Sunday, March 27, 2016
GOLD COINS AND MEDALS
First: Why buy "Rare" Gold coins and medals?
Gold coins and medals can be subdivided into many categorizes. The first and most obvious division is bullion gold and "Rare" gold. Bullion gold moves with the price of bullion. "Rare" gold has a correlation to bullion, but one that is far less obvious and less quantifiable. It moves with what Marx called the "Fetish Value" of gold.
The bullion price of gold trades in an open global market. Open, in that anyone with money can participate but not "free" in that no market on earth is truly free. All markets are rigged by their governing bodies who are owned by the largest trading houses and banks, which, by virtue of leverage, necessarily dominate the markets.
Think about Poker. If you have ten chips and you're playing against five guys with a million chips each, eventually they'll get your ten chips, no matter how good a player you might be. Now add in the fact that those five guys have levered the game with a bunch of arcane rules that benefit players with more chips and you get the idea of how markets work.
What this means is that markets always eventually reach a value that reflects underlying conditions but the time frame is unpredictable, because the markets are rigged.
So what does this have to do with Rare Gold Coins?
Well, since "Rare" gold coins trade in correlation to the Fetish Value of gold, it's important to realize that the bullion price may be at a certain level for a certain amount of time, yet the Fetish Value of gold can reflect a completely different dynamic.
People become increasingly interested in gold the more they lose Trust in their Government, their Currency, and their Financial Institutions.
For many the answer is simply bullion. The problem some see with bullion is the possibility that the very Institutions one seeks to protect oneself against, will eventually rig the bullion market in ways that make it impossible for anyone but them to benefit from it. This may or may not happen.
The hedge against this eventuality is Rare coins.
This is a hedge because and while Size is beneficial, supply is completely decentralized, so that it is difficult for large players to take advantage of their leverage.
Information is also largely decentralized, in spite of the internet. And the rare coins market is a tremendously information intensive market. It is easy to find out auction prices over the last fifteen years. But this is like understanding stock market prices over the last fifteen years. It tells you very little about anything but the very short term. And when you move back in time farther than a couple of hundred years, there are no population reports, few mintage records, and most written records are out of print and difficult to locate.
This levels the playing field in the rare coin market. Goldman Sachs does not deal in rare coins. And not simply because the market is too small. They'd be there in a heart beat if they had a real edge, to just take whatever was available. But they don't have an edge.
So if you're willing to put in the time to learn you can have an edge.
This is the Why of Rare coins.
Part IV: how to buy Rare coins
Sunday, March 20, 2016
How to Buy Coins and Medals Part II
Let's say you have an overview that suggests this is a good time to buy hard assets, and you have a particular affinity for numismatics.
Let's say you're interested in an investment and not simply the joy of a hobby.
Where to begin?
First Consideration: Historical Importance.
The first and foremost reason any hard asset has value is that it is considered to be Historically Important by some standard. Most usually because it is associated with a Person or Event. Anything that belonged to associated with Juilus Caesar, or John Lennon, or Geroge Washington, or Alexander the Great or Jesus Christ, to name a few.
Secondly perhaps because it is associated with a intriguing historical period. A Civil War uniform, the Gutenberg Bible, A Corinthian Helmet, A Tyrannosaurus skeleton etc.
Third, it may be important because the craftsmanship is second to none: A Rolls Royce Silver Shadow, A fender stratocaster, A Patek Philippe, A Lalique Cactus Table, A Badminton Cabinet, etc.
Historical Importance confers INTRINSIC VALUE. This is the major asset of the Hard Asset.
Second Consideration: Rarity.
If Julius Caesar wore a different helmet every day of his military life and all seven thousand of them had been preserved in a Roman Museum which existed to this day, and these were all available on the open market, A Julius Caesar War Helmet would still not be nearly as valuable as it would if only one or two existed.
Third Consideration: Condition.
To many this is as important or even more important that rarity. Let's say there were seven thousand Julius Caesar War helmets on the open market. The ones in the best condition would be worth many times that of those in lesser condition.
Let's say only one Alexander the Great War Helmet existed but it was in far worse condition that the worst of the Caesar helmets. Would it be worth more than the finest Caesar War Helmet? Probably, but not necessarily. Condition is certainly very important to many collector/investors.
Fourth Consideration: Beauty
Beauty is fourth only because it is by far the hardest to quantify. Yet Beauty is terribly important because it is also confers INTRINSIC VALUE.
In the case of the Seven Thousand Caesar Helmets, if one, for example, had been inlaid with a finely crafted scene depicting Caesar's marriage to Calpurnia with beautiful renderings of those two standing in front of a intricate temple scene, well you can imagine how much more valuable this might be than the other Caesar Helmets.
And if such a Helmet from the period existed though we didn't know whom was depicted, it still might be worth more than the finest Caesar Helmet. Beauty, though subjective, counts.
Next - How to apply these four conditions to Numismatics
Thursday, March 17, 2016
The easiest thing in the world is to look up old auction prices. They are available at Coin Archives and AC Search. They will tell you everything you need to know about what coins and medals used to sell for at some point in the past. It is information everyone has.
And it is totally useless.
A. because everyone has it, so there's no advantage in it.
B. because it is knowledge about the past. Which, if you have any mathematical background, you should know, tells you nothing - or very little - about the future.
If you were looking, for example to by a house in Bed Stuy Brooklyn and the last time the building you're looking at changed hands was three years ago, and then it sold for $640,000, and now the new owner is asking 1.2 million, you might say, gee that's a terrible price. But if you take into account all the gentrification in that neighborhood, and the recent price inflation in Brooklyn in general, you might say, well that's market price but still, we must be in a bubble. But then if you look at the fact that everyone on earth wants to live in Brooklyn right now and that trend seems to be accelerating, and you consider that the building is pretty nice, nicer than most with original details etc, and much cheaper than the buildings going in the neighborhood just ten blocks away, then you might think, gee, that's a pretty good price. And then you consider the Fed just indicated that tightening is over so the whole mortgage market is likely to be supported and you think, wow maybe that's a bargain
So it is with numismatics. It's where the price will be in a year, two years, five years that counts. It where prices are heading for similarly rare coins, similarly beautiful coins, coins in similar condition , but perhaps from different periods, or from different areas. It's where the price is headed for all high end hard assets in relation to world monetary policy.
You need an overview.
You need to see where all hard assets are heading vis a vis currencies with which they are purchased.
You need to have a view of which currencies are likely to appreciate and which are about to crash and who that affects and what that implies for hard assets of different types.
Like stocks you need to understand sector rotations: You need to understand which areas of your particular interest are simply out of fashion and which are being bid up to speculative heights.
Then within the numismatics sector you have to have some understanding of supply and demand. Which areas are currently oversupplied or under-supplied and how likely are those trends to continue - or not.
In other words if this is more than just a hobby - you need to treat it as such. And the first thing to do is forget about what stuff cost last year - or five years ago - or ten years agao - or even last week.
It is entirely irrelevant to numismatics - just as it is irrelevant to all forms of investment.
You need to start thinking about where prices will be in the future. It's not easy. If it were easy everyone would do it.
Saturday, March 12, 2016
Will gold hit $2000 again?
Yes, Definitively yes. The answer is so obvious it's all but a sure thing.
The fact is inflation is still rampant for the Household Sector.
Deflation is taking hold in the Fincancial Center - But that's a seperate issue.
For the Household Sector - which is the vast middle class, the value of money is being destroyed.
Don't look at the CPI. It measures nothing relevant.
The American Institue of Economic Research publishes the Everyday Price Index growing at over 8 percent year over year
Shadow Stats Alternate CPI using 1980's methodology shows prices growing year over year at over 10 percent .
And an index of the 500 most purchased items in the 50 largest cities in the US shows inflation growing at over 12 percent year over year. This index includes everything we spend on: insurance, education, heat, rent, food, energy, (IE everything the Government excludes in their absurd CPI figures).
Meanwhile rates are still near ZERO and that's exactly what you get when you loan your money to the bank.
The Banks take that money and use it to buy risk assets through speculative funds - like real estate, for example, in New York - pushing up home prices and rents higher and higher.
So you lose 10 percent per year on the future value of your money. The Banks gain 10 percent per year on the future value of your money and they use it to push prices higher so they profit again, as you suffer again when you rent or buy.
This is the whole reason the middle class is drowning. And it it the whole reason that GOLD - and every other private asset - Art, Numismatics, Antiques, Antiquities, Cars, Memorabilia etc are all going to go much much higher.
Because the value of money is being destroyed for the Household Sector - which is the vast middle class.
So everything of intrinsic value that can be purchased with deteriorating money must soar in value.
And as Public Financial Assets lose value especially in the the Vast Bond Universe which is in perhaps the biggest bubble the world has ever seen (this is the very real Financial Deflation you hear so much about) - the wealthy are already piling into private assets.
But soon even the middle class will follow as they lose confidence in the failing Institutions. And when that happens Gold and all other private assets will soar.
When? When will the middle class wake up and understand the source of their misery is not in immigrants or Isis or Mexicans or welfare recipients - but in the Monolithic Banking Sector?
When will it occur to the middle class that the Banking Sector - whose job it is to EFFICIENTLY ALLOCATE CAPITAL - has transformed itself into a monster that SUCKS CAPITAL OUT OF THE ECONOMY?
Timing is impossible. Anyone who claims to be able to time these things is an abject liar. Check their records. They make a new call every three months. When it finally comes true they forget their 50 wrong calls.
But, judging from the fact that Donald Trump will be our next president, I'd say the anger is already there. It's just a matter of locating the cause. And that will come