“Global Scramble” For Silver - Coins “Hard To Get,” “Premiums Likely To Jump”

https://www.goldcore.com/goldcore_blog/Global_Scramble_For_Silver_Coins_Hard_To_Get_Premiums_Likely_To_Jump

Exchange Controls And Perfect Fake Gold & Silver Coins

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/7/17_Exchange_Controls_And_Perfect_Fake_Gold_%26_Silver_Coins.html

House backs privately minted coins as legal tender

http://azdailysun.com/news/local/state-and-regional/house-backs-privately-minted-coins-as-legal-tender/article_bc980ec8-3d13-57eb-8da0-18df2768e86f.html

U.S. gold bars and coins find new home overseas on Asian demand

http://www.reuters.com/article/2013/02/11/usa-gold-export-idUSL1N0BB9CO20130211

Congress looks at replacing dollar bills with coins -- saving billions

Currency debasement will make every coin non-economic to manufacture.  This is what happens when money dies.


http://www.mercurynews.com/breaking-news/ci_22098752

Missouri lawmakers debate U.S. gold, silver coins use as legal tender

http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=151735&sn=Detail&pid=504

Modern Money Mechanics, by the Chicago Fed

Recall my blog earlier today <click here> where I rhetorically asked "what is riskless return?", and more importantly, "what is money?"  With central bankers' machinations and manipulation of financial markets, these questions are becoming very pertinent and have profound implications on assets and wealth.  Price discovery mechanisms have become distorted beyond recognition as a result.

Here is a workbook by the Chicago Federal Reserve Bank itself attempting to answer these esoteric, but actually impactful questions, released in 1961.

http://www.scribd.com/doc/57392495/Modern-Money-Mechanics

“In the United States neither paper currency nor deposits have value as commodities. Intrinsically, a dollar bill is just a piece of paper, deposits merely book entries. Coins do have some intrinsic value as metal, but generally far less than their face value. What, then, makes these instruments - checks, paper money, and coins - acceptable at face value in payment of all debts and for other monetary uses? Mainly, it is the confidence people have that they will be able to exchange such money for other financial assets and for real goods and services whenever they choose to do so."

2011 1 oz Silver American Eagle (May 13th) on APMEX

http://www.zerohedge.com/article/apmex-out-silver-eagles-until-may-13

This is an example of how data is distorted by pundits, economists, and the media.  Sales of American Silver Eagle coins are momentarily down, month-over-month.  According to the experts (i.e. silver bears who completely misjudged the bull market in silver), this is a sign of declining demand, much like a decline in new home sales, for example.  Ergo, prices must come down, is the line of thinking.

However, unlike housing demand, which is countered by bulging inventory, there is a physical shortage of silver coins.  In other words, the reason why investors can't buy silver coins is due to lack of inventory--not because there is declining demand.  As a matter of fact, demand is booming among both investors and industrial consumers, and supply cannot keep up.

But leave it up to the anti-silver crowd to use their spin tactics to hoodwink the public.

United States Mint Seeks Public Comment on Factors to be Considered in Research and Evaluation of Potential New Metallic Coinage Materials

I guess the US Mint is out of silver.  Contact them and let them know what materials you desire for your coins.

http://www.usmint.gov/pressroom/?action=press_release&id=1219

United States Mint Seeks Public Comment on Factors to be Considered in Research and Evaluation of Potential New Metallic Coinage Materials

WASHINGTON - The United States Mint today announced that it is requesting public comment from all interested persons on factors to be considered in conducting research for alternative metallic coinage materials for the production of all circulating coins.

These factors include, but are not limited to, the effect of new metallic coinage materials on the current suppliers of coinage materials; the acceptability of new metallic coinage materials, including physical, chemical, metallurgical and technical characteristics; metallic material, fabrication, minting, and distribution costs; metallic material availability and sources of raw metals; coinability; durability; sorting, handling, packaging and vending machines; appearance; risks to the environment and public safety; resistance to counterfeiting; commercial and public acceptance; and any other factors considered to be appropriate and in the public interest.

The United States Mint is not soliciting suggestions or recommendations on specific metallic coinage materials, and any such suggestions or recommendations will not be considered at this time.  The United States Mint seeks public comment only on the factors to be considered in the research and evaluation of potential new metallic coinage materials.

The recently enacted Coin Modernization, Oversight, and Continuity Act of 2010 (Public Law 111-302) gives the United States Mint research and development authority to conduct studies for alternative metallic coinage materials.  Additionally, the new law requires the United States Mint to consider certain factors in the conduct of research, development, and solicitation of input or work in conjunction with Federal and nonfederal entities, including factors that the public believes the United States Mint should consider to be appropriate and in the public interest.

Comments must be submitted on or before April 4, 2011.  Interested parties may submit written comments by any of the following methods:

E-mail:	coinmaterials@usmint.treas.gov
Fax:	(202) 756-6500
Mail:	New Coin Materials Comments Mail Stop:  Manufacturing 6 North United States Mint 801 Ninth Street, N.W. Washington D.C.  20220
Hand Delivery/Courier:  Same as mail address.

For further information, contact:  Jean Gentry, Deputy Chief Counsel, United States Mint at (202) 354-7359 (not a toll-free call).

Contact:

Press inquiries:  Mike White (202) 354-7222

Customer Service information:  (800) USA MINT (872-6468)

Competing currencies in Michigan

http://www.connectmidmichigan.com/news/story.aspx?id=481793

New types of money are popping up across Mid-Michigan and supporters say, it's not counterfeit, but rather a competing currency.

Right now, you can buy a meal or visit a chiropractor without using actual U.S. legal tender.

They sound like real money and look like real money. But you can't take them to the bank because they're not made at a government mint. They're made at private mints.

The U.S. Treasury Department says the Coinage Act of 1965 says "private businesses are free to develop their own policies on whether or not to accept cash, unless there is a state law which says otherwise."

"This establishment accepts any form of silver, gold, chicken, apple pie, if someone works it out with me," said Jeff Kotchounian of Deerfield Chiropractic. "I've taken many things."

Jeff Kotchounian says he's used this Ron Paul half troy ounce of silver to get $25 worth of gas from a local station.

While the government and banks don't accept them, many others do.

US gold coin sales surge

As I've often posited: better early than late. No crystal ball predictions here, as we may be entering a temporary overbought situation, but treat precious metals as insurance against a financial crisis, not a money-making venture. And given the past and current debt problems domestically and offshore, the odds of a crisis have increased substantially. Good luck to all.

http://www.reuters.com/article/idUSN0762739220100507

See disclaimers on side bar.

Disclosure: long physical precious metals, long precious metals mining shares.

You can buy gold bars at Harrod's now

This is surreal, but you can now buy gold bullion and coins at the upscale London retailer Harrod's. Apparently, it's not just the Chinese, Russians, Brazilians, and middle Easterners who are nervous about the USDollar.

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/6328823/Harrods-to-sell-gold-bullion-for-first-time.html

Silver

While gold may receive most of the attention as an alternative investment, silver may offer the better value than its more infamous cousin. The gold/silver ratio is approximately 70:1 (gold is $950 and silver $14.50 currently), which makes silver historically cheap relative to gold.

Gold has maintained its monetary store of value spanning centuries, and most of its inventory above ground exists in the form of bullion, coins or jewelry. Silver on the other hand, has many industrial and scientific uses, including in electronics, batteries, solar panels, disinfectants, and antibiotics, among others. Hence, 97% of the silver that has ever been mined has been consumed, never again to be recycled. A shortage of silver appears to be more imminent than gold, as individuals recycle gold jewelry for cash.

Because silver on the COMEX exchange is a smaller market than gold (which is already much smaller than equities, bonds, and foreign currencies), it is easily manipulated. Hence, price increases in silver often lead price appreciation in gold.

Now that individual ownership of silver is encouraged to 1.2 billion Chinese, a rally in silver becomes even more probable.

Answers to your questions

Some of you have asked some key questions, so I will answer them to the best of my knowledge. This is not financial advice, but strategies I have either deployed or considered for my own portfolio:

1) Buy gold bullion, either in 10 or 100 ounce bars. This will have the lowest premium, but then you need to take delivery, store it and secure it. There will be a serial number attached to each bar. Check to make sure the dealers are reputable, or you can take delivery on the COMEX futures exchange.

2) Buy gold coins (stick to South African Krugerrands, Canadian Maple Leafs, U.S. Eagles). Since coins are smaller, these are more transferable than bullion, but you pay a higher premium above delivery price. Wait until the premiums are in the single digits, as demand has exceeded supply. If you're lucky, you can buy them from the U.S. mint (they are allocated due to high demand) or through a reputable dealer.

3) For potential extra returns, I have also purchased rare gold and silver coins. The St. Gaudens $20 double eagles (about 100 years old) are valued by numismatic collectors due to their beauty and liquidity. Morgan Silver dollars are also liquid (coined in the late 1800's). Obviously, coins in better condition are rare and command a higher premium. Visit a reputable coin dealer with reliable grading services.

4) Buy the gold exchange traded fund (ETF), which tracks the price of gold, and trades like a stock. I cannot give specific recommendations so Google it.

5) Buy individual gold mining shares. These companies usually give you greater leverage than the actual price of gold. They offer greater reward, but also greater risk. However, not all gold mining companies are created equal, as some are mature, leading producers, while some are junior companies with even higher potential for appreciation. They may be less liquid to trade and inherently riskier. Either way, you must perform due diligence as the company's prospects are not just dependent on the price of gold, but also other factors like geopolitical risk, environmentalist risk, production risk, labor risk, earnings risk, etc. just like other sector equities.

6) Buy a gold mining share ETF, which is a basket of various gold mining share companies. Again, it tracks the shares of these companies and trades like a stock.

When purchasing items (4), (5), and (6) above, you must put in mental trailing stop-loss thresholds. While equities and ETF's offer liquidity and convenience, they also are more volatile. To limit losses, you should keep a mental trailing stop, but do NOT indicate this stop loss to your broker. Because these stocks are volatile, unscrupulous market manipulators can drive the price down artificially to your threshold, stopping you out of the trade, guaranteeing your loss, perhaps 20% or 25%, or whatever you choose. Since these shares are volatile, do not keep your stop-loss too tight, as you will be stopped out too often. Volatility invites higher reward and risk, so you have to widen your stop-loss limits.

If you are risk-adverse, stick to bullion and coins.

And the reason why you want to have a trailing-stop is because as gold and/or gold share prices rise, you want to lock in profits along the way. For instance, I rode ABX from $19 up to $38/share. However, if it drops to $29, I am stopped out of the trade, as I put in a sell order (25% below the $38 level). I've locked in a $10/share profit. However, if it continues to rise to $50, I'm still in the trade, increasing my profits.

Remember: when placing buy or sell orders, use limit orders, not market orders.

7) You can do all of the above with silver as well. In fact, silver may have more upside as the gold/silver ratio is at the higher end of its historical range.

In summary, don't view gold as a vehicle to get rich quick. History has shown that in times of financial crisis, that certainly can happen, but think of using gold or gold mining shares as a diversification away from financial and paper assets (stocks, bonds, currencies, real estate). Gold has historically held its purchasing power for thousands of years, so treat it as a hedge against inflation, as well as a hedge against uncertainty in markets.

Good luck to us all.

Gold, gold, and more gold...

I used the recent pullback in gold to purchase more Barrick Gold mining shares, albeit it at a higher entry point than my previous purchase of $19/share for ABX. I'm in at about $26/share, which is still cheaper than the $30 it touched earlier.

I also found a way to reduce future purchases to $18.90 by writing April 2009 ABX 22.50 puts, collecting $360 per contract. If ABX touches $22.50/share before the April expiration--and I get exercised, I'll pick up the shares, and since I get to keep the premiums whether I am exercised or not, my effective purchase price would be $18.90.

I also purchased rare gold coins at an auction, including the beautiful $20 St. Gaudens double eagle. I expect them to soar once inflation kicks in from the trillions of dollars of additional money flows.

I'm usually far from a gold bug--I am agnostic as far as investments go, but the inflationary scenario is too coompelling for me not to act. As long as the Fed and Treasury aim to bail out industry after industry, as long as banks and companies continue to collapse, and as long as the government continues to print money in unprecedented amounts, gold will have nowhere to go but up. There usually is a lag period before inflation accelerates, but the inflationary pressures are already starting to build. With short-term interest rates under 1%, it's only a matter of time before people figure out it's wiser to hold gold than devalued paper currency.

What to do going forward (part 2)

While I will agree with you on the metals play, you jumped in a bit early (not a sin), as hedge funds are unloading everything to raise cash--stocks, bonds, commodities, their first-born, etc.You're down 10%, but again, not a sin.

What I do object to is your recommendation of speculative mining stocks. Some of these junior mining companies could run out of cash unless the coming boom occurs soon, which it may or may not. An investor would lose all or much of their investment (cash-poor mining stocks sometimes agree to be acquired, albeit it at a low price). It would suck to make the right call on the direction of metals, and but lose money because the mining company ran out of cash. So yes, on mining companies with cash, no on the speculative plays.

I do like your call on coins and some of the larger gold and silver mining companies--as long as they earn a profit and are well-capitalized (have lots of cash).

As for peak oil, that call proved to be disastrous--or really early, as there has been demand destruction due to a worldwide slowdown. An alternative energy play is natural gas MLP's, which are currently yielding double-digits (all-time highs). Their prices have been battered, but I like the bigger ones who are paying out dividends to unitholders, as they must from positive cash flows. I don't mind waiting for a turnaround if I can earn 20% on my money--most of it tax-deferred. Crude oil is sensitive to the worldwide economy. Natural gas is less sensitive to the transportation and manufacturing industries. However, people need to heat their homes, and cook their food. And more fleet vehicles are being converted to natural gas, as it burns cleaner. But like I said, earning 10-20% is better than earning 1%. When energy prices do recover, these MLP's will appreciate as well.