It has been said that Jane Austin wrote the same novel seven times. Since she lived 200 years ago, she can be forgiven. (The best screen adaptation by far, of one of her novels, is “Pride and Prejudice,” the 1940 version.) Maybe I write the same column seven times, I don’t know, but like a preacher, some things can’t be said often enough, or with enough variations. I’ll try again. Look at the photo below, and what is the difference?
They both look like they are worth something. Both are gold color, both the same size, and could be mistaken for each other, if they were both in a cash register with lots of gold colored coins of the same size. How many people, me included, spent those damned Susan B. Anthony dollar coins that were the same size as a quarter as a quarter? Good riddance, although I understand the Treasury has millions of them in storage. One of the above coins, the half ounce Gold Eagle, is worth about 190 times as much as the Sacajewea one. The gold colored dollar coin, which immediately became a failure, is made of some sort of gold colored stuff which has no value at all, any more than does the Susan B. Anthony coin, now out of circulation. Both were attempts by the government to make a dollar coin that would last longer than the paper bills. Bureaucrats of all sorts and elevations, universally have few brains and intellect, it seems, or they wouldn’t have concocted such absurdities as the Sacajewea, and Susan B. Anthony coins. What’s the difference? Plenty! About 190 times difference. Neither promise anything, but one doesn’t have to, as it has value itself, and needs no promises. Why? Because gold, due to its beauty, difficulty of acquisition, and supply, makes it intrinsically valuable. Big difference.
Now check out the items below, and tell me what the difference is.
All are of paper. None are backed by anything. Most are the same size. All have heads in the center. All are of green color. All look very official. All have dollar values on them. All have serial numbers on them, and all have official seals, which seem to give them purchasing power. All cost about the same to print about two cents, probably. All except the big one, have been passed off in stores, when mixed with the official one, to a less than potent cashier. So what’s the difference? Legal Tender Laws, are the difference. If Congress passed laws giving Santa Claus dollars legal tender status, they could be used to buy bubble gum and cotton candy at the beach this summer.
Gold, on the other hand, needs no legal tender laws, to make it actual money. Neither does silver, no matter in which form they may be. Of late, many of my and other’s clients, have seen fit to convert their actual money into legal tender, for use in buying various things which they may desire. I charge no fees if the actual money were purchased from me, but I have no idea of other’s business practices. The conversion from real money into legal tender, is really quite simple. It merely involves a phone call and delivery to the buyer. Unlike legal tenders, prices of goods in actual money (gold and silver) haven’t changed much in the last hundred years. This is why smart people store surplus assets in real money, rather than legal tender. There are other possibilities of course, but they involve larger storage places. Since I own an 1887 home, the photos below are illustrative.
On the left is a Victorian chair, and on the right a Victorian sofa, both in my living room. The chair is a reproduction, and worth a hundred dollars. The sofa is a genuine, restored antique, and worth $3000. Both can be used, both are sturdy, and both are of the same style. One is worth thirty times more than the other, because of its authenticity. See the similarity with the coins? Surplus assets can be stored in things that give one pleasure, other than gold and silver. In tough times, it might be difficult to sell a 110 year old sofa for what one has paid for it, because although it is old and pristine, tough times mean that one needs something to sit in, regardless of price or age. Hard times, I am certain, will make selling an antique difficult. Antiques, at least to me, are a wonderful place to hedge one’s assets, but things like antique autos and furnishings, do not have a ready market, as do gold and silver. I would have to do a lot of advertising to sell my sofa for what I paid for it, because the antique dealer I bought it from, undoubtedly marked it up 40% from what he paid for it.
This brings us into the same thing with gold and silver. Precious metals dealers with high overhead, expensive advertising budgets, and lots of employees, are similar to antique dealers. They need to mark up their products to cover their overhead, and this is not evil. It is a sound business practice to cover your costs. This is why we shop around for cheap gasoline, sweet potatoes, and coins. We want to get the best prices we can get. When I bought the antique sofa, it was after looking at many, many antiques, at many, many locations. I finally bought it in a distant city, and paid to have it shipped. It was in such excellent condition, and priced so reasonably, that I bought it. People call me all the time, checking my prices with others. Smart. Gold and silver bullion coins and bars, do not have age and condition entering into their price, as do antique furniture and autos. It is merely their weight. Advantages of antique furnishings, paintings, and autos, are that they give a lot of pleasure, and make one a proud owner of such. Gold and silver assets are not displayed and used by their owners, as with furniture, but are sure fire asset hedges, and easy to convert into legal tender when necessary, and without advertising. Take your choice, but protect yourself.