Inflation vs Financial or Tangible Assets

Simple economics: When SUPPLY exceeds DEMAND, prices can and will fall - the exact opposite happens when DEMAND exceeds SUPPLY, prices can and will rise, period!!

If you take a closer look at what we call MONEY, a Federal Reserve paper One Dollar Bill, Five Dollar Bill, Ten Dollar Bill, Twenty Dollar Bill, Fifty Dollar Bill or a Hundred Dollar Bill you will notice the basic differences are really only the stamped symbol numerical value placed on them stating they have x value as a medium of exchange. The reality is they are merely pieces of paper (a cotton linen fiber to be exact) that have been issued by government decree (fiat).

This concept, under any government control, has no limits (infinity) in terms of the SUPPLY of them being created (out of thin air) by the printing press and placed in the market place with whatever stated Dollar values symbols placed on each one of them. As this SUPPLY of money grows larger and larger (unlimited and unchecked), the value of that money must go closer to its real value which is ZERO (they will become worthless) and this has happened over and over throughout the history of mankind. Likewise, all dollar backed denominated financial assets (stocks, bonds, CD's, etc.) most likely will also approach this value of zero (YOU LOSE to inflation).

If however, you invest or switch your hard earned paper dollar money into a limited supply of tangible assets, such as GOLD, SILVER, REAL ESTATE and ENERGY you may maintain a standard of living that you may have become accustomed to over your life to this point (at least you will tread water and not drown). Tangible Assets have a value that is independent of the supply of paper money, and as the purchasing power of financial paper backed assets nears zero, then the value of tangible REAL assets goes in a reverse (exact opposite) pattern maintaining their value due to the inflation and thus you get the greater benefits of buying tangible assets as a hedge.

If you do invest in tangible assets my preferences are GOLD and SILVER! My opinion is to buy and take physical possession of them for the ultimate safety, because what you have in hand you actually own and control (don't let someone else hold your precious metals for you - period). They have been used for over 5000 years as the real money of last resort by mankind (outside governmental forced controls) all over the world and are easily bought and sold on a daily basis between people.

GOT GOLD and SILVER ? If not, get some - protect your hard earned money!

90% U.S. SILVER Coin Valuations

Questions arise all the time on how do you BUY and SELL old U.S. pre 1965 Silver Dimes, Quarters and Half Dollars. What determines the price values.

Typically, 90% "JUNK" United States Silver Coins are quoted most often by $1,000.00 FV (face value)bags. They could be 10,000 dimes (years 1964 or earlier), 4,000 quarters (years 1964 or earlier), or 2,000 half dollars (years 1964 or earlier). They might contain a mixture of the different nominal size denominations or maybe they are all Mercury Dimes, Kennedy Half Dollars, Franklin Half Dollars, etc. Many dealers will sell half bags ($500.00 FV), quarter bags ($250.00 FV), $100.00 FV, $10.00 FV rolls and even $5.00 FV rolls. Normally, the smaller purchases will have a slight selling premium over the $1000.00 FV bag.

Some advantages to Investing in 90% U.S. Silver Coins are the smaller face values of a dime, quarter, or half dollar can make it easier to barter if you need to make small transactions (you aren't going to cut a 1oz Gold coin into small pieces to purchase a small valued item, such as food, water or even gasoline). They are easy to identify in the United States with their stated value stamped on them. Some may have an additional numismatic premium value due to low mintage, uncirculated condition, or a key date or mint mark (get a 2011 RED BOOK if you want to check out the mintages and grades).

It's all in the WEIGHT. When the coins were first minted a $1,000.00 FV of 90% would have a Silver weight of 723.384 TROY ounces (60.282lbs Troy) of pure .999 Silver, plus a bonus 10% of Copper weight 80.376 TROY ounces (6.698lbs Troy) of pure .999 Copper for a Total TROY weight of 803.76oz (66.98lbs) Troy weight (remember 12oz Troy equals 1lb Troy). However, Copper being a base metal and not a precious metal (Gold, Silver, Platinum and Palladium) is traded and weighed in Avoirdupois (AV or AVDP)16oz equals 1lb AV. So, if you wanted to know the weight of $1,000.00 FV U.S. 90% Silver Coins in Avoirdupois weight, it would have 789.21oz AV (49.3256lbs AV) of Silver and 10% Copper of 87.69oz AV (5.4806lbs AV) for a Total weight of 876.90oz AV (54.806lbs AV).

Now that we have the weight numbers down we have to address the problem of circulated "JUNK" 90% U.S. Silver Coins, most dealers use a "MELT" value of 715 oz Troy when valuing a bag of $1,000.00 coins. These bags should have a mixture of well worn, medium worn and slightly worn to bring about this 715 oz consensus.

To find the "MELT" price of the bag or fraction of a bag you simply find out what current "SPOT" price of Silver is for that time (Kitco.com or LME.com) and multiply by the Face Amount of 90% U.S. Silver Coins that you have.
Examples: $10.00 FV (7.15oz) Troy times spot SILVER price of $19.00 equals a price of $135.85 Melt value. Say it's a $500.00 HALF BAG (357.5oz) Troy times $19.00 equals a price of $6,792.50 Melt Value and so on.

Remember the 10% Copper is a BONUS, but again to give you an idea of the value of the Copper using the same examples from above you have $10.00 FV or .8769oz AV times spot COPPER price of 3.40lb AV (.2125oz AV) equals .19 value for the Copper. At $500.00 FV or 2.7403lb AV times 3.40lb AV equals $9.317 value for the Copper (on a $1000.00 FV bag it would have $18.634 value for the Copper). I know it's not much, but as in a previous blog, COPPER (the RED Metal) may be the Sleeper Metal that could percentage wise move alot higher in price, so any bonus value is good.

Now to the reality of Selling your 90% U.S. Silver coins, at the present time dealers are paying back of Melt prices, so using the above example of $500.00 FV he or she may offer to buy at 13 times face or $6,500.00 or $292.50 below the melt value. This is known as a "SPREAD" because the dealer is in business and may sell this $500.00 at spot or a small premium because he has cost of being in business and runs the risk of holding the inventory which could go up in value or perhaps down that is the risk he is willing to take. There could be a point in time where the dealer may offer spot or higher to fill his inventory needs, it's has to do with market Supply and Demand. Likewise, when buying from a dealer he may have a premium over melt on what he is selling. For the most part the larger the sell the lower the premium will be because of the volume.

I hope this is informative on the dealings of buying and selling 90% U.S. Silver Coins. As usual do your on research, check the spot prices when you're ready to buy or sell, because education and knowledge are the key to getting a fair deal.

The Beauty of Toned not Tarnish on Coinage

First of all the definition of Tarnish and Toning:

Tarnish is dull (lose) the luster or brightness. A discolored coating. It just sounds harsh or cheap to me when saying the word.

Toning is the quality given to one color by another. A shading of colors. It has a smooth soft harmonizing sound when you say the word.

This is why when I talk about a coin with varying degrees of colors I say that it is Toned or Toning not that it has a Tarnished look to it.

Have you ever really taken the time to looked at a toned Silver, Copper or Nickel coin (preferably Uncirculated), bar or round? Some people love the eye appeal of a toned coin and if the toning is natural and covers most of the obverse and/or reverse fields in a circular rainbow hue of colors it can add more beauty and value to the price of the coin.

Toning is an alteration of the chemical makeup and color of a coin's surface. It occurs naturally over time as the metal reacts with chemicals (mainly sulfur based compounds) in its environment and toning will take place faster in warmer and more humid conditions. Toning is a thin film of sulfide that is found on the surface of Silver and Copper coin metals. It is what can give a coin the beautiful hues of colors ranging from a bright blue, deep magenta, red, turquoise, bright orange and light gold in a rainbow look when the coin is tilted slightly in natural lighting. However, as time continues heavy toning can cause a coin to turn an ugly brown or even black in coloration. A nice natural toning (not man made induced articial toning) is what can give a coin a higher value or lower value in grading the condition.

Silver can also react with other substances such as chlorides found in water which creates Silver Chloride which can appear as an unattractive black, gray or dark brown stain on the surface of a coin and can sometimes have the appearance of a grease or even a greasy feel when holding a coin.

Pleasant discoveries sometimes are found when coins that were placed long ago in certain older type coin holders, paper rolls, envelopes, mint bags, albums, etc. where small amounts of sulfur were found caused the toning to take place.

United States .900 fine Silver coins tone differently than sterling .925 fine Silver or Bullion .999 fine Silver, due to the higher the content of Copper (the most chemically reactive numismatic metal used in the U.S.) resulting many times in a Verdigris color (green or bluish coating that forms on Copper when exposed to the air for long periods of time).

Another name for the toning on Copper coins and its alloys is often called Patina (a film or incrustation, usually green, formed by oxidation on the surface of old bronze or Copper). Did you know that a brown or black patina coloring is caused by Copper Oxide, Cupric Oxide, or Cuprous Oxide. A green coloring is caused by Copper Sulfate or Copper Sulfide and a blue coloring is caused by Copper Carbonate.

The other base metal used most often in coinage is Nickel, which generally tones only slightly, most often turning to a hazy gray though sometimes this metal will turn a light golden, pale champagne or pale blue color. If you see a Nickel coin with a wild rainbow toning it is most likely done artificially.

I like to use Air-tites (they keep finger prints, human skin oils and accidental droppings of coins from becoming damage), if a coin has been sealed in an airtite container the surfaces of a coin will deplete the sulfur and other chemicals around it and stop the toning process. This will stabilize the colors and if the coin is stored in a proper moisture free and temperature controlled environment keeping the beauty and eye appeal intact for that toned coin. This is very important if you have purchased expensive slabbed graded coins and you don't want the toning to change colors radically over time and lessen the value of your collectible or investment.

Thank You for viewing my blogs and all the best in your investing and collecting of REAL MONEY.

Charles

How many TROY Ounces of SILVER in U.S. Coins?

Useful Info:

To equal 1 Troy Oz in in the following U.S. Silver Coins you will need uncirculated coins or close to the original weight with very little wear on the coins!

WAR NICKELS dates 1942 - 1945 (35% Silver or .056265 ASW~actual silver weight) 18 = 1.01277oz
Pre 1965 DIMES (90% Silver or .072340 ASW) 14 = 1.01276oz
Pre 1965 QUARTERS (90% Silver or .180840 ASW) 6 = 1.08504oz
Pre 1965 HALF DOLLARS (90% Silver or .36169 ASW) 3 = 1.08507oz
1965 - 1970 HALF DOLLARS (40% Silver or .14792 ASW) 7 = 1.03544oz

MORGAN SILVER DOLLARS dates 1878 -1904 and 1921 and PEACE SILVER DOLLARS dates 1921 - 1928 and 1934 & 1935 all have in the original minting 90% Silver or .77344oz ASW

This is why when South Africa came out with the Krugerrand in 1967 and it had a rounded bullion weight of exactly 1oz Troy weight it helped change the concept of investing in GOLD and SILVER, because of the ease to calculate value with the daily SPOT PRICE of the Precious Metal.

As with customers asking why they can't BUY at SPOT Price and not paying a premium off spot. The reason is that SPOT PRICE Quotes are for the RAW BULLION before it has been processed into coin round forms or art bars of various sizes. It is a base price before any commissions, fees are added plus it does NOT include the COSTS such as extracting mined ore, labor, minting into tradable forms, insurance, shipping, etc.

For me the key is do I hold FIAT Man's paper money or REAL Hard Asset GOD's GOLD and SILVER money backed by 5000+ years history of mankind trading and exchanging them as a true store of value and being HONEST Money.

The Bible mentions GOLD 430 times and SILVER 303 times.

The U.S. Coinage Act of 1792 stated a dollar shall be 371.25 grains of SILVER. No where did it say anything about a paper dollar. By the way 1 Troy oz equals the equivalent of 480 grains (gr), 20 pennyweights (dwt), 31.1034768 grams (g) or 1.097142857oz avoirdupois (av).

Precious Metals and Gems are weigh in TROY weight and there are 12oz Troy to a Troy pound
Avoirdupois is the weight most commonly used in the U.S. for everything else that the consumer purchases and there are 16oz AV per pound. It is important when dealing in precious metals to know the differences in weight or it will cost you.

Silver Manipulation Quiz

Take the "SILVER MANIPULATION QUIZ" at
http://www.roadtoroota.com/public/291.cfm and let me know how you did.

COPPER is Coming

I'm starting to get excited about COPPER all over again, maybe it's the hoarder in me for things that may hold real value, or the current price of Copper just makes sense to own in this crazy world of uncertainties.

It is classified as a base metal, but Copper has traded with Gold and Silver as mankind's money for centuries so it really should be classified as a Bullion Metal along with Gold, Silver and Platinum because of its monetary uses.

Copper is traded all over the world (24 hours a day) on the various commodity exchanges in Avoirdupois (AV) pounds, but like any of the other metals it can be poured into bars or rounds in various Troy weight sizes and stamped with the .999 purity. So it is important to know the differences in Avoirdupois and Troy weights.

Copper's symbol is CU and its name was derived from "Cuppum", the latin name for Cyprus. Its original coloring is a beautiful reddish-gold that is very malleable to work with and in fact is the oldest metal used by man dating back more than 10,000 years. Its atomic number is 29 on the periodic table, it melts at 1981° F or 1083° C and its boiling point is 4643° F or 2567° C.

Copper is the 3rd most widely used metal in the world behind Iron and Aluminum.
Brass is mainly made alloying pure Copper with Zinc. Bronze is mainly pure copper alloyed with other elements such as Tin, Aluminum, Silicon or Beryllium.

The U.S. Mint changed the composition of the United States One Cent piece (penny) in 1982 (28 years ago) from having 95% pure Copper to now 97.5% Zinc with a mere 2.5% Copper coating, and now there is some talk of changing the composition of the United States Five Cent piece (Nickel) from 75% Copper and 25% Nickel to some new alloy (maybe Tin or even Plastic). You can bet the majority of Copper and Nickel will be gone from the new coin. It's called "Debasing the money" and has happened to mankind through governments over and over throughout the history of man (will we ever learn?).

Did you know that in 1973 the U.S. Mint tested alternative metals including Aluminum and Bronze Clad Steel to make the One Cent coin? Aluminum was chosen and 1,579,324 such coins were struck (dated 1974) and ready for public release. About one dozen of these cents are believed to be in the hands of collectors, although they are considered illegal to own and are subject to seizure by the secret service.

There are 373.2417216 grams in One AV pound and 453.59237 grams in One Troy pound. Here's a factoid of Copper weight in U.S. Lincoln Cents dated 1909 - 1981 and part of 1982 (note: 1943 was zinc coated steel - no copper in the cent). In One pre 1982 cent you have 3.11 total weight per coin which breaks down to 2.9545 grams of pure Copper and 0.1555 grams of pure Zinc in an uncirculated coin.

In one roll of 50 cents you would have 5.41oz AV or 4.93oz TROY pure copper or put another way, it would take (depends on coinage circulation wear) ~154 cents to equal One AV pound (16oz) pure copper or ~126 cents to equal One TROY pound (12oz) pure copper.

Starting in mid 1982 with the change in composition you have only 2.5 grams total weight per coin with only (2.5%) .0625 grams of pure copper in one cent to date it takes ~5971 cents to equal One AV pound (16oz) and ~7257 cents to equal One TROY pound (12oz) pure Copper. Zinc with the balance of (97.5) 2.4375 grams of pure zinc in one cent to date it takes ~186 cents to equal One AV (16oz) pound of pure Zinc. I hope you see the point of how debasing robs the citizens of "Real Money".

A U.S. Nickel (excluding the 35% Silver War Nickels from 1942 -1945, 11 different mint marks in all) has 5.0 grams total weight per coin with only 3.75 grams of pure Copper or 150 grams in a roll of 40 Nickels. So if you have the mind to hoard U.S. Cents and Nickels you can accumulate more Copper weight with Nickels than Cents. To be more precise it takes ~99.5 nickels to equal One AV pound (16oz) pure Copper and if you're looking at actual Nickel weigh (1.25 grams of pure Nickel per coin), it takes ~298.6 nickels to equal One AV pound (16oz) pure Nickel.

Here's another interesting fact, it takes ~375 modern (1928 to date) U.S. Fiat Currency Notes (paper) and it does not matter what denomination is stamp on each note to equal One AV pound (16oz). The point is that paper (more precisely cotton-linen fiber) is much lighter and easier to produce in whatever stated nominal value on each note than the effort taken to produce money out of the Earth's metals. It seems the currency produced by the U.S. Bureau of Printing and Engraving for the Federal Reserve (private corporation) is merely legalized counterfeiting, I don't know?, you decide.

As inflation increases, mining costs could add to upward pressure on the copper price along with huge pent up demand for Copper in Asia, China and India. I see it as a potential low risk and high reward from an investment standpoint and may be needed for bartering in the future. Copper, like Gold and Silver, has a REAL feel to it (solid weight, limited production, won't go stale or expire, a perfect store of real value), mined raw out of the Earth's crust, refined for purity and brought to market for industry. It is not a piece of Fiat Paper created out of thin air from any government in the world.

In my opinion, it's all about Demand and Supply and most important to me is the potential Return on Investment (percentages) and Copper could be the sleeper in the mix with the Precious Metals. Copper may provide the best return (smartest investment) for a "poor man's" choice over gold or silver bullion in the future.

Remember Gresham's Law - "Bad Money (Debt - Based) drives out Good Money (Savings - Based)".

This is one of the reasons that I have started buying and selling copper bars and rounds at the shows - I believe in it.

My findings stated in this article come from a variety of sources deemed to be true and as always do your own homework (read as much as you can on the topic) to see if physical Copper investing is for you.

ASE - American Silver Eagles

This is my first blog and it is on the beautiful American Silver Eagle U.S. Mint Program. The Eagles (Silver and Gold) began 24 years ago in 1986. The Platinum Eagles (1oz size $100 face value, 1/2oz $50 face, 1/4oz $25 face and 1/10oz $10 face) began in 1997 and may have ended in 2008 for good. Zero have been produced in 2009. This year the Gold Eagles have only been minted in the 1oz size $50 face value bullion coin. No fractional sizes minted (1/2oz $25 face, 1/4oz $10 face and 1/10 oz $5 face). Will they mint Gold Eagles in the future (past 2010 which would be a quarter century)??

But let me get back to the 1oz only Unc. Silver Eagles, they have ranged in mintage numbers from a low in 1996 of 3.4 million (U.S. Mint web site) to a high this year of 22.7 million and counting. Did you know this has put total minted production of Unc only no proofs, no burnish W unc, or reverse proofs to a whopping 200+ million bullion coins (that's 200,000,000 ounces of silver). I believe it is a milestone that may be coming to an end in the near future. Where's the mint going to get the needed supply from U.S. Silver sources (by law the Eagles must be produced from silver mined on U.S. lands) to continue to statisfly the growing demand for more Eagles for the investing and collecting public that seems to want hard assets instead of fiat paper back by nothing??

Eagles are my favorite bullion coin and I would like general comments on future investment ideas about them. What are your thoughts on the U.S. Mint Eagle program or anything else that relates to investing and collecting SILVER coins and bullion.

Thanks,
Charles