WHAT'S DRIVING THE COIN BOOM? WILL IT LAST?

The main underlying factor motivating the global hard asset boom is obviously the maasive global printing of paper\electronic money.   Every dollar, euro, Franc, Pound, rial etc that is printed or brought electronically into existence is backed by a commensurate unit of DEBT.  So as the global supply of money units increases so does the global burden of debt.

This is why global rates are at functional zero.  With this much debt rasing rates makes debt service untennable. 

Raising rates also would cause a massive crash in the global risk markets.  This is unetennable too because with zero rates, all the pension funds of the world have been shifted out of bonds and into the risk markets.  If the risk markets crash everyone loses their pension.

BUT - with rates at zero the debt continues to outstrip GDP because Banks and Hedge Funds (almost the same thing now) can get money for nothing to invest in real things like Real Estate and other hard assets thus further compounding the creation of Money Units which are then used to bid up the price of desirable assets.  

So the money/debt creation is in a cycle that can only be broken by a massive crash in the risk markets that will bring untold pain and stress on the global economic and political system.

The Central Banks can not and will not let that happen - so it won't -  until it happens in spite of their best efforts.

So the Hard Asset boom must and will continue until the risk markets crash.

Numismatics: Like all Assets, Numismatics can be traded on both a momentum and a value basis.

Numismatics has one of the highest barriers to entry through Knowledge of any of the hard assets.  Without a knowledge of the historical background and some appreciation of aesthetics, which require some knowledge one can only momentum trade numsimatics by buying and selling Holders or Slabs as they are often reffered to.

Holdered coins have brought in many new buyers because they confirm authenticity and weed out doctored coins.  This is to the good.  They also Grade coins and this creates a momentum market for trading by those with the lowest knowledge base.  And coins with the higheset grades create their own catagory of limited availablity,  This is good too - the more traders the merrier -  as long as one is familiar with the mechanics of momentum trading.  If it's your thing - power to you - I mostly stay away from it.  That's a personal choice,  Some people do very well momentum trading.  And owning the best quality of anything will always have appeal = as long as momentum doesn't carry it to absurd levels.

Value Trading of coins is based largely on knowledge of the historical imporatnce of a coin and understanding of the aesthetic skills of the engravers.  And also a knowldege of how many versions of a single type might be in existence   Here, the slabs won't help much except in confirming authenticity.  And here is where the collector willing to invest time and intelligence always has a big advantage.

Take the coin pictured above.  It takes a certain amount of knoweldge to understand the extraordinary skill of the engraver and the historical import of the lifelike rendering of Alexander the Great so near to his actual lifetime by one of his most skilled generals.  The slab won't help with the intrinsic value aspect of this coin but it will confrim authenticity, point out hidden alterations and assign a grade - which will create a momentum market that exists paralell to the value market.  For the value market aspect - you're on your own with your studies.  The  intrinsic value of certain coins may only appeal to a very narrow section of the coin market.

In effect every coin will have a momentum value and an intrinsic value.  Just like every stock.

Both aspects of trading/investing will continue to rise in value as long as the Central Banks of the world collude to keep the printed money flowing necessary to float the risk markets - and feed and house the populations.

AFTER THE CRASH

But what happens when the Central Banks lose control and the risk markets crash?

At that point everyone will lose capital.  However certain people have become so wealthy that they can afford to lose a large percentage of their capital and will still remain incredibly wealthy.

At that point too the Central banks will have no choice but to print money like crazy.  Only it will have little beneficial effect,  except to make Hard Assets even more attractive as a store of wealth since they can not be created out of nothing.

But I would imagine that the assets that have accrued the most value through momentum trading will come back down and revert to a mean, while those hard assets that have the most Intrinsic Value through historical importance, beauty and limited number will continue to rise in value, though they will certainly not be as liquid as they are now because the number of those who retain enough wealth to buy will be much more limited.

But as a store of wealth over time those coins (and hard assets in general) with the most intrinsic value should do relatively well.  Especially compared to things that exist only in a cyber reality that can be hacked, erased, recreated - and made obsolete by emerging technologies,

GOLD IS A FINANCIAL INSTABILITY HEDGE: STABILITY VS INSTABILITY

 

For Five thousand years of global history gold was money.  Written language is only about 5000 years old so it's hard to know much beyond that.  In 1971 Richard Nixon ended that system  and replaced gold with paper backed by the force of the US Military and the faith in US Financial Stability.

Paper gave way a few years later to Electronic accounting, where it currently resides.  The electronic global money system, however is still backed by the might of US Military the faith in the stability of US Financial System.

By extension the Global Financial system is a Financial alliance between the US the European Union, Britain and Japan.  But the US is still by far the largest and deepest market   So the stability of the US Financial System is paramount.

How stable is the US Financial System?

The answer is twofold.  First you must consider the stability of the US Political System, which came close to being toppled on January 6th of this year.  Perhaps not perilously close.  But the violence, anger, hatred  the fueled that insurrection is alive and stronger today then it was a few months ago.  That same anger is also alive in Europe.  And it is fueled by the massive disparity in global wealth.  

The richest 1 percent own half of the world's wealth while the bottom 50 percent own 1 percent of the world's wealth.   

How stable is that?

The next question is how stable is balance sheet of the United States?  And How stable are the US financial markets?

That's an incredibly hard question to answer.  

The US national debt is about 29 trillion dollars and growing at about 5 trillion dollars a year.  While US GDP is about 21 trillion.  That sounds like it is moving away from stability

Meanwhle

• When state and local debt as well as unfunded liabilities are taken into account, the $27 trillion public debt rises to around $80 trillion.
• Social security is expected to run out of money in 2032 and Medicare in only six years (2025-2026).
• Total public debt (including off balance sheet) per working adult in the U.S stands around $500,000.
• There are an additional $100,000 per person in household debt and $23 trillion in corporate debt (not counting unfunded pensions).
• That brings the total debt in the system up to about 130 Trillion dollars.

But that doesn't count the 10 trillion dollars the Fed took onto its balance sheet to bailout the Covid Liquidity crisis. And it doesn't count the Over the Counter debt derivatives market which is in the QUADRILLIONS OF DOLLARS.

Our system is a system of debt.  And the those who can access debt at very low rates, say around Zero - can use that debt to buy up all the assets, simultaneously pushing up the price of those assets.  So Real Things like Houses and Food and Gas (and hard assets like art and coins and cultural heritage items) become ever more expensive for those who can only access the debt markets at very high rates or not at all.

How stable is that?

Hard to say.  It doesn't sound very stable.

But right now Faith in that system is still relatively strong.

But that is all that is holding it together.  Faith. 

And the might of the US military.

How stable is that?

How you answer that question is how you value gold.

WHY CAN"T GOLD TAKE OFF?

 

With stagflation taking hold of the global economy; with a global pandemic, with domestic terror becoming part of the platform of one of Amerca's two major political parties, with Democracy threatened across the globe, with  wildfire, drought and hurricanes threatening the global food supply, Gold is still languishing in a trading range betweeon $1600 and $2000.  

WHY?

Has there ever been this much uncertainty built into the fabric of everyday life?

The reason, though is simple.  Despite all the massive suspicion and in many quarters hatred of government, of the press, of our political institutions (often fomented by officials of the same government,)  there is still a thorough respect for the Central Banking System.

There is a certainty that the Fed and ECB will coordinate in all circumstances in a way that will protect the financial markets so that they will ever and always continue to rise.

The stock market will go up forever.  The bond markets will continue to be liquid forever.  The wealthy will always get richer and richer.

So who needs the portfolio protection that is gold?

Nobody,

As long as the Central Banking system is secure.

They bailed out the Long Term Capital Management crisis with a trillion dollars.

They bailed out the sub prime crisis with 3 trillion dollars.

They bailed out the Covid Liquidity Crisis with 10 trillion dollars.

How much will they throw at the next crisis?  30 trillion dollars?  50 trillion dollars?

HERE IS THE QUESTION: At what point will the creation of bailout money create its own instability that will rival the crisis it is baling out?

That's the point at which gold and silver will take off.  And at that point it will become impossible to get gold and silver except at ever higher prices.  When it takes off it will move very quickly and very high.  Might be better to have some now.

INFLATION VS DEFLATION: HARD ASSETS

 

The raging debate between those claiming inflation will get out of hand and morph into hyper inflation - like billionaires Paul Tudor Jones and Michael Burry (who made a killing off the subprime collapse), and those who worry deflation will ultimately destroy the global economy - like all the world's central bankers, essentially contrast  two ideas that are both right.

The problem of the global economy is that there is so much debt in the global system  - 280 Trillion dollars - not counting debt derivatives which push the figure into the multi Quadrillions - yes Quadrillions - that unless the global bankers artificially create inflation by keeping real rates deeply negative and commit to massive quantitative easing - which means the central banks create ever more debt and then buy it themselves from themselves (yes it sounds crazy but that's what it means and that's where we are) then the whole system will collapse in a massive deflationary hole.

But the QE Infinity produces massive asset price inflation which ultimately seeps into the real economy of everyday purchases and inflation rises and rises crushing the middle class.  So the governments must commit to ever more deficit spending to bail out the crushed middle class which adds to the global debt which causes ever more inflation.

Add to that a global pandemic which has been hopelessly politically exploited so that common sense solutions have been discarded by enough of the population that it may never get under control - and Global Warming that is destroying the global food supply so food costs will rise forever - while fires, floods, hurricanes and tornados do their part to destroy the housing supply - which necessitates more debt to bail out the homeless and the hungry..

So that is now our choice,  Massive inflation or the Deflationary destruction that results from stopping the liquidity that fuels the inflation.  

So how do you invest?

As long as inflation wins out Hard Assets along with paper assets will all rise,  That's stocks, real estate, and all hard assets.  Even pure gambling instruments like crypto currencies and space fleet funds will rise as long as inflation carries the day.  

But as soon as there is a crack in global debt system as there was in 1997, 2007 and again in 2020 all of which necessitated central bank bailouts of the world's wealthiest corporations, hedge funds, banks, and individuals first with one trillion - then 3 trillion - then 8 trillion - a new multi trillion dollar bailout will be necessary.  How much can the global system give away to the wealthy?  20 trillion?  30 trillion?  Because that's what the next bailout will take.  And the one after will be more expensive.

Eventually the bailouts will not be tolerated by the poor and crushed middle classes and then we'll get civil unrest that will necessitate a stop to the bailouts and that will bring about the deflationary crash.  It is inevitable.   Then paper assets will become worthless.  Hard Assets will take a hit - but they will retain value.  And that's why the wealthy are moving into Hard Assets.

Hard Asset of Choice: Ancient Coins

 

When selecting your Hard Asset of Choice you might want to consider Ancient Coins.

Why Ancient Coins?

Ancient Coins require the most knowledge of any Hard Asset.  To fully understand Ancients you need to understand the History, Monetary systems and Art.   Some things to consider: 

1, The Historical Figures of the Period, the Kings, Tyrants, Consuls, Satraps, Generals, Usurpers, and their political and military achievements.  It's good to have a basic knowledge of Latin and Greek so you can read the coins.  Ancient coins were often meant to be Proclamation Issues as well as monetary units.  They tell stories about who is in charge, and what their accomplishments are.  It's good to know the context of those rulers and their acheivements.

2. The monetary systems of the areas that interest you: Staters and their division, Darics, Drachms, obols,  Mnaeion,  Aurei and Denari etc.  A working knowledge of the monetary system of an area is a big help.   Mint marks and control marks give clues as to the exact location of issue.  Some mints are prized by collectors.  Some control marks are dates that link issues to important events.  These are all things that are good to know.

3. And most important, Many Ancient coins are Artworks, executed by some of the world's greatest artists.  Some of whom we know the names, others are anonymous.  To appreciate art you really must have a working knowledge of the History of Art.  You can always say, "Well I don't know much but I know what I like," and that's fine.  But not knowing much will lead you to rely on the opinions of others, on consensus, on labels.  And over time that's not worth much as "consensus" changes.   The more you bring to it.  The more you get out of it.  A well developed eye is crucial.

4.  Like all assets you have to appreciate Condition.  Many ancients are slabbed.  So the condition of those will have numerical values to help you out.  Yet within that there are issues that collectors consider that are not included in the grade.  It's good to know what they are and how they affect value.  For example: A mint state coin with high surface nd strike grades should be great.  But if that one small mark on the coin happens to be right on the King's face - well, that could be a deal breaker for many collectors.  That sounds like common sense - once you know it.

Opportunity - Barriers of Knowledge present enormous opportunity.   Every Lamborghini Estoque is similar.  Every ancient Oktadrachm is different.  Many Hard Assets are simply momentum plays for the super wealthy.  Some ancients coins can be like that.  But many ancients take enough knowledge that the playing field can be tilted away from the wealthy to the knowledgeable.  That's a rare 0pportunity in the field of Hard Assets.

Track Record.  Of all hard Assets Ancient coins have longest track record.  Ptolemy collected coins at the court of Alexandria in 300 BC.  Many Roman Caesars collected coins.  Constantine the Great collected coins.  The Medicis and the Borgias and most of the Kings and queens of England were avid coin collectors.  The Carnegies and the JP Morgan collected coins.  If you want you can research coin values and collections going back through all periods of human history.

HARD ASSETS REQUIRE SOME KNOWLEDGE

 

The thing about buying hard assets is that there is a tremendous advantage to buying things you understand.  If you want to take a punt on Doge Coins, or BioPharmaCon, or WikiSmmSnap all you need to to do is know a guy who read something on facebook by someone who really knows his stuff and then throw some money at it, and hope.

Hard Assets are real things with a real Historical track record of holding and increasing in value over time.

The first thing you need to know is how your hard asset of choice has performed over the last hundred or five hundred or two thousand years.

Then you need to know why.  Why do people value that gold coin that was the first one ever minted in the history of humanity?  What's so important about Julius Caesar anyway?  Why do people think Da Vinci is such a great painter?  What's so great about an Aston Martin?  Why is the Gutenberg Bible such an important object in the history of human thought and achievement?  Is it any better than the Geneva Bible or the Lenneberg Codex?  If you're thinking of buying one you really ought to know.

If you don't understand why something is cherished you just might buy into a fad rather than an historical investment.  Or you might vastly overpay for something that no better than a lesser known but equally as important and sought after version of the same asset type.

Then you need to know How Many?  What if there were thousands of Gutenberg Bibles on the market today?  As amazing as it might be, would it hold the same value?  The number created, the number available, and the number that might become available are all important factors in understanding your market of interest.

All of this makes Hard Asset Investment vastly more fun - because you must be the expert, if you want to do it successfully.  You can't subscribe to someone else's Newsletter to hear about what's hot and what's not in the world of 15th century lithographs.  You really should understand that world yourself before you buy one.  Unless you're so rich it just doesn't matter. Like the 3000 billionaires in the world.

But unless they inherited their billions they probably are able to learn about their areas of interest.

Finally, to successfully invest in Hard Assets your knowledge should lead you towards currently underappreciated Hard Assets.  Things that are so historically important and beautiful and well crafted that you know will eventually be more appreciated than there are at this current time.  You can always momentum trade in any market, but even in a vast bull market momentum trading can eventually get you into trouble.

The more you learn, the more you appreciate.  The more you appreciate the more your Hard Asset collection appreciates.

The Hard Asset Boom

 

There has been a hard asset boom going on globally for a few years now.  But during the last several months this boom has gone into overdrive.

Coins, Medals, Comic Books, Sports cards, Old Master Paintings, Classic Cars, Historical Documents, Wines, Chinese Art Objects... I'm sure I'm missing many things.

The reasons are obvious.  All the central banks are involved in QE Forever.  There's always talk of tapering, normalization (Ha ha ha) and other such nonsense.  Small gestures might be made in these directions from time to time.  They are impossible in a global financial system drowning in debt because debt is tremendously DEFLATIONARY.  Any move towards normalization (a word with no real meaning) is impossible as nobody wants to see what happens when the deflation takes hold.

The other reason for the Hard Asset Boom is the massive inequality of wealth.  The global economic system is one where the world's Central Banks create money and then give it for free to the biggest corporations and Hedge Funds who then buy up everything with the Free Money.  This is socialism for the Rich on a massive and unprecedented scale.  

So what can these immensely rich people do with all this Cash?  Put it into risky paper assets?  Well, that game has been run up into the stratosphere over the last 50 years.  Leave that to the Reddit kids.

No, smart money is converting itself into Real Things so that when the game collapses they will be in possession of stuff that will hold its value.

And the best of that stuff if very finite.  There are only so many Gem State Kroisos staters in the world  Like 5.  There are only so many Da VInci paintings for sale.   There are only so many Honus Wagner baseball cards.  There are only so many Aston Martins driven in the first James Bond movie.  There are only so many Gutenberg Bibles.

You get the idea.  Or you should.  Because the very wealthy got the idea  a while ago.

But what do you do if you can't afford a Gutenberg bible.  Well, a first edition of For whom the Bell Tolls isn't a bad idea.  There are still many Hard Assets that are affordable.  Find one you like.  And buy it.

INFLATION VS DEFLATION: Hard assets

 

If you listen to most talking heads all you hear is inflation blah blah blah.

Here are the facts of the world we live in.  Japan has been in Deflation for the last 30 years.

Europe is in the grip of a vicious Deflation with negative interest rates and QE Forever.

China is either in Deflation or at least desperately battling Deflation as they go back into lockdown.

That is 40 percent of World GDP.  DEFLATION.

And those are all Creditor Central Banks. So Deflation is manageable for creditors.

The US has had trend below 2 percent growth ever since 2009.  Under Trump that number sank to about 1.6 percent trend despite 3 trillion dollars of new debt - Before Covid.  After Covid the New Debt figure has grown to about 8 to 10 trillion through Fed balance sheet growth and we will get some temporary quarterly growth figures from deep trough comparisons, but then return to sub 2 percent trend.

This is not my opinion.  These are the financial facts.

Within this is there some brutal Inflation?  Yes.  In home prices, education, health care costs, food, some materials.  

But for a deep debtor nation such as the United States, inflation is vastly superior to deflation  And Jerome Powell understands this.  Thank God.  He will keep rates low and keep QE forever.

But if some in the nattering Political class get their way and try to battle inflation.  Which does destroy unprotected wealth.  Look out below.  Because a deflationary spiral will wipe out everything.

So what to do?  Hard Assets will fare best under inflation or deflation.  Why?  Because their value is intrinsic and not based on "Multiples" and Economic Models.  Their value is based on the fact that people throughout history have loved them, admired them, collected them, cherished them as emblems of either natural beauty, artistic beauty or great human achievement or all three.

Protect yourself, with at least some of your portfolio in Hard Assets, because inflation or deflation: its a hard, its a hard, its a hard, its a hard. Its a hard rain, a gonna fall.

A Store of Value in a World that despises Value

What is True or Fundemental Value?

Value or Valore in the classical word literally means something to the Good, to the Benefit of, that which imparts strength, and well being.

For this to occur the thing of value must have USE.  And the use must benefit us.

What is the USE of Money?  It enables us to store wealth, to transfer wealth, to trade wealth.  For this it must have the quality of a unit of account, be a scalable means of payment and be stable over time in preserving wealth.

What qualifies?

Paper money certainly serves as a unit of account, and is a scalable means of payment.  It certainly DOES NOT serve as a stable store of wealth over time:

What about Bitcoin:  Well, here's Nouriel Roubini:

"Bitcoin is not a unit of account, is not a scalable means of payment, and is not a stable store of value."

Instead, he argues, it is a pump and dump scheme, where fear of missing out leads retail investors to speculate on an ever-increasing bubble.

"Risky, volatile bitcoin doesn't belong in the portfolios of serious institutional investors. Many of its retail backers are suckers being manipulated by an army of self-serving insiders and snake oil salesmen,"

It might make a great momentum trading vehicle but it has no fundamental value.

Which leads us back to Gold and silver.

Both Gold and silver serve as a unit of account, are scalable means of payment and have been stable over 5000 years in preserving wealth.

While comparisons are difficult across ages, a legionaire in Caesar's army would have been paid roughly an aureus a month, which is about 3 ounces of gold, but this would have been supplemented  by the booty of war and also land grants after a certain number of years of service.  A Private in the US army get about 20k a years or about 12 ounces, though without supplementary pay.  

Has gold held its value over the last 2000 years?  I'd say roughly it has.  Certainly better than anything else.

The trouble with gold and silver right now is that the Central Banks of the world control the value of all financial assets, and all currencies.  Bitcoin being neither an asset not a currency has the benefit of no control, so as a pure gambling vehicle it is great if gambling is your thing.

But the dollar value of Gold and Silver are being capped by the Fed.  Yet their control is against the primary trend of the free market.  The Fed needs to print infinite amounts of money to prop up the economy and pay off the infinitely increasing debt that will never be repaid.  And at the same time it can not raise rates without increasing the interest payments of the infinite debt.  So this creates the perfect market for gold and silver.

So two strong forces are in competition which right now is creating something of a stalemate in the price of gold and silver.  Central bank manipulation vs free market conditions. 

So if your goal is to get rich quick, they're not for you.  But if your goal in unstable times is to have a stable currency in your portfolio they're not a bad idea.

Im Back: Go Real!!!!!!!!!

 After a harrowing run in with hackers and identity thieves I' ve gotten my site and hardware cleaned and reported the breach to the FBI who seems to feel like they have some solid leads on these criminals.  Let's hope.

This has led to a long delay in the relaunch of the site but most new coins have been added and uploaded.

Meanwhile one thing has been made super clear: The value of Hard Assets has never been greater.

First, with MMT or Modern Monetary Theory or Magic Money Tree, which is simply the unlimited printing of money by the world's governments to cure all the worlds woes, real hard assets shave never been more sought after by those desiring to trade their fanciful electronic chits for real things.

But second, Everything electronic can and will be hacked.  Your credit cards, your online information, your paypal, your apple pay, your bitcoin, your social security, everything is game.  Everything is hackable.

Except real hard assets.  They can be stolen by humans at gunpoint,  But they can not be hacked.

How valuable is that in a hackable world?  And wait for Quantum Computing.  It's still a few years away  but coming quickly,  Quantum Computing will hack bitcoin in seconds - and everything else.  

Obviously you can't keep all your assets in hard assets, but has there ever  been a time in human history when hard assets served both as a store of value, a safety net and a p prime source of investment income?

All hard assets with a historical track record are sky rocketing right now.   Gold coins especially so. Ancients are on fire.   Historical Gold medals have been bid out of sight.  However, gold bullion is not moving and the reason is clear.  It is a highly manipulated market by the Fed and the bullion banks,  This is beyond dispute as J P Morgan has paid several hefty fines for bullion manipulation.  IT's just that they make so much more doing it than they have to pay in fines.  

But don't let this fool you.  As the great Richard Russel used to say: "You can only manipulate the dominant trend for so long,  In the end the trend always wins."  And so will it too this time.  Meanwhile, it is best to accumulate real gold coins even bullion coins as the paper gold market can remain manipulated for some time.

But even limited issue bullion is beginning to catch a serious bid.  Have you noticed the Paris Mint coins of the mid seventies with the Sower and Hercules images have tripled in value over the last year?  As have many of the modern British Mint and Australian mint issues.  

So go real.  Go hard.  Go strong.  In a fake virtual hackable world, Real has Real Value.