PDA

View Full Version : Bullion Bars work 20% harder



Gino
26th November 2009, 08:35
I have two observations on the coins versus bars argument that is kicking around.

Firstly, when silver hits US$100/oz I donít think anyone will be measuring its value in US$.

Secondly, for coins or rounds to become the medium of exchange/trade in a so called SHTF scenario, you are really talking about a return to the dark ages, no electronic transactions, no credit cards, no banking, no internet . . . a complete societal breakdown. Personally, I donít feel that is justification to buy coins over bullion. Presumably in this Mad Max world of post-SHTF, fire will still exist and people will be able to melt down their hoard into tradeable units . . . if necessary.

But hereís the thing regarding coins and bars, the fabrication premiums for coins is nuts. Using the Perth Mint as an example (maybe some else can do the US Mint calculations):

1) On a per ozt basis, the fabrication charge for a 0.999 fine 1oz Kookaburra Coin (A$5.50/ozt) is 624% above the fabrication cost for a 0.999 fine 50oz bar, which is A$0.74/ozt; and
2) At A$20 per ozt, that A$5.50 fabrication cost per coin adds an extra 27.5% onto the spot price.

Or to look at it another way, the government is taxing you over 20% of every ounce you buy if you buy 1oz coins, instead of 3.8% if you buy (50 oz) bars.

But the kicker is, that this 20+% tax is not really a tax but a gift. A gift from you to your government of over 0.2 ozt of .999 fine silver for every 1 ounce coin you buy. So, not only are you paying more when you buy coins with a government stamp on them, but by buying these coins you are giving up 20% of your silver for the paper pushers to continue their market high-jinks and manipulations.

In fact, if you believe silver is real money, you are financing the market manipulations and price suppression. You are the continuation of the fiat currency system with its fractional reserve banking that trades in your own enslavement (debt).

Do you really want to have 20% less impact on the silver market with your purchases?

Surely it is true that all silver investment is beneficial to its value, however, the silver market is comparatively small by world market standards, so an extra 20% of silver being taken off the market by investment would have a huge impact on the price.

In the USA, American Silver Eagles (ASEís) retail for US$2.50 over the spot price which at US$18.50 per ozt, say, is equivalent to leaving 13.5% of your silver behind. It was obviously a higher percentage when the price was lower.

May I humbly suggest that the impact of a 13.5% to 20% increase in silver demand will have more influence on the value of your investment than living in fear of some cockamamie SHTF conspiracy theory.

Which makes you wonder if the propagation of that scenario isnít just some elaborate psy-ops by the ďpowers-that-beĒ. :-)

Getting serious again, does anyone have any figures of what would happen to the Silver price if demand increased by between 13.5 to 20%? That is, if people bought bars instead of government rationed coins?

Jason Hommel, are you there?

SilverLite
26th November 2009, 08:46
We all know silver is silver, however for me personally if a SHTF scenario did occur I'd feel more comfortable with SAE's than generic come redemption time.

Gino
26th November 2009, 08:59
We all know silver is silver, however for me personally if a SHTF scenario did occur I'd feel more comfortable with SAE's than generic come redemption time.

Even though you are leaving 13% of your silver to the paper currency pushers? . . . wrt your tag line.

SilverJim
26th November 2009, 09:43
The hole in your theory Gino is that as a medium of exchange, coins are superior to bars and widely recoginized and trusted coins will be superior to generic rounds. In a SHTF scenario, I want SAEs and 90% junk. I own all forms, JIC. :cool:

Gino
26th November 2009, 10:28
The hole in your theory Gino is that as a medium of exchange, coins are superior to bars and widely recoginized and trusted coins will be superior to generic rounds. In a SHTF scenario, I want SAEs and 90% junk. I own all forms, JIC. :cool:

Glad to hear you have a mix. So do I.

But 13% is a hefty insurance premium for an apocalyptic, survivalist scenario that is predicated on the anhilation of modern trade and communication functions.

Personally, I can not imagine being so frozen in fear of such an unlikely event that I would give up so much. Well actually, having said that, I have been in that state of mind in the past, and know that people that dwell there will be paying a far higher price than the simple loss of silver from their purchases of coins. There are significant social, relationship and other opportunity costs in maintaining a negative focus on personal prospects.

Others may like to consider buying bullion bars for the greater impact they will have on freeing the silver market and I apeal to them to consider the cumulative effect of the investment community consuming 13 - 20% more silver.

MasterQ
26th November 2009, 12:59
I've been contemplating the same.

I know ASE's are popular on this forum but I bought my wife a mix of all 3 some time back. (Canadian, Phils, and ASE)

I would imagine they are better for SHTF than bars but you can still get an exchange for the bars. The bars are better on spot period. I guess it would matter as a collateral for whatever we may or may not end up in.

If the bars trade for more fiat later then no real loss but if they are discounted into a basket of currencies this could be a real problem.

I know I'm one of the few lonely voices on the direction of the dollar and with that thought bars measure as a better low cost entry investment to help shelter some incoming inflation on the short term.

Coins seem to be the medium of choice if you were going straight to market for food and sundries.

Choice is yours!

-Q

cdavport
26th November 2009, 12:59
I believe in owning some of everything. If the premium for coins is a problem for you, switch to 90% junk. You can buy it at spot, and cover yourself for a possible dollar melt down. Also pretty much eliminates the fear of counterfeiting as well. I also own 10 oz, 50 oz, and 100 oz bars, as well as various govt. issued coins. hey---you can't have too much of a good thing!

PlataTruth
26th November 2009, 13:03
In Canada, the best bang for your buck is the 10 oz bar. Least premium and still highly sellable/tradeable, and like you said less money for the govt.

Longhaul
26th November 2009, 15:13
Good points all, especially not leaving a larger % of silver on the table when you leave. Maybe 2% of my stash is ASE's, Maples.

When I got a small pile of silver in my hands, it all makes the same noise to me when shaken. I never could buck up the extra $ for the special ones knowing I would be ultimately lighter when I left the LCS.

As far as some cockamamie SHTF conspiracy theory, Most news is conspiracy of some kind, take your pick,

but....for some reason many of those cockamamie SHTF conspiracy theorists out there wound up in the same PM holding positions for the same reasons that other intelligent folks got there, so it can't be all that bad.

TheLoneRanger
26th November 2009, 15:43
On what do you base your assumption that the fabrication cost for a 1 oz Kook is A$5.50?

My guess would be that the fabrication cost for a Kook or a ASE or Silver round would be within pennies of each other.. the rest being strictly premium for the brand name... neither the US Mint nor, I am sure, the Australian Mint sell their coins for cost of production.

Gino
26th November 2009, 18:29
On what do you base your assumption that the fabrication cost for a 1 oz Kook is A$5.50?

My guess would be that the fabrication cost for a Kook or a ASE or Silver round would be within pennies of each other.. the rest being strictly premium for the brand name... neither the US Mint nor, I am sure, the Australian Mint sell their coins for cost of production.

$5.50 per coin is the fabrication cost when you convert unallocated bullion to bullion. The best and most cost effective way that I have found to buy physical product in quantity here is via a perth mint unallocated account, convert to physical and take delivery. You skip the retail mark-ups.

The 1KG bars offered the lowest fabrication premiums in the past, but the mint has changed their fabrication costs to favour the purchase of 50 oz and 100oz bars instead. But they have no plans to produce more 50 oz bars, they advised yesterday. I took their entire stock of 50oz bars yesterday, which was not many btw. So now the question for the mint today is "Are you planning on continuing the production of 100 oz bars and how many do you have in stock?"

Take it off the table my friends, in any way you can, as much as you can as often as you can. The time is now!

There is momentum in the market, the accelaration of that momentum lay in increasing the volume of your purchasing.

Buying ASEs when the government is rationing them is allowing the government to put the brakes on and defer your purchases.

My point is that you/we do not need to be controlled and can push the accererator of the silver market to the floor, simply by not being deferred and instead increasing the volume of our purchases by 13+% . . . at the same capital outlay . . . by not paying the outrageous premiums.

silversurfer1
26th November 2009, 18:51
With this Dubai default I think a discussion of whether which is the better of coins, bars or junk is becoming secondary. It appears "things" are heading to higher gear (not good). Coins have advantages, bars have advantages and junk has advantages. Neither have disadvantages. I have a mix of all. Just grab as much as you can afford of any or all the above - as fast as you can.

SilverLite
26th November 2009, 19:38
I've been contemplating the same.

I know ASE's are popular on this forum but I bought my wife a mix of all 3 some time back. (Canadian, Phils, and ASE)

I would imagine they are better for SHTF than bars but you can still get an exchange for the bars. The bars are better on spot period. I guess it would matter as a collateral for whatever we may or may not end up in.

If the bars trade for more fiat later then no real loss but if they are discounted into a basket of currencies this could be a real problem.

I know I'm one of the few lonely voices on the direction of the dollar and with that thought bars measure as a better low cost entry investment to help shelter some incoming inflation on the short term.

Coins seem to be the medium of choice if you were going straight to market for food and sundries.

Choice is yours!

-Q
I also own a mix of all. The question I have is if this was a good idea or should I have opted into AE's only...

The local dealers ( maybe this was the first mistake :) ) I spoke to always said they pay more for AE's than generic come trade in. So I always bought the pretty AE's for dollars over spot.

When I bought bars it was always for spot. Obviously this was nice because your not putting extra greenbacks into somebody elses pockets for nothing.

Anyhows that where I'm coming from. Comments appreciated.

Burticus
26th November 2009, 22:38
If $#!+ really hits the fan, you can always make an Injun-style tomahawk out of a 100 ounce Engelhard bar & eagle feather for clocking zombies on the ukranium.

Eagles, maples and phils will work equally well in a slingshot.

SeekrBrnEvryMin
26th November 2009, 23:44
If $#!+ really hits the fan, you can always make an Injun-style tomahawk out of a 100 ounce Engelhard bar & eagle feather for clocking zombies on the ukranium.

Eagles, maples and phils will work equally well in a slingshot.

At SHTF kick-off, I'll lead a small moulage party to your place to trick-or-treat at first. We'll throw bricks if you throw silver.