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Saturday, November 27, 2021


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.


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,