Boom to bust and back again describes precious metal and financial markets the past three decades. First, as it relates to gold coins and bars, let us look at how we got where we are.
It really started in 1933, President Franklin Roosevelt declared an emergency and took away the American citizen’s right to own gold. The gold was confiscated. The President promised the gold would be returned. It wasn't.
It took more than 40 years, but, in 1974 the American citizen won back his and her right to own gold. Then in 1985, President Reagan signed into law the minting of legal-tender gold and silver bullion coins.
Why own precious metal coins? Legal tender gold and silver coins offer the investor the intangible benefits of owning an attractive article and the tangible benefits of a legal tender bullion coin. The coin's precious metal content increases in value with higher gold and silver prices. Some coins are limited editions, adding a potential rare coin value. Should the worse happen, a complete collapse of our paper currency, gold and silver coins can be used to sustain one's day-to-day survival.
Most foreign gold and silver coins, like U.S. gold and silver coins, are universally recognized and easy to resell. Most come in four gold weights: one ounce, half ounce, quarter ounce, and 10th ounce. Bullion bars available to the individual investor include the popular 1 troy ounce, 10 ounce, and 100 ounce silver bars and the one gram to kilo sized gold bars.
To avoid possible assay costs and loss of instant liquidity, stick with well-known brand names. Each bar is stamped with its own registration number, purity, weight, and are easy to buy and resell.
How are precious metal prices set? Prices constantly change, trading in precious metals continues 24 hours a day, following the sun westward around the world. In the U.S., early morning and afternoon commodity prices are constantly updated by the Commodity Exchanges. Major wholesalers provide most local dealers with spot prices throughout the rest of the day.
Prices respond to daily market conditions and each dealer's own supply and demand. Dealer retail prices for bullion bars and coins are based on the spot price, plus manufacturing and distribution costs, wholesalers risk, and retailers’ commission.
Gold and silver dealers range from small local coin dealers and large well-established precious-metal brokers, to a few fly-by-night scam artists. If at all possible, do your trading with your local dealer on a cash basis. If it is a large order, and you must deal with an unfamiliar out-of-state broker, use a "sight draft" in conjunction with your local banker. "Sight draft" means what it says. The merchandise is shipped to your local bank and when your banker sees the coins or bars, the banker wires your funds to the dealer.
Here is what counts when buying precious metal bars and coins: It is the total price you pay and receiving the merchandise. It is not "discount" commissions or a "hot deal" used by some to get you to buy now. If an investment is good today it will be good tomorrow.
America's "spend your way to prosperity" policy of the 1960s and the 1970s ended in soaring interest rates, double digit inflation, and a shaken stock market. Our dollar, the world monetary standard, was on the brink of collapsing. By 1980, the price of gold had increased more than 2,000 percent and silver more than 3,000 percent.
Gold’s
Year - Low & High
1975 $140 - $173
1978 $185 -$385
1979 $342 - $716
1980 $483 - $1,040
Two years later, 1982, the precious metals market collapsed Market lows showed gold $298, silver $4.98, platinum $244, and the Dow Jones Industrial Average of 776.42. But the great bull market for stocks had started.
Boom to bust and back again? The gold market—like the U.S. Stock market—could go considerably higher or considerably lower. Either way, gold coin investing is not for quick and big profit speculation, but as a long term investment
"Steady plodding brings prosperity: hasty speculation brings poverty."
Proverbs 21:5
_________ Michael E. Odell
For Other Posts by Michael E.Odell —click on "Blog Archive" at upper right
03-15-08 Investment 101 - only safe way to double your money
03-03-08 Real Men or Girly Men
02-29-08 A Cup of Hemlock for Washington State
02-13-08 Death & Suicide Initiative 119 Are Back
02-12-08 Thorns or Roses - The Choice Is Ours
02-12-08 Recession & Inflation - Government the Problem
12-08-07 A Hamburger Today & Pay Tomorrow
About Me
- Michael E. Odell
- Michael E. Odell, a political polemicist with a working background in sales, finances, politics, writing, broadcasting, and teaching small business classes on several college campuses. He has authored several books including Gold A Layman’s Investment Manual, Business Plans for Lemonade Stands, and Marketing Plans for Lemonade Stands—and an occasional poem for his own pleasure. He was first elected to the State House of Representatives Spokane Valley’s 4th District in 1962 and ran for Congress in 1968. Fifty years an outspoken advocate of less government and more individual responsibility.