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 investing in odd silver coins. (See the Tangibles Investing section, near the end of this column.)
Stocks:
The tumble in the U.S. stock markets (down 10% since January 26, 2018) is partly attributable to the business cycle, and partly attributable to the Fed raising interest rates. (Ironically, the Fed Governors claim that they are “forced to raise rates” because higher inflation is emerging. But they are the ones who created the inflation!) With even higher interest rates forecast for the rest of 2018 and 2019, it is safe to assume that the equities markets will continue to get pounded.
My advice is to minimize your exposure to stocks and mutual funds. Panic now, and beat the rush. For those of you who are enrolled in pension plans: good luck. Odds are that your pension fund managers have heavily invested in stocks. But if you are in a 401(k) plan or an IRA, then it is probably not too late to transition to a self-directed IRA. I suggest that you make that a silver-backed IRA. (IRAs backed by U.S. Mint Silver Eagles are allowable.) Ideally, you should hold that IRA silver at home. With silver now under $16.50 per Troy ounce, it is a sound, affordable alternative to stocks!
Going Cashless:
Commander Zero recently posted some astute observations in his Notes From The Bunker blog: Cashless society. JWR’s Comments: Those of us who share concerns about the advent of a cashless society should plan ahead. It is wise to start forging relationships with those who willing to serve as intermediaries for us, to make food and fuel purchases and to make tax payments for us. It is also crucial to invest heavily in silver coins, so that we’ll have something truly valued available for barter. Silver coins fill all of the requirements for a day-to-day barter money: They are fairly compact, durable, fungible, divisible, easily recognizable, and almost uniformly desirable.
Much the same can be said of gold coins, but they are actually too compact a form of wealth for day-to-day barter money. But their compactness makes them ideal for refugee money and for making major transactions. One such transaction is bribing borders guards and immigration officials. This happened a lot in the 20th Century, and sadly we will see it again in the 21st Century.
Commander Zero makes a good point about the anonymity of no-expiry-date gift cards, if they are purchased with cash. The time may soon come when it will be unwise to purchase certain technical books with a paper trail. (Well, actually an electronic attribution trail.) Having a cash-paid gift card from a major book store chain might prove to be very handy. Ditto for cash-paid gift cards from sporting goods stores like Cabelas.
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‘Being cash-free puts us at risk of attack’: Swedes turn against cashlessness
Economy & Finance:
Kudlow sees ‘pot of gold’ resulting from U.S.-China trade dispute
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At The Jakarta Post: Economy in brief: Consumer confidence up in March
Tangibles Investing (Odd Silver Coins)
I’ve had a few consulting clients ask me about buying obscure collectible silver coins. These odd silver coins do have a small place in your portfolio, but I’d recommend you not buy many of them. You can forget about most of the intended-to-be-collectible coins and bars produced by private mints. Most of these novelty Christmas bars and rounds sell at a premium on the primary market, but then are eventually re-sold right at spot on the secondary market. Don’t be the guy who pays the premium. Only a tiny fraction of those coins have any genuine long-term collector appeal.
A Side Note: Avoid buying the new faddish “colorized” silver coins, unless you can buy them on the secondary market at spot. Typically these have cartoon characters painted on. These sell at absurd premiums on the primary market. I’m not going to pay $75 for a one-ounce silver coin, just because it has a Disney Princess painted on it. Nor will I pay $79 for a one-ounce silver coin if it has a USS Enterprise spaceship decal slapped on it!
If your goal is strictly barter, then just buy generic silver. But if your goal is to gain above and beyond the advance of the spot price of silver, then it might be worth your time to look for the more collectible silver issues. But only buy these coins an bars on the secondary market, where you’ll be able to buy it close to the spot silver price. A few examples are: Australian Koala and Kookaburra coins, Austrian Philharmonic coins, Sunshine Minting silver bars, and some national mint-issued silver rounds.
Four other bits of advice on buying physical silver:
1.) When you buy silver, buy it in Troy ounce increments, not grams. If nothing else it will make your accounting easier, and it will also be more advantageous for barter. (When most people think of silver, they think in terms of Troy ounces, not grams.) The only exception might be the massive 1-kilo silver rounds. Collectors are often willing to pay an inflated price for the kilo coins. I must say: the Silver Kookaburra proof kilo coin is a thing of beauty.
2.) If you buy small bars and have the choice between serialized bars and unserialized ones, then always choose the serialized ones, unless there is a big premium charged. Serialized bars as small as 1-ounce have been produced by firms like Johnson-Mathey. Again, this is an opportunity that you normally only get on the secondary market.
3.) Buying 1-ounce silver coins and have the choice between coins produced by national mints and private mints? Then buy the ones from national mints. (Again, unless there is a big premium charged.)
4. If you are buying silver coins and have the choice between standard mint run coins and proof coins at or near the same price per ounce, then buy proofs. Proof coins are struck with a highly polished die, and hence they look dazzling.
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!
Would like any advice from the readers on purchasing “junk silver” in bags of $100 face value – what are the pros and cons, which coins should I buy 10, 25 or 50 cent pieces, how is the liquidity, and value in the worst case scenario? One of the advertisers on the site is Apmex – presume that others have had good experience and are their other sellers such as you local dealers that should be considered? Want to hold the physical metal, not interested in “pretty” but to have some tangible and physical assets that hold value, have some reasonable liquidity and where the bid and offer isn’t so wide you can drive a truck through it. Have several good secure locations for storage and safe keeping. If not junk silver, then what’s the next best alternative metal(s) that hold value and have some liquidity. Had a business trip to the DC swampland – after what I saw (and heard) in a few hours, convinced me (albeit a little late) that it’s time to look at some alternatives.
I like the junk silver and if you are going to invest in PMs it is a good option for 20%-50% of your PMs. But PMs is a waiting game. Because you pay a premium to buy it and typically must sell it below par it has to increase in value 10% or more simply to break even. So invest only what you can afford to “sit on” for 5, 10, 20 years. Yes indeed, it may take 20 years for gold or silver to incrrease in value substantially. Also, you can take $9000 in cash, walk into a coin shop and buy $9000 worth of gold. They won’t take a check or a credit card they want cash. BUT when you go to sell they will give you a check (not everyone, some con shops will buy for cash). You will then take the check to their bank and they “may” cash it and if they do they will need the bank manager to sign off on it and look over their shoulder while they count it out to you. All this time you stand there on camera getting dirty looks from the teller and bank manager. So if you have substantial PMs that you want to sell you have to search out buyers who will pay cash and they will likely only pay cash for a few thousand at a time. You can sell it for cash more easily at a pawn broker but they will give you about 70%-80% of value on it. Also when you get the cash you can’t just put it in your bank account. If you really want dirty looks show up at your bank with $9000 to deposit. It is possible to sell PMs to a private buyer. You could invite them to your home where they will evaluate what you have and offer you cash for it. What could possibly go wrong with that, right? So while I like PMs be aware there are complications to them.
I’ve had very good results with APMEX. Highly recommended. Discreet shipping.
I’ve never been attracted to junk silver as much as actual silver coins, but that’s just personal preference. I think when the need arises, I would be more apt to take minted silver rounds over 1960’s quarters for trade.
Tangibles are your best investment. Think about what people who are not preparing will be pining for the most; booze, tobacco, etc will command high prices in that situation, as well as the necessary tools for protection and sustenance.
I have a small bag of junque (old) silver minted coins, just for “making change” when & if the need eventually arises. But not a lot.
Otherwise, I buy 1 oz silver rounds (private, not government minted), as my budget will allow, usually approximately $100 monthly. Just ordinary stuff, nothing special.
So far, I have about 10 POUNDS of 1 oz rounds (I wish I had 10x that much). So far, I’m able to keep it all in a small, cheap, sturdy, plastic case, handy for carrying. So far.
I had contemplated buying other sizes (1/2 oz, 2 oz, 5 oz), but was told that I would pay more for them per ounce than the 1 oz size. So, being the cheap ******* that I am, i have been continuing to buy 1 oz rounds.
When I have available money (CASH, never check or plastic), I walk into my local coin shop, buy what I can, make some small talk, and walk out. Totally and completely anonymous.
I hope to buy more today after work, if we get finished with our 100% inventory at a decent time. Otherwise, I’ll have to wait until Monday, and hope that the spot price doesn’t go up.
Premiums on 5-10 oz bars are considerably less than 1oz coins but for larger exchanges. Look at cull Morgan/Peace coins as a form of junk silver.
Hello J.T.
I bought my “junk” silver through APMEX, dimes 60%, quarters 20%. halves10%, and dollars 10%. This is not an investment, otherwise I’d be buying something other than junk silver. I really don’t like the term “junk silver”. No real silver, even 90% silver, is ever really junk. If the $100 face value bags are a little steep, try the $50 bags instead, or even just one roll at a time. I chose the ratio of coins based on how they are likely to be spent when TSHTF and based on the inability to make change afterward.
I’m a little concerned about buying gift cards as a hedge against going cashless. If the grid goes down or an economic collapse occurs they would be rendered worthless. A little more thought needs to go into other ways to preserve wealth before the crunch. Wealth preservation now, rather than later, before it’s too late.
Echo JWR’s comments regarding the coming cashless society and tangibles.
Make a list of things you think you may need in the future – things you would buy with cash only. Start buying them now. The List is a good place to start: https://survivalblog.com/wp-content/uploads/2018/02/listoflists.xls
2nd Amendment items should be at the top of the list. Reloading supplies. Magazines. Even gun cleaning kits and oil.
Bugout items. Gift cards for those things you couldn’t anticipate or store in a bugout situation. Silver coins for the same.
The prepaid industry is closely tied to the illegal immigrant invasion of the last three decades. If President Trump succeeds in cutting off this flow, expect the prepaid industry to dry up and your opportunity to buy prepaid cards with cash shut down.
Pro Tip: purchase gift cards with cash at mom-and-pop stores whose video recording systems reside within the store. Big box stores upload video to the Cloud, where it is stored forever and data-mined for identities. Target’s loss prevention systems make Big Brother look like a piker. Wear a wide brimmed hat. Sunglasses are a nice touch.
As to prepaid gift cards; our church “sells” a number of different units (Walmart, CVS, etc.) and the companies give them a percentage of the sale. No cameras and I always pay cash.
Apmex is a great seller. We like the dimes and quarters more than fifty-cent pieces. For fun sometimes we quickly polish them as it makes them really shine and look more valuable. I actually keep a roll of the dimes handy at all times just in case, as well as a 1/10 oz gold piece in my coin purse. If you ever had to travel with at least some coinage, you can easily make necklace out of the gold pieces in all sizes and they sell the “stuff” to do that too. Wearable jewelry is less likely to be taken and can be worn under a shirt or sweater. Just bought some lovely 1/10 oz Lady Liberty coins in a tube just to have some variety. They are stunning.
The stock market and the economy won’t handle 3% percent short term rates, which is the Fed target to arrive at by 2020. I’m not saying that it should or shouldn’t, I’m not saying that they can or can’t, they won’t, and no amount of academic rigor will change that.
There is some extra risk to no expiry gift cards. They don’t expire…until they do. It’s happened before with bankruptcies (especially), and reorganizations (as well).
RE: Stock market tumbles
Gains in the 3 major US indices from 2005 to 2017:
Dow Jones +137%
S&P 500 +139%
NASDAQ +196%
The Dow alone is up 67% in the last 5 years. Even when accounting for declines in 2008 and 2015, most markets have realized gains in excess of 100%. Meanwhile, Bitcoin is down over 60% in 4 months. Market “tumbles” are re-pricing in a rigged system to allow TPTB that control those “markets” to sell high and buy low. They have done this for decades and will continue to do so. To not take advantage of these dips in the same way, and use those profits to purchase tangibles, is simply giving up. “But what if it collapses tomorrow?” Sure, and an asteroid may strike, or we could get hit by a bus crossing the street. If you quit taking chances because of the .0001% chance of some catastrophe, the odds of missing out until that happens are 100%. Live each day to the fullest without fear.
“Therefore do not worry about tomorrow, for tomorrow will worry about itself. Each day has enough trouble of its own.”-Matthew 6:34
Yesterday marked the 85th anniversary of Executive Order 6102 that banned the possession or trading of gold by private citizens. It was not until 1975, some 42 years later, that Americans could own and trade gold. Unless we believe that all central banks and governments will disappear into the ether during the next collapse/war/Apocalypse (this would mean a complete global meltdown on a scale that is unfathomable by any stretch of the imagination), this KNOWN precedent is likely to be implemented again and in my opinion, would surely include silver.
Governments are getting awfully good about tracking citizens and connecting the dots. I wouldn’t put it past local, state and federal authorities to make trading in PMs illegal or at the very least require registration and require property taxes be paid.
You need a well organized network in place to trade PMs for services or products. I had that in the Redoubt. Living in the Central Southern US not so much. So while I do like PMs as just one alternative of many to ensure my family’s well being in the event of a collapse, I’m also preparing for other currencies including building skill sets.
For PM purchases I like junk silver (although I try to buy the best physical appearance I can find). Never more than 1 oz pieces. For gold it’s 1/10 oz to 1 oz coins. I occasionally buy graded commemorative half dollars from the 1920’s and 1930s because the designs can be quite beautiful.
I recall being told the stock market was going to crash and buy silver. About 1989. The market has grown almost 10 fold since then and my $40 silver is now worth $16…
I’m not blaming digital cameras , which have reduced silver demand , I’m blaming me for listening to people with an axe to grind and silver to sell.
Agreed bitcoin is down. Lots of profit takers are keeping it low would be my guess.
But what stock could you have bought for $30 five years ago and sell for $6800 today? Or even more ($19,000) if you picked the right day – as with selling stock timing is so much of it.
The Dow is down 2500 points just in last few months. So if we compare timelines (as is really the only fair way to do it – months for drop, five years for gain) stocks are down about 5% for 4 months (or 10% from the high 2 1/2 months ago) and up somewhat. BTC is down 60% but up by atmospheric amounts.
I don’t think anyone should have a large part of investment money in BTC (or the market) but it sure has been more fun to watch than the stock market.
If our government decides to go cashless it will be with huge fines if one is caught using silver or gold.
DD is right. I am old enough to know the fraud of sellers of silver and gold stating doom is around the corner for years. Yeah right.
And it surprises me how many people are planning for a collapse when Scripture tells us clearly how the end will come.
In the near future one will not be able to buy or sell without the Mark of the Beast. At that time your gold and silver will be paper weights. Just follow Christ and be saved, than all things just fall into place
I actually buy those atrocious ‘painted’ and ‘stickered’ ASEs from the “culled/damaged” stock at provident metals. They usually are not damaged at all (just uglier than sin), and carry a low premium. I then soak them in pure acetone for a couple hours (careful – it quite dangerous/flammable stuff), and the paint/stickers just ‘sluff’ right off. They appear (to me) to be just as attractive as any other unmolested ASEs I’ve ever seen.
Don’t forget nickels. PM’S are after beans,bullets and band aids are sorted,plan long term(generations?) and act accordingly.
A lot can happen before end time prophecy is fulfilled. 5,000 years of recorded history records thousands of epoch events all over the world where natural disasters occur, strong nations crumble, wars are fought and entire continents divided into new countries. I’m confident it’s at those times when people recognize what is real and what’s worthless. Anything that at a minimum puts food on the table is of extreme value, and PMs can do that. Perhaps even let you buy a new life for your family. I’ll happily take the risk associated with keeping PMs as part my savings and investment plan.
Someone here had mentioned collecting PMs in a self-directed IRA and keeping the metals at home.
Probably not a good idea. This is a gray area and I wouldn’t want to be the test case for the IRS.
There are several safe non bank storage facilities to hold them without having to worry about having your IRA voided and paying tax and probably a penalty.
The legalities are explained here: http://www.irafinancialgroup.com/preciousmetals.php