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Three Lies Commonly Told by “Rare” Coin Dealers

We regularly take calls from Money Metals Exchange customers who have been taken for a ride by one of the many rare coin (or numismatic) salespeople who…

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We regularly take calls from Money Metals Exchange customers who have been taken for a ride by one of the many rare coin (or numismatic) salespeople who seem willing to say just about anything to earn their sales commissions.

Numismatic dealers advertise gold and silver and touch on legitimate concerns over inflation, government debt, and the likelihood of another financial crisis.

Those who call in seeking to make an investment in bullion get switched into a very different product – illiquid and overpriced “rare,” proof, and commemorative coins. And they are faced with large discounts when attempting to sell down the road.

Only coin collectors with specialized knowledge should dabble in the markets for numismatic coins. Investors who simply want gold and silver as a hedge against inflation and uncertainty will want to select an ethical dealer, such as Money Metals Exchange, which sells lower premium bullion coins, rounds, and bars.

Here are three of the most common deceptions used by peddlers of "rare" coins...

Lie #1: Rare Coins Are Uniquely "Confiscation Proof"

This falsehood keys on President Franklin D. Roosevelt's Executive Order #6102 which ordered citizens owning more than 5 ounces in gold coins to turn in the "excess" coins for dollars and made "hoarding" gold a crime.

There was an exception made for truly rare and collectible gold coins (many garden-variety coins numismatic salesmen sell today might not fall under this definition, by the way).

Only months later, FDR stuck it to anyone who cooperated by turning in their gold when he devalued the dollar by almost 50% and reset the official price of gold to $35 per ounce.

At that time, the dollar was formally backed by gold.

Buyers of rare coins hoping to avoid
government confiscations are faced with
immediate confiscation of some of their wealth
by the rare coin dealers themselves.

Forcing the public to turn in its gold made it possible to expand the money supply in an effort to counteract deflationary pressures and fund massive new federal government spending programs.

President Richard M. Nixon slammed shut the gold window in 1971, so money can now be printed without this important restraint.

In other words, central planners no longer "need" your gold to pursue their inflationary policies.

Today, if the government wanted to confiscate our wealth (because simply stealing it via inflation wasn't doing the job quickly enough), we would expect officials to take whatever was the easiest to get their hands on – and/or jack up taxes. Financial assets are not only easily located, but also easily confiscated electronically, unlike physical gold and silver securely stashed away.

The "confiscation proof" argument spun by rare coin salesmen falls apart in another way.

Under two federal laws – one passed in the early 20th century and another from the 1970s – the U.S. government claims the power to seize any private asset whatsoever in times of national emergency or war. Nothing is automatically exempt.

Lie #2: Rare Coins Are "Not Reportable" for Capital Gains Tax Purposes

The truth is that government reporting requirements are virtually identical for numismatics and bullion.

Only in extremely rare instances are buying or selling bullion gold or silver reported to the IRS by dealers. The primary exceptions are purchases using more than $10,000 in actual cash or sales of very large gold and silver bars – bars that can be used for delivery on a futures contract.

In the overwhelming majority of transactions, dealers are NOT required to file any kind of report.

What rare coin salesmen "forget" to mention is that any capital gain you enjoy in selling a rare coin is still something that you, as an individual taxpayer, must report on your tax return – whether or not a 1099 information return was filed by your dealer.

Tax obligations are the same for both numismatic and bullion coins. Gains on coins held longer than one year are taxed at the collectibles rate, which is 28%. Short-term gains are taxed as ordinary income.

Lie #3: Rare Coins Provide More Price Appreciation

St. Gaudens Gold Coins

Each numismatic coin type, each year, and
each condition level has its own sub-market,
making it especially difficult for anyone but
extremely serious collectors to make
knowledgeable decisions.

Far from delivering greater actual, bankable profits than bullion, the opposite is usually the case with numismatics.

The outrageous buy/sell spreads so common with numismatics (and proof coins) severely eat into the profit potential associated with owning them.

It is extraordinarily common for unsuspecting rare coin buyers to be suckered into paying twice the melt value for coins which are the opposite of “rare.”

Because the coins command very little actual premium versus melt value when it is time to sell, the owner may have to wait for the metal price to double, just to break even.

The best way to avoid being scammed is to find out what the buyback price would be on a coin if you were to sell it back later that day. For reference, bullion coins, bars, and rounds, offer a spread which is generally less than 15% (and can be under 5%).

      

Economics

“Culture As An Asset”

#CKStrong Stunning. Hedge funds hoovering up trading cards as an “alternative to equities” with the same passion Brooks Robinson hoovered up ground…

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#CKStrong

Stunning. Hedge funds hoovering up trading cards as an “alternative to equities” with the same passion Brooks Robinson hoovered up ground balls.

This is usually a sign of the endgame for markets, i.e,, the precursor to a bear market. Think the “Great Beanie Baby Bubble” of 1999.

In general, there are two types of assets,

  1. They can be rare—gold bars, diamonds, houses on Victoria Peak, bottles of 1982 Pétrus, Van Gogh paintings, stamps, beanie babies, or baseball cards or
  2. They can generate cash flows over time  – GaveKal

Creating An Illusion Of Scarcity

Scarcity relative to the money stock is what its all about now, folks. 

It probably won’t be long before the Fed has to bailout the baseball card market, no?

Full disclosure,  I do own a Mike Trout rookie card

Given the extreme valuations of all most all asset classes, coupled with the massive amount of money in the global financial system, markets are now really stretching, looking for, and actually attempting to create scarcity as a useful delusion to justify, rationalize, and drive speculation. 

Maybe I will start collecting poop as an “anthropological asset,” put it the blockchain and super charge the price ramp by snapping a few pictures of each sample, converting them to NFTs to load up to the internet.

Then again, maybe all this is signaling the start of a big, big inflation cycle and the markets are looking to get out of cash and protect their purchasing power.   But that’s too rational.  

Can you believe what markets have become, folks?   It is hard to see clearly when everybody is making money. 

 

 

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Articles

Bryah nabs strategic exploration ground around namesake project

Special Report: Bryah Resources has expanded its footprint in WA, securing three exploration licences covering 50 km2 around its existing … Read More
The…

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Bryah Resources has expanded its footprint in WA, securing three exploration licences covering 50 km2 around its existing land holding in the Bryah and Padbury Basins.

The Bryah Basin hosts the high-grade copper-gold mines at DeGrussa, discovered by Sandfire Resources (ASX:SFR) in 2009, and at Horseshoe Lights, which was mined until 1994.

It also hosts several historical and current manganese mines including the company’s Horseshoe South mine.

Bryah Resources’ (ASX:BYH) is confident that the new tenements – E52/3848, E52/3898 and E52/3963 – cover prospective and under-explored areas which have gold, copper-gold and manganese exploration potential.

The tenements were acquired for 4 million ordinary shares at an issue price of $0.055/share.

Tenure right next to historic gold mine

The largest tenement (E52/3898) covers exploration ground adjacent to the historic Wilthorpe shallow open cut gold mine.

The mine straddles the boundary of new tenement E52/3898 and an adjacent E52/2059, held by Westgold Resources (ASX:WGX).

It was mined by Dominion Mining from 1993-94, producing 4,650 ounces of gold from 72,817 tonnes of ore grading 2.0 g/t gold.

And there has been limited gold exploration since.

Based on the reported mineral occurrences, Bryah considers the tenement package highly prospective for copper, gold, and manganese.

Pic: Tenement location plan

Exploration planning underway

The company will shortly commence a thorough desktop review of all historical exploration reports as well as its own extensive database.

The data review will support a detailed phase of exploration planning, ahead of ground exploration activities.

In the meantime, reverse circulation drilling is underway at Bryah’s manganese JV, in a 2000m program fully funded by partner OM Holdings.

 


 

 

This article was developed in collaboration with Bryah Resources, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

 

The post Bryah nabs strategic exploration ground around namesake project appeared first on Stockhead.

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Economics

US stocks march on, lifted by business optimism

Benchmark US indices closed higher for the second consecutive day on Thursday September 23 lifted by positive sentiments from Fed s economic outlook…

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Benchmark US indices closed higher for the second consecutive day on Thursday, September 23, lifted by positive sentiments from Fed’s economic outlook.

The S&P 500 was up 1.21% to 4,448.98. The Dow Jones rose 1.48% to 34,764.82. The NASDAQ Composite rose 1.04% to 15,052.24, and the small-cap Russell 2000 was up 1.82% to 2,259.04.

Traders ignored the weak unemployment data released by the Labor Department on Thursday, which showed new jobless benefits claims rose by 16,000 to 351,000 in the week ended Sep 18.

Economists consider the rise in benefits claims to be because of Hurricane Ida and forest fires and not due to flawed policy action. On Wednesday, the Fed said that it might start withdrawing stimulus support from November. The statement raised confidence in the economic recovery.

Financial stocks were among the top movers on S&P 500 Thursday, while energy and real estate stocks declined. Stocks of BlackBerry Limited (BB) rose 12.08% a day after reporting quarterly results. Its revenue rose to US$175 million in Q2, FY21, from US$174 million in the year-ago quarter.

Accenture plc (ACN) stock jumped 2.63% after reporting its fourth-quarter results. Its net income was up US$1.43 billion from US$1.30 billion in the same quarter of the previous year.

Salesforce.com, Inc. (CRM) stock rallied 7.38% after it raised the full-year revenue guidance. It expects its FY 2022 revenue to be US$26.35 billion, up from its earlier forecast of US$26.3 billion.

In the energy sector, Exxon Mobil Corporation (XOM) rose 3.58%, Chevron Corporation (CVX) gained 2.51%, and ConocoPhillips (COP) gained 2.45%. Kinder Morgan, Inc. (KMI) and EOG Resources, Inc. (EOG) advanced 2.51% and 2.76%, respectively.

In the consumer discretionary sector, Nike, Inc. (NKE) increased by 1.26%, Starbucks Corporation (SBUX) gained 1.25%, and General Motors Company (GM) rose 2.24%. Ross Stores, Inc. (ROST) and Hilton Worldwide Holdings Inc. (HLT) ticked up 1.62% and 4.30%, respectively.

In financial stocks, Berkshire Hathaway Inc. (BRK-B) rose 1.65%, JPMorgan Chase & Co. (JPM) jumped 3.35%, and Bank of America Corporation (BAC) rose 3.79%. Wells Fargo & Company (WFC) and Morgan Stanley (MS) jumped 1.58% and 2.86%, respectively.

Also Read: Top five communication stocks that rode the Q2 rebound

Also Read: ONTX stock dives 16%, DVAX stock in green after clinical data

US stock indices closed higher on Sep 23 on positive economic outlook.

Also Read: Crypto exchanges Binance vs Kraken: Where would you like to trade?

Futures & Commodities

Gold futures were down 2.05% to US$1,742.40 per ounce. Silver decreased by 1.71% to US$22.515 per ounce, while copper fell 0.48% to US$4.2317.

Brent oil futures increased by 1.38% to US$77.24 per barrel and WTI crude was up 1.37% to US$73.22.

Bond Market

The 30-year Treasury bond yields was up 5.04% to 1.941, while the 10-year bond yields rose 7.71% to 1.434.

US Dollar Futures Index decreased by 0.39% to US$93.100.

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