AuthorTopic: What Does it Mean When Demand for Physical Bullion Coins Goes Exponential ?  (Read 7236 times)

Offline Surly1

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Re: What Does it Mean When Demand for Physical Bullion Coins Goes Exponential ?
« Reply #30 on: December 09, 2015, 04:44:17 PM »

I have never had car payments because I buy used cars with cash.  A mortgage is as necessary evil but paying extra to bring the principle down so you can pay it off early is the way to go.  Ms Dog and I did that and now it is gone.

Best. Advice. Ever.
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Offline JoeP

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Re: What Does it Mean When Demand for Physical Bullion Coins Goes Exponential ?
« Reply #31 on: December 09, 2015, 05:08:13 PM »

I have never had car payments because I buy used cars with cash.  A mortgage is as necessary evil but paying extra to bring the principle down so you can pay it off early is the way to go.  Ms Dog and I did that and now it is gone.

Best. Advice. Ever.

I have to agree with K-Dog and Surly on this - I have used credit to buy cars, but not in the past twelve years...and these were new cars. 

I'd prefer to buy used but I think my wife must believe used cars have cooties or something.

I'll take this battle defeat with my chin up - I pretty much control the larger investments.  Reminds me of that saying about losing the battle and winning the war.
 
 


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Offline MKing

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Re: What Does it Mean When Demand for Physical Bullion Coins Goes Exponential ?
« Reply #32 on: December 09, 2015, 05:12:57 PM »

So, today my favorite coin dealer is selling individual Silver Eagles for $18.00. The spot price this morning was $14.21 per Troy oz.

My question to you: When coin price premium is 26.67% marked up over spot....in that particular circumstance....is silver acting more like a commodity, or more like money?

It is acting like your favorite coin dealer has decided to make about a 26% markup on his likely cost. You don't think that anyone sells their product at LESS than cost do you?

Quote from: Eddie

I understand industry mostly buys silver as silver shot, which can be had in amounts over 100 oz. for only about 4% over spot, just to compare.

So the market on one type of silver is different than another. Sort of like mark ups on cars, Lexus versus Toyota? One makes up on quantity what it loses in margin. Sounds pretty normal business like to me as it gets.
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Offline jdwheeler42

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Re: What Does it Mean When Demand for Physical Bullion Coins Goes Exponential ?
« Reply #33 on: December 09, 2015, 05:49:33 PM »
I was hoping you'd say that. :)

We know silver is different than gold because it IS a commodity. But we also know silver behaves like money...in certain circumstances, right? Can we agree there?

So, today my favorite coin dealer is selling individual Silver Eagles for $18.00. The spot price this morning was $14.21 per Troy oz.

My question to you: When coin price premium is 26.67% marked up over spot....in that particular circumstance....is silver acting more like a commodity, or more like money?

I'd say money. And if that's true, it's still telling us the same thing gold is telling us.

That's why I didn't go to great lengths to talk about what you just mentioned, although it is a perfectly valid point.

I understand industry mostly buys silver as silver shot, which can be had in amounts over 100 oz. for only about 4% over spot, just to compare.
Thanks... for making it easy.  You have the disparity right there: silver shot, at 4% over spot, is acting more as a commodity, whereas silver coins, at 26.67% over spot, are acting more as money.  And I'd say that is true in large part because in general people don't melt down coins.  Too much effort is put into making them to destroy them casually.  That does not mean it does not happen under certain circumstances, though.

I guess my real point is that gold spot and coin prices and silver spot and coin prices are kind of like air temperature, relative humidity, air pressure, and wind speed: they all are actually giving different pieces of information, but you put them together to tell whether a (currency) storm is coming.  The important thing is that you need to look at all the factors together and not just rely on one or two.  (And I know you get that, Eddie, but a lurker catching this thread in passing might not.)
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Offline Eddie

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Re: What Does it Mean When Demand for Physical Bullion Coins Goes Exponential ?
« Reply #34 on: December 09, 2015, 06:10:34 PM »

I have never had car payments because I buy used cars with cash.  A mortgage is as necessary evil but paying extra to bring the principle down so you can pay it off early is the way to go.  Ms Dog and I did that and now it is gone.

Best. Advice. Ever.

I read the Richest Man in Babylon and the Wealthy Barber and all those books, and I was long ago indoctrinated by various money experts to get out of debt.

But is it really such good advice? Today, in our ZIRP world?

The truth is, not necessarily. And I think I can make a cogent argument that traditional wisdom about debt is wrong. At least as a strategy for accumulating wealth, which is the way it's always been pitched.

All those books tell you to (a) pay yourself first, (b) put money in the bank at interest, and (c) avoid the drain of paying monthly interest on borrowed money.

Putting money at interest, or even in relatively safe bonds (if there are any) pays pretty much zilch.

 My car payment on a new car? 48 months, no interest. $10,000 cash back in rebates for a plug-in hybrid. I drive a lot. I have bought many used cars, and every one of them cost me in repairs. New cars today run for 200K with no repairs, many of them. I don't see the advantage of buying used cars for cash anymore. Not on those terms.

Now, if your debt is credit card debt at credit card rates, the old advice still makes good sense. Cut 'em up.

And it was very true that debt was really burdensome when I was a young dentist paying back commercial loans at prime plus two percent variable rate (which was over 12% at the time.). Today, I could get the same loan for 4.9% fixed.

The truth is I once got out of debt. I've burned two mortgages in my time, and hope to burn some more. But listen.

I have five mortgages at the moment. Two of them I've refinanced from 30 years to 15 years....and now that I've done it and dealt with the tax consequences of doing that, I'm not at all sure it was smart. I'm actually considering going back to 30, because those two properties are  personal homes that gave me a huge mortgage interest Schedule A deduction, and now it's a fraction of what it was before. Yes, it is true I'll save money in the long run, but in the short run, I'm taking it in the shorts. Because of my tax situation. I'm being penalized by the government for being frugal.

A third mortgage is on a rental. A  rental property with a thirty year mortgage is a better investment than one that is owned outright, because the interest is an expense item, and it allows me to lock in a house at a reasonable price for relatively little money up front, and then collect rents that pay the mortgage and flow cash too, while the house appreciates in value. Could I get upside down if prices fall? Sure, but even that doesn't mean I'll necessarily lose money. Not unless I'm forced to sell. The reason people are usually forced to sell is because they're over-leveraged.

The way our tax system works, a fully paid for rental property is an inferior investment, comparatively speaking. Believe me, I own some outright. And trust me, I've done the math. Once again, it's the tax consequences that make the mortgaged property superior.

A fourth mortgage is on the real estate that houses my second business. That not only does everything tax-wise the mortgaged rental does, but it gives me another entire Schedule C to write off expenses that I otherwise couldn't. Like my dump trailer. Like the new tractor I'm thinking about buying.

The fifth and last mortgage is on the stead, the country place. It is, at the moment, mostly a liability. It doesn't make money, it doesn't feed me, and it's doubtful I have much equity above and beyond what I've paid on the principal. So of all the debt, this is the only one that really feels onerous. But I am paying extra payments on that one. The mortgaged rentals are what pay the extra payments. When it's paid for then if TSHTF, I can walk away from all the rest and be just fine. So that's my priority.

Now I know that in a  fast collapse scenario I have problems. But not insurmountable ones. My storage business clients are going nowhere. Some of them were clients when the guy I bought the place from bought it himself, and he kept it for many years, until he died, in fact. I was given his books, which he kept in in a loose leaf binder. On the cover was the name of the business, and underneath it said, in parenthesis "The Smith Family Jewel". Now it's my family jewel.

I no longer really need the house I raised my kids in, and prices could fall an awful long way and I'd be fine, because my house is worth well over twice what I paid for it new in 1991. Could I get underwater? It's on a 15 year note, and i'm paying mostly principal. My equity is gaining thousands every month the world doesn't collapse. I doubt it'll be a problem.

I'm not writing this because I want to impress anyone. I could give a shit. But you have to examine common wisdom and decide if it's true for you. I'm just trying to show anyone who would like to end up with a couple of nickels to rub together how it can be done. Is it risk free? Of course not. But the risks aren't excessive.

Of course, if your meme is "Money Is the Root of All Evil" then what I'm doing must be evil? Right? My tenants don't think so.I'm not screwing anybody. They get a good deal from me, and they aren't complaining. There is such a thing as fair trade. You don't have to be Mitt Romney, and buy good companies,lay off all the employees and sell the assets to make money. Not every business man is a predator.







« Last Edit: December 09, 2015, 06:16:01 PM by Eddie »
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Offline Eddie

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Re: What Does it Mean When Demand for Physical Bullion Coins Goes Exponential ?
« Reply #35 on: December 09, 2015, 06:27:14 PM »

So, today my favorite coin dealer is selling individual Silver Eagles for $18.00. The spot price this morning was $14.21 per Troy oz.

My question to you: When coin price premium is 26.67% marked up over spot....in that particular circumstance....is silver acting more like a commodity, or more like money?

It is acting like your favorite coin dealer has decided to make about a 26% markup on his likely cost. You don't think that anyone sells their product at LESS than cost do you?

Quote from: Eddie

I understand industry mostly buys silver as silver shot, which can be had in amounts over 100 oz. for only about 4% over spot, just to compare.

So the market on one type of silver is different than another. Sort of like mark ups on cars, Lexus versus Toyota? One makes up on quantity what it loses in margin. Sounds pretty normal business like to me as it gets.

Read JD's last post.  Mark-up is normal for coins. But 25 plus percent is really outrageous. My point is that the increasing spread between spot and coins price means something. Something not good for fiat money.

The reason people pay so much for the coins is because they're more fungible than silver shot. That means silver bullion coins are behaving more like money every month of every year now since about 2008.



You see that gold coin sales are flat. However, the spread in price is similar to that of silver. And the wait for delivery is the longest it's been since I've fiddled with this stuff, which is over ten years now. I think there are a couple of other reasons people are flocking to silver, of course. The G/S ratio is near historical highs, and gold is too expensive for small buyers to afford now, much different than ten years ago. But still, i think my point is made.
« Last Edit: December 09, 2015, 06:38:04 PM by Eddie »
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Offline Petty Tyrant

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Re: What Does it Mean When Demand for Physical Bullion Coins Goes Exponential ?
« Reply #36 on: December 09, 2015, 08:27:29 PM »
I agree that advice of eg suzie ormond books is not relevant today bec they never foresaw the really low interest rates we have now. The flipside is that the assets u pay off at those low rates could crash in value. I also was a landlord that didnt charge rent above the costs to service the mortgages and rates,  but it is my firm belief now that the property market is not worth playing unless it  is a boom period as it was from 01 to 08. The "im in it for the long haul" meme no longer applies when we know the tenants are a good chance to lose their jobs and a permanent  market crash is in the cards.

Make yoyr stead your primary place of residence so it cant be repo-ed,    be prepared to let the cars go if need be. I bought a new 4x4 luxury pickup when i moved to where i live a/ because i liked it and b/ because i still had city mentality that u need to look presentable. Waste of money really, that could have been used for digging dams and buying buses kitted out for living in Etc. At the end of the day people need to decide for  themselves what debts they want to live with paying and the stresses and headaches that go with it. For collapse aware people its also a matter of taking your chances on thinking when certain events might happen and when to make certain moves eithet in advance or response. Strategic default can be one of those too.

Mostly for the boomer generation, they need to make decisions about where to park the money and equity they have. We can see cash could be banned and inflation or hyperinflation could wipe it out as well as bail ins. Pension plans we know will be raided by the govt as the laws are in place in preparation. Gold we hope will not be seized,  if u can have it undocumented as its probably the best way to keep some value after buying necessities for the future.
« Last Edit: December 09, 2015, 08:33:12 PM by Uncle Bob »
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Offline jdwheeler42

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The True Value of Gold for Preppers
« Reply #37 on: December 09, 2015, 10:50:36 PM »
One thing I think is missing from this whole discussion on the value of gold:

$3000 worth of beans will take up a large part of a room
$3000 worth of bullets will take up a lot of shelf space
$3000 worth of silver will fill up a box
$3000 worth of gold will fit in your wallet and barely be noticeable

By all means, do the beans and the bullets first.  But when you start running out of room, precious metals are a great way to store large amounts of value in small spaces.  This also makes them very portable should the need to bug out arise.  I would rather walk 50 miles and trade an ounce of gold for 50 pounds of beans than walk 50 miles carrying 50 pounds of beans.
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Offline Surly1

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Re: What Does it Mean When Demand for Physical Bullion Coins Goes Exponential ?
« Reply #38 on: December 10, 2015, 03:04:33 AM »

I have never had car payments because I buy used cars with cash.  A mortgage is as necessary evil but paying extra to bring the principle down so you can pay it off early is the way to go.  Ms Dog and I did that and now it is gone.

Best. Advice. Ever.

I have to agree with K-Dog and Surly on this - I have used credit to buy cars, but not in the past twelve years...and these were new cars. 

I'd prefer to buy used but I think my wife must believe used cars have cooties or something.

I'll take this battle defeat with my chin up - I pretty much control the larger investments.  Reminds me of that saying about losing the battle and winning the war.
 

Eddie brings up a good exception, which is that certain vehicles can be purchased new for zero per cent interest. When you find yourself obliged to replace a car, and are in a position to buy it at the right price, that logic becomes irresistible.
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Offline RE

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Re: What Does it Mean When Demand for Physical Bullion Coins Goes Exponential ?
« Reply #39 on: December 10, 2015, 05:02:24 AM »

I have never had car payments because I buy used cars with cash.  A mortgage is as necessary evil but paying extra to bring the principle down so you can pay it off early is the way to go.  Ms Dog and I did that and now it is gone.

Best. Advice. Ever.

I have to agree with K-Dog and Surly on this - I have used credit to buy cars, but not in the past twelve years...and these were new cars. 

I'd prefer to buy used but I think my wife must believe used cars have cooties or something.

I'll take this battle defeat with my chin up - I pretty much control the larger investments.  Reminds me of that saying about losing the battle and winning the war.
 

Eddie brings up a good exception, which is that certain vehicles can be purchased new for zero per cent interest. When you find yourself obliged to replace a car, and are in a position to buy it at the right price, that logic becomes irresistible.

Except that new cars depreciate the minute you drive them off the lot, so you are immediately underwater on the loan.  If you then drive to work in your new car and the boss hands you a pink slip, you can't sell it back to the dealer for the amount of your loan.

Besides that, why pay $30K for a new car when you can get a perfectly good used one for $5K?  :icon_scratch:

RE
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Offline Eddie

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Re: What Does it Mean When Demand for Physical Bullion Coins Goes Exponential ?
« Reply #40 on: December 10, 2015, 09:17:03 AM »
I agree that advice of eg suzie ormond books is not relevant today bec they never foresaw the really low interest rates we have now. The flipside is that the assets u pay off at those low rates could crash in value. I also was a landlord that didnt charge rent above the costs to service the mortgages and rates,  but it is my firm belief now that the property market is not worth playing unless it  is a boom period as it was from 01 to 08. The "im in it for the long haul" meme no longer applies when we know the tenants are a good chance to lose their jobs and a permanent  market crash is in the cards.

Make yoyr stead your primary place of residence so it cant be repo-ed,    be prepared to let the cars go if need be. I bought a new 4x4 luxury pickup when i moved to where i live a/ because i liked it and b/ because i still had city mentality that u need to look presentable. Waste of money really, that could have been used for digging dams and buying buses kitted out for living in Etc. At the end of the day people need to decide for  themselves what debts they want to live with paying and the stresses and headaches that go with it. For collapse aware people its also a matter of taking your chances on thinking when certain events might happen and when to make certain moves eithet in advance or response. Strategic default can be one of those too.

Mostly for the boomer generation, they need to make decisions about where to park the money and equity they have. We can see cash could be banned and inflation or hyperinflation could wipe it out as well as bail ins. Pension plans we know will be raided by the govt as the laws are in place in preparation. Gold we hope will not be seized,  if u can have it undocumented as its probably the best way to keep some value after buying necessities for the future.

Excellent advice in my view.
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Offline MKing

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Re: What Does it Mean When Demand for Physical Bullion Coins Goes Exponential ?
« Reply #41 on: December 10, 2015, 12:11:03 PM »

I have never had car payments because I buy used cars with cash.  A mortgage is as necessary evil but paying extra to bring the principle down so you can pay it off early is the way to go.  Ms Dog and I did that and now it is gone.

Best. Advice. Ever.

I have to agree with K-Dog and Surly on this - I have used credit to buy cars, but not in the past twelve years...and these were new cars. 

I'd prefer to buy used but I think my wife must believe used cars have cooties or something.

I'll take this battle defeat with my chin up - I pretty much control the larger investments.  Reminds me of that saying about losing the battle and winning the war.
 

I have bought new and used. I used tools of all sorts and sizes, guns, knives and credit included.

22 new cars, 17 used. Nothing wrong with a car payment, or lack of one. I understand the normal type of irrational doomer fears that abhor credit, but don't know how they play into using tools to their full advantage.

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Offline MKing

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Re: What Does it Mean When Demand for Physical Bullion Coins Goes Exponential ?
« Reply #42 on: December 10, 2015, 12:17:28 PM »

So, today my favorite coin dealer is selling individual Silver Eagles for $18.00. The spot price this morning was $14.21 per Troy oz.

My question to you: When coin price premium is 26.67% marked up over spot....in that particular circumstance....is silver acting more like a commodity, or more like money?

It is acting like your favorite coin dealer has decided to make about a 26% markup on his likely cost. You don't think that anyone sells their product at LESS than cost do you?

Quote from: Eddie

I understand industry mostly buys silver as silver shot, which can be had in amounts over 100 oz. for only about 4% over spot, just to compare.

So the market on one type of silver is different than another. Sort of like mark ups on cars, Lexus versus Toyota? One makes up on quantity what it loses in margin. Sounds pretty normal business like to me as it gets.

Read JD's last post.  Mark-up is normal for coins. But 25 plus percent is really outrageous.

So is the premium Lexus charges the consumer rather than buying the same underpinnings that are on a Toyota. Some people are so stupid they feel they are getting a better deal by paying more, based on zero knowledge or understanding. It exists because there is a market for, PT Barnum having been really, really right, and the market knows it.

Quote from: Eddie
My point is that the increasing spread between spot and coins price means something. Something not good for fiat money.

And the spread between a Lexus and the equivalent Toyota means something. Mainly, that there is a market for the same thing, with different price points because of marketing or advertising, or whatever. And it doesn't mean that there is something not about for automobiles.

Quote from: Eddie
You see that gold coin sales are flat. However, the spread in price is similar to that of silver. And the wait for delivery is the longest it's been since I've fiddled with this stuff, which is over ten years now. I think there are a couple of other reasons people are flocking to silver, of course. The G/S ratio is near historical highs, and gold is too expensive for small buyers to afford now, much different than ten years ago. But still, i think my point is made.

I think I don't know enough about the nuance you are discussing to even understand the concern. Which is why I often look at empiricals..such as what does something "not good for fiat" mean? Well, it DOESN'T mean there are runs on US banks, or that any depositor has no received their money back when a bank went insolvent, certainly it means NOTHING for the price of gold because it has been crashing for years now, and it doesn't appear to have brought the market down, and it doesn't appear to have erected your payments from insurance companies for fixing teeth, or the american peoples ability to guzzle oil. So with the things that matter, there is nothing of significance happening.

Well, except for the die in around UTA. But that sounds just like good social theater, can't wait until Kunstler finds out about it and tries to make it into yet another nit-female screed.
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Offline MKing

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Re: The True Value of Gold for Preppers
« Reply #43 on: December 10, 2015, 03:40:39 PM »
By all means, do the beans and the bullets first.  But when you start running out of room, precious metals are a great way to store large amounts of value in small spaces. 

Have any suggestion for keeping them from depreciating in value compared to just putting money into a 401K or any other pre-tax account which has a higher chance of gaining in value? Until a collapse shows up that anyone notices anyway?

Let's be serious here, in all the screaming in the blogosphere about this collapse or that deflation, it won't stop tens of millions of people from coughing up cash to go to the movies and watch Star Wars next week. If collapse falls over in the forest with no one around, does it make a noise?
Sometimes one creates a dynamic impression by saying something, and sometimes one creates as significant an impression by remaining silent.
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