GOLD AND SILVER ARE THE FINANCIAL FUTURE
Bullion has been used as a calamity hedge in a dangerous world for centuries
The world is in upheaval in the Summer of 2020 due to a global pandemic and the riots that have accompanied the unfortunate and tragic death and injury of human beings in multiple cities at the hands of law enforcement. The market for gold and silver is in an equal uproar, and the cost of an ounce of either metal has gone up considerably.
For example, gold exceeded $2,000 an ounce and silver rose to more than $30; neither amount has been seen for quite some time.
LOOKING TO THE PAST FOR HINTS OF THE FUTURE
No one knows at this point how high gold and silver will go. The November election will also directly affect these two metals’ prices, depending upon how the results are viewed for future financial well-being. Some indication of the panic buying affecting the precious metals market can be seen in gold and silver prices in May 2018: gold was about $1,300 and silver roughly $16.50 per ounce. Even two years ago, however, there was a certain nervousness in the metals market and many thought the price a bit high. However, there is a direct connection between these prices and current events, and the present difficulties show this very well.
Those who have not studied gold and silver markets tend to think that this present demand is something relatively new. Nothing could be further from reality. Even in ancient times, those who had disposable income frequently laid aside gold and silver, usually in the form of coins but also in jewelry and bars. These buried hoards, where the owners failed to recover them, are still being found. And for those aware of modern events, the famous Saddle Ridge hoard of gold coins, found in California a few years ago, shows that such buried treasure is still to be unearthed. One has to wonder what unfortunate individual or family failed to dig up their holdings for later use in all cases.
Gold became increasingly scarce after the fall of the Western Roman Empire in the 5th century, and for the next thousand years, silver played a key role in monetary affairs. Even with that as the case, silver was not all that plentiful either. In about 1500, however, large quantities of silver were discovered at Joachimsthal in central Europe, and even larger discoveries of silver followed this by the Spanish conquistadores in what is now Mexico and Bolivia. The mines at Joachims’ actually have an echo even in today’s world. The large silver coins struck in the nearby mint were soon called “Thalers” (or “Talers”), and this name was corrupted in various countries. In Holland, it became “Daalder,” which soon appeared in English as “Dollar.”
In the 16th and 17th centuries, with the ready availability of silver, there once more arose a desire, by those concerned about the future, to lay aside quantities of silver. The money of choice
are worn as little as possible. It should also be borne in mind that Morgan silver dollars carry a slightly higher premium than Peace dollars when buying or selling.
During the 1960s and 1970s, there also arose the sale of silver rounds. These pieces, generally about the size of a silver dollar, contained one ounce of pure silver and had interesting historical and artistic designs to attract the buyer. Because silver has gone up in value since that time, they were perhaps not a bad investment. Today, such pieces have fallen out of favor, and the older pieces often can be purchased for just above melt price.
At present, the U.S. Mint strikes the American Eagle dollar, which contains exactly one ounce of pure silver, .999 fine. These are widely purchased for investment and as a hedge against the future. A few people lay aside bags of “War Nickels,” which were struck from 1942 to 1945. Each nickel contains 1.75 grams of silver, meaning that 1,000 such nickels ($50 face value) contain 1,750 grams of silver (about 56 ounces).
In 1974 President Gerald Ford signed legislation that allowed Americans to own gold for the first time since 1933. There was soon a torrent of gold coins flooding the U.S. market; most of these were the famous South African Krugerrands, which contained precisely one ounce of pure gold. The Krugerrand is .917 fine, meaning that .083 of the weight is copper.
In 1986 with Congressional authorization, the United States Mint entered the field with an ounce gold coin, the $50 American Eagle. It used the famous Saint-Gaudens design of an advancing Liberty for the obverse but a new reverse. Lesser weights are also available for sale to collectors and investors: half, quarter, and tenth ounces. The smaller gold pieces are perhaps good for future emergencies, but one should bear in mind that premiums tend to be higher, in a relative sense, for the smaller pieces. These American Eagle coins are struck in .917 fine gold, which does not affect their value or pure gold contained.
In 2008, the Mint began striking the American Buffalo $50 gold coins, containing an ounce of pure metal but struck in .9999 fineness. In 2008, some of the Buffalo pieces were made in lesser weights, but this is not the standard.
Other gold coins have been coined by the U.S. Mint from time to time, but are probably not the best type of coin for investment or security purposes due to higher premiums. Commemorative gold coins should also be avoided. In addition to the ever-popular Krugerrand, other countries have joined in offering gold coins to the public. Of these, the Austrian 100 corona coin, which contains .98 ounce of pure gold, the Canadian Maple Leaf $50 coin (one ounce of pure gold), and the Mexican 50 pesos (1.2 ounces of pure gold) are perhaps the most popular with American buyers. The Austrian and Mexican coins are .900 fine while Canada uses .9999. Those selling gold coins use the higher fineness as a selling point, but in reality, whether at .900, .917, or .9999, there is no practical difference in the value as long as there is a known amount of gold. They are a stock of value and not likely to be melted anyway. There is also some interest in other metals, notably copper, platinum, and palladium. Copper does have a certain value, but in the last two years has shown little movement one way or the other and is almost useless in bad economic times because of little demand. There is also a storage problem because of the weight involved; it is not affordable to transport a ton of copper. The U.S. Mint strikes platinum coins and others, and that has helped to make it more mainstream. James Passin, who has a strong knowledge of platinum, analyzes it in this issue. Palladium is to be avoided for long-term investment or security purposes. The U.S. Mint strikes such pieces, but it is merely a political favor to a Montana mine owner, and such coins are virtually unknown to the general public. Those people buying bags of silver coins or gold coins should be aware that silver dollars and U.S. one-ounce gold coins are the subject of significant counterfeit efforts by international criminal groups, and widely sold on the internet. Even Facebook has been flooded with advertisements for this worthless junk. The pieces are usually plated to appear genuine but contain some cheap metal.
Many Internet sites show the spot price for precious metals daily. Those who plan to buy gold or silver should study the prices carefully before entering the market.