Are you concerned the precious metals train has left the station without you?

Are you concerned the precious metals train has left the station without you?

Quoting Gordon Gekko from the 1987 movie Wall Street: "I don't throw darts at a board. I bet on sure things. Read Sun-tzu, The Art of War. Every battle is won before it is ever fought." Mr. Gekko is explaining that an investment decision should start with research.

The thesis of my article is that numismatic coins are waiting to win the battle for you.

All markets are, at times, distorted. Because of Federal Reserve (not Federal, has no Reserves) increased intervention in markets (to salvage their misguided, previous, and much smaller interventions) some markets are now, perhaps, wildly distorted.

Maybe your spidey senses are tingling with your observations that:

  • The National debt is increasing exponentially.
  • The stock market could be overpriced.
  • PMs (Precious Metals) like gold and silver have made extraordinary gains in 2020 and you are experiencing FOMO (Fear of Missing Out).
So you are considering a PM investment.

If the above 3 observations continue, how should I play it in the PM arena?

Well, this is my simple idea, my idea alone and not investment advice. Do your own due diligence.

Possibly the greatest gains will accrue to slabbed, numismatic coins if another coin mania takes hold. You can count on the Wall St thieves to promote it and maybe this time it becomes a moon shot. There are good reasons why the 1989 mania faded, and also, why this time could be "to the moon," but that is for another article.

I have been looking at U S silver dollars (Morgans & Peace) and my conclusion is, those with some numismatic value have only begun to rise.The silver dollars are only one possibility of many. For example, I believe the same is true of U S, pre 1933 $2.5 Quarter Eagles, Three Dollar Gold Pieces, etc. There are many possibilities in the numismatic arena but the silver dollars are in a more affordable price range.

The key here, in my opinion, is many numismatic, U S Coins have only begun to rise from a long decline which began in 1989.This is an excellent review of that Wall Street induced mania by veteran PM guru Pat Heller. From that article:

In early 1989, there was the specter of possibly millions of dollars of "Wall Street-organized" rare coin investment funds entering the market to purchase large quantities of rare coins. Dealers and collectors scurried to "beat the rush" by creating a coin-buying frenzy. Prices rose significantly in anticipation of this "outside" money flowing into the numismatic market.

Looking back, the very top of the market occurred approximately during the major Long Beach convention at the beginning of June 1989. By mid-1989 doubts appeared as to whether this "investor" demand for PCGS- and NGC-certified U.S. coins would materialize. Some of the funds were never launched while others only drew a small fraction of the anticipated investor funding. The numismatic market stalled, then slowly started to retrench.

There are a great many U.S. coins that today are trading at price levels far below what they were 31 years ago. At the same time, there is also a lot of coins trading at higher prices, especially among gold issues as the gold spot price was just over $360 in early June 1989.

Patrick Heller

Open this link from PCGS (Professional Coin Grading Service) and check out their PCGS 3000 index. That index today is 70% below the 1989 mania high.

With a possible oncoming rush into PMs induced by antics of the Federal Reserve (not Federal, has no Reserves) perhaps Gekko was wrong and in the case of undervalued numismatic coins we can "throw darts at a board."

Ok, let's try this as an example. (an 1880 Morgan at Liberty Coin Service). It is a high-quality Silver Dollar graded 64 by PCGS.

Now go to here and type in the SKU # 7096 and see recent auction prices for the MS-64 grade. The prices vary because of eye appeal but consider this: Where will these modestly priced silver dollars go if the spot price of silver goes up another $10, $20, ??? Add to that a mania later for something rare and limited. Mining companies cannot make another Morgan.

One more important consideration: Graded coins encased in plastic are called, "slabbed." What sets slabbed coins above others is they are a known, registered item. Let's say you give the slabbed coin linked above, 1880 Morgan, to a special friend or wife and later they wish or need to sell it. They simply shop around to dealers stating, "I have an 1880 PCGS graded MS64 Silver Dollar" or they can shop it out themselves on a service like eBay.

What I left out was my background as a spec in the PM futures making fiat in the run to higher PM prices. Now the low hanging fruit like 62 Saints and 61 Libs are not much available because they traded near spot. So, what to do?

Well, one part of the numismatic market has a long way to run. When the value of these truly rare items is realized, along with the PM mania I expect, the price rise of these limited edition beauties could be spectacular.

Even surpassing 1989.



How To Collect Pre-1933 Gold Coins

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