired me to go into my records.
One of the benefits of processing financial documents before filing them with the SEC, on the third shift is learning how to recognize unprosecuted felons in expensive suits.
Woohoo, the winds are starting toreally blow and buckets of rain outside (Issaias has arrived)
All roads lead back to the fiat money system:
Broken countries. Broken trade. Broken bond markets. Broken manufacturing. Broken businesses. Broken housing markets. Broken Labour markets. Broken people. Mal-investments. Wealth inequality. Big Government. Mass immigration. Overpopulation. Nature fighting back. Big military. Wars. Climate change.
End the FED. End the ECB. End the BOJ. End the PBOC. End the BOE. End the SNB. End the RBA
Bring back The Classical Gold Standard.
this is using a little bit of churchills recipe and a certain propaganda minister during WW2, but instead the truth is being repeated with this mantra
Peter you asked about experience with kitco digital coins. While I do not have experience with Kitco I have been involved with LODE (website - lode.one) for awhile.
A few general facts as I understand - still learning:
LODE is still developing but it is a long way down the road to creating what they hope will be a digital currency so not just a place to store PM. I have a view that once you have enough emergency physical silver/gold and wealth stacked up it makes a lot of sense to look at and learn about digital PMs. To that end I bought some Lode tokens (equity share) and AGX coins silver money . The AGX can be converted to silver in multiple places around the world. Carry silver or gold with you on global travels seems interesting. I signed up for a LODE credit card to be issued soon that will transact in silver. Based on Telegram site for LODE lots of neat features scheduled to roll out this year. LODE looks to be trying to stay regulatory compliant that is a big deal when you pick a digital PM backed system.
For LODE you can buy silver or gold backed coins - I only have some silver AGX to learn and keep up with the changing technologies. The PM is vaulted and audited which the 18.2% premium to buy helps pay for.
hope this helps
rick
I thought digital silver meant you could hold it in your fingers!
I might suggest not using a classic gold standard, which had gold at a fixed ratio. But instead simply allowing the currency to gold ratio (aka price) to float on an open market, like we do now, solves the reason those standards failed.
If you haven’t read it, it’s a good read and not very long.
https://www.amazon.com/New-Case-Gold-James-Rickards/dp/1101980761/ref=asc_df_1101980761/?tag=hyprod-20&linkCode=df0&hvadid=312025907421&hvpos=&hvnetw=g&hvrand=14890321645266034015&hvpone=&hvptwo=&hvqmt=&hvdev=m&hvdvcmdl=&hvlocint=&hvlocphy=9014930&hvtargid=pla-434940680141&psc=1
We are heading to a financial calamity for which we are not prepared. Silver will be the metal of choice “for the people” once this thing gets going. Hint: it has started. For the simple reason - if a ounce of gold is worth 10.000 USD some day - it is going to be easier to control your month end budget by selling a silver coin for your needs.
Silver was the best performing asset in July.
Appl gained 16.51% in July
Silver gained 29.94%
Gold gained 10.97%
The game is to have at least one or two stocks doing better than precious metals. Plus all the arguments against PM: big spreads, robberies…
If you buy PM you are definitely thinking that some day there will be a panic to buy the only asset that the banks do not own - oh ya they control it through COMEX and the LBMA (London) for a time.
Vanguard changed the fund from 80% mining and bullion to 25% in 2018 after a 10 year fall in its price, ensuring holders would not profit when it rebounded. Someone else owns the mining sharesThis is one thing I learned from 2008: always own the company stock itself, never mutual funds or other proxies. And times are actually very good for trading stocks directly - buy/sell over 100 shares, it's free, zero cost to me, using a Vanguard brokerage account. The web and Vanguard have come a long way here. In fact I just bought 3 stocks and then sold 3 stocks last night without much effort and zero cost to me, plus had all the data at my fingertips to make a sure buy. I will never buy a mutual fund again. Funds of all types are in a bubble, IMO...but certain individual raw stocks remain a fair value, even in this bull market. The raw stocks allow one to avoid the bubble.