Economics & Investing For Preppers

Here are the latest items and commentary on current economics news, market trends, stocks, investing opportunities, and the precious metals markets. We also cover hedges, derivatives, and obscura. And it bears mention that most of these items are from the “tangibles heavy” contrarian perspective of JWR. (SurvivalBlog’s Founder and Senior Editor.) Today’s focus is on private mints.

 

Precious Metals (Private Mints):

One aspect of the thin precious metals market is often overlooked: The small number of private mints in the U.S. and Canada. There are only a handful of mints, and the volume of coins and bars that they can produce is limited. The huge coin presses that they use are specialized pieces of equipment. And not many manufacturers have experience pressing medallions. So if there is ever a spike in demand, other makers can’t jump into the market overnight. If and when we do witness a big spike in silver, it is safe to assume that the private mints will not be able to keep up with market demand. At that stage, the premium for coins of any type will go up. But presently, with silver just now emerging from the doldrums, you can still get silver coins at a very low markup over the spot price of silver.

Mints that have a low debt burden seem to do best, as they are usually able to ride out the highs and lows of the market. Silver Towne Mint and Sunshine Minting are two good examples of low-debt mints that have been in business for decades.

Another thing to keep in mind is that the profit margin for private mints is small, yet their capital equipment costs are high. So small mints going bankrupt is a fairly common occurrence, especially in bear market phases. (See for example, the sad demise Mulligan Mint and Northwest Territorial Mint, in 2013 and 2016, respectively.) Inevitably, it seems that their specialized minting equipment and assorted tooling gets sold through bankruptcy liquidation sales or auctions. Then another firm opens up or expands an existing mint using part or all of that same equipment. To clarify: The 1-ounce .999 silver round is essentially generic. Most mints use .999 fine silver planchets (blanks) produced by larger companies. The only thing unique seems to be the dies for the coins. But their quality varies. Highly-polished dies can produce proof quality coins.

There are not many mints that actually have the equipment to melt raw .999 silver, roll it to an exacting thickness, and then punch out their own planchets for minting bullion coins. Just a few mints have that flexibility. The majority of private “mints” are not really mints per se. Rather, they are low-temperature pressing operations that lack high temperature planchet production capability. Hence they are at the mercy of the market. In times of high demand, a chronic shortage of silver planchets develops. So the mints that don’t produce their own planchets find themselves unable to produce many coins when demand is at a peak.

Keep all of the foregoing in mind. I generally recommend buying coins from coin dealers rather than from mints. But even coin dealers can go out of business. (Like the Tulving debacle in 2014, for example.) So do your due diligence before you buy. Buy only from well-established dealers or mints with good reputations.

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The 30-day chart for spot silver is looking promising.   But remember: Silver is more of a long term hedge.

Stocks:

Stocks dip on tech worries, oil slides after Trump tweet

 

Global Economy & Finance:

Next at The Financial Tribune (of Iran): US Recession Risks Rising

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Commodities:

Reuters reports: Trump says he will not accept high oil prices; crude dips

Forex:

Moving on to this at Zero Hedge: Turkey Will Repatriate All Gold From The US In Attempt To Ditch The Dollar

 

Tangibles Investing:

Radical Personal Finance Podcast: How to Invest in Guns for Maximum Profit and Diversification: Interview with James Wesley, Rawles from SurvivalBlog.com. Note:  This interview is dated, since it was done when Hitlery Clinton was expected to become President.  But the key investing points haven’t changed.

Provisos:

SurvivalBlog and its Editors are not paid investment counselors or advisers. So please see our Provisos page for our detailed disclaimers.

News Tips:

Please send your economics and investing news tips to JWR. (Either via e-mail of via our Contact form.) These are often especially relevant, because they come from folks who particularly watch individual markets. And due to their diligence and focus, we benefit from fresh “on target” investing news. We often “get the scoop” on economic and investing news that is probably ignored (or reported late) by mainstream American news outlets. Thanks!




8 Comments

  1. IMNSHO: We’re moving towards a rapidly accelerating stock market, particularly tech stocks. This will inevitably depress the price of precious metals, at least for a while. It may be the last chance to buy them at reasonable prices for a long time. I believe we have 1-2 years to take advantage of this. It’s tempting to try to cash out of stocks near the peak and buy metals, but you won’t know when the peak is here, and by then people may have caught on and the demand for metals may be skyrocketing. Start allocating a bit more to metals now!

    The next financial crisis might bring with it TEOTWAWKI — or it might not. Remember that you need people to sell your metals to to raise cash for your short term survival. It will take a few years for organized barter markets to develop.

    Buying entirely from a local dealer may get you some preference when it comes time to sell. Make sure they know you buy only from them, and be nice when you buy. Good relationships will be an asset during the crunch!

  2. I buy my 1 oz .999 silver rounds from a local coin shop that’s been in business for awhile. I allocate approximately $100 (+/-) cash on a monthly basis after paying bills. I watch the spot price, and attempt to time my purchase for the low prices (or at least not on the high prices). Slow but surely, I stack my silver. And wait.
    Even if I never need to use my silver for TEOTWAWKI, it’s something I can pass to my children.

  3. The silver buffs don’t talk much about digital cameras. Used to be people bought film , which uses silver in manufacturing. Almost everything is now digital , which depresses the demand for silver.

    Look at the prices for silver over the past 40 years . Compare it to real estate and stocks. It’s pretty grim .

    It may arise that a horrible situation arises and currency is destroyed . If that’s the case , I’m not betting anyone is going to accept silver. Why should they? I’d rather have some food or bullets to barter.

    I’ve watched enthusiasm for silver trap a lot of people into loosing a lot of money based on claims from people that silver could “double in____ years.” The people that make these claims are in the silver business.

  4. The contacts on just about every switch and relay imaginable is plated with silver. Transistor leads, instrument fuses, coaxial connectors, every key or pushbutton on every keyboard or electronic device EVERYWHERE. Every solar panel uses about 1 ounce per 100 watts. The overwhelming majority of silver used in photographic processes was recycled. That recycled supply is no longer available. lt’s not cost effective to recycle the small amounts in consumer devices, so it all goes into landfills unreclaimed. How much effort (and cost) would it take to recover all of the discarded TV remotes, calculators, old phones, etc.?

    According to Ted Butler, almost all of the gold ever mined sits in vaults around the world. Almost all of the silver ever mined has been used in industry and destroyed. Every Tomahawk cruise missile contains 34 POUNDS of silver (mostly in the batteries). He claims there is now more gold above ground than silver.

    Frank C – can you define a dollar? It’s a unit of WEIGHT of SILVER!

    A dollar can no more be money than a quart can be milk.

    Doubt me? Research the coinage act of 1792. It has never been repealed or superseded.

  5. I’d like some more conversation about that tidbit from the Venezuela article talking about how people are stuck in an alternate mental universe where they can’t admit to themselves that their “money” ie “paper” is worthless and therefore refuse to accept or deal in precious metals. I see this as a great danger in the US also due to long term sheeple mentality and continual long term dollar devaluation that is not truly felt due to huge FedGov deficits that put chicken nuggets in every microwave…

    1. I think they call it cognitive dissonance , basically being in denial despite the facts. Its a very strange time we live in here in the US. People have been so pummeled with propaganda over time and conditioned by the left. I think we’re going to get a serious wake up call here someday. All you can do is take care of your own , it seems the vast majority is lost. We can only do so much, the rest is in God’s hands. I trust this President, he needs our support. So much is at stake…

      1. @Greg, Just a point of clarification. What you are thinking of is called “double-think”

        “Double-think” is when a person holds two opposing/conflicting views and doesn’t have a problem with that. Head-in-the-sand so to speak.

        “Cognitive dissonance” is when the person feels discomfort over holding those two opposing views.

        If a person is experiencing cognitive dissonance, they are on the way to recognizing the problem and can often be persuaded. Those who are still in the double-think stage don’t see a problem and you are basically talking to a wall.

        1. Thanks for the clarification, but it still doesn’t address the root issue…if you are in an area surrounded by ‘double-thinkers’ that don’t understand the extent of the problem, things are going to get ugly real fast with gangs/police/military running things like in Venezuela. It won’t matter whether you have junk silver, silver eagles, silver ingots or gold buffaloes. Another selling point for moving to the Redoubt or some other place with like-minded people.

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