Local coin shop runs out of silver bullion coins
Posted on 18 July 2008 with no comments from readers
Yesterday I visited the local coin shop in my home town, Salisbury in England and while full of interesting medals and collectables something was missing this year. The coin counter had shrunken to a small selection in the corner.
I asked the owner of The Castle Galleries, John Lodge what had happened and he explained that it was proving hard to buy sufficient supplies to keep up with demand. Indeed he apologised for only having two silver bullion coins on display: a 1924 Silver Eagle and a 1780 Marie Theresa. So I bought both for $40 and emptied his shop!
However, Mr. Lodge has been in business for a long time, and as a very small boy I used to go to a youth club he ran called the Happy Hour Club. He recalled that in the late 1970s people used to queue down the road to buy gold and silver coins, and nothing like that had happened yet.
Mr. Lodge felt it was remarkable just how long ago the last gold boom seemed. It certainly appeared unreasonable to me that I should pay $20 for an ounce of silver as a coin, exactly the same price as I would have paid in 1979.
In that year I worked as a labourer for my father’s building company and we sold one house for $36,000. Today it would be twenty times that amount.
Nothing else I have bought on my short visit is close to the 1979 price. In just the past year gas prices are up 27 per cent and the average supermarket basket by 21 per cent, according to the Daily Mail. So why should bullion coins be unchanged over 29 years?
Mr. Lodge says it is extraordinary how long the bear market lasted and reminded me that the coins bottomed at $5 each. Yet you look at one ounce of silver and it looks like it ought to be worth $100 or more.
But there is a shortage emerging, clearly and that ought to be driving prices higher if nothing else. Mr. Lodge also thinks the industrial consumption of silver is forgotten, and that means the silver of 1979 has gone, unlike gold which piles up in vaults.
Apparently bullion dealers report a doubling of sales in the UK over the past year with increasing interest among the public in buying silver and gold coins and bars of metal. But if inflation does what it did in the 1970s then the queues down the road to buy from Mr. Lodge will be there again. I just hope he finds some stock.
no Comments posted by readers:
naked short selling by the boyz is the cause.
8 major institutions, both the metals and the junior stocks.
maybe the profits from oil manipulation by the boyz will find its way into PMs. The upleg on financial equities will fail.
In all my years I have NEVER seen such blatant fraud, theft, and manipulation as is happening now.
Every level is complicit.
Why are you wasting money on precious metal? Surely, oil has peaked in price by now, so stocks should be the better bet.
With American diplomats in Iran, nobody is left who can stop oil from falling. We won’t be making any saber-rattling moves at this juncture; that would be unwise. And what could Israel possibly do or say now to screw it up, test a nuke?
No, it looks like all the other major players will try to drive oil as low as it can go to save their countries from inflation and… dare I say it? DOOM.
National governments know when to drive oil prices down. Both America and Saudi Arabia, China, Japan, Germany… hell, even Mars is probably trying to drive down oil.
Only one hedge funds I know of is trying to drive it up: Goldman-Sachs bought massive oil futures at $149 a barrel for delivery at the end of the year. Boy are they doomed.
Everybody else wants to save their nation. The momentum is now against the speculators.
P.S. Good luck to you gold bugs. But what leverage does precious metal have?
Comment by Hordac the Refuser — July 18, 2008 @ 10:03 pm
Wow-you must be very young or not to inquisitive.Precious metals (since I have been in 2001)have gained 28% a year since 2001.
To gain some knowledge -read this:
A very interesting and puzzling story-
“When I was 12 years old, we still used silver coins in this country.
When he went to the gas station, my dad paid about $.30/gallon for gas, so a 10 gallon fill-up cost us $3.00; he paid for them with 3 silver dollars or silver certificates, or 6 silver halves, usually.
Today, 3 silver dollars are worth about $13 apiece at Ag$18/ounce, or $39. At $3.99/gallon today, those 3 silver dollars are still worth 9.77 gallons of gas.
So, silver has held its value while the dollar has lost over 90% of its value since 1964. And, there is a lot less silver in the world today than there was then.
Moral:
silver is as close to a riskless investment as there is in the financial world today, if you buy the real physical, no margin, and keep it in your own possession.”
see (http://www.gold-eagle.com/cgi-bin/gn/get/forum.html) for story.
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To put it in perspective: what used to take $3 USD paper, now takes $45 USD paper. What used to take 3 silver dollars to fill up your tank, still takes 3 silver dollars.
Note: One US Silver dollar (Morgan or Peace) has .770 oz of silver (3 have 2.31 oz total silver).
I pulled up last year’s July 2007 gasoline price average and the price of silver for July-guess what?
July 07 average gas-$2.99 gal.(http://www.eere.energy.gov/afdc/pdfs/afpr_jul_07.pdf)
July 07 average silver price- $12.75 oz.(http://www.kitco.com/scripts/hist_charts/monthly_graphs.plx)
Checking the formula I find: 2.31 oz silver X 12.75= $29.45. $29.45 / 10 = $2.94 gal.
3.2 OZ OF SILVER STILL BOUGHT 10 GAL OF GAS! This correlation has worked out since the 1960’s.
Now, the catch is this-does the price of oil control the price of silver, or does the silver price somehow control the
price of oil? I do not know this answer, but I do know silver is expected (by the futures market) to close at or near $25 oz by year end.Plug in the formula and you may be able to predict the price of a gallon of gas in December.
My calculations show $ 5.70 per gallon.The picture gets better- top silver mining analysts are calling for $50 oz
silver, when? I do not know, BUT, when gasoline hits $11.50 gal those that had invested in silver will not care. Work the formula yourself, you have the tools, find the time.
I know, Richard, I know. Precious metal actually is real money that can’t be devalued through inflation. And yes, everybody says silver is actually undervalued and a great buy (even better than gold). But oil truly is artificially high right now, and (ask a Venezuelan) should be selling for about $65 a barrel, if that. So it’s hard to make a silver/oil comparison.
Still, did your gold ever pay you dividends?
Hordac the Refuser says “Still, did your gold ever pay you dividends?”
Hordac, did your assets paying a dividend appreciate or depreciate over the past year? Stupid question, I already know the answer. So I will ask you a better question: did your dividend make up for your asset depreciation? I highly doubt it. Keep buying dividend stocks buddy.
Who needs a dividend when you have massive appreciation? Especially when the dividend comes from issuing new debt or dillutive equity. Many of your precious dividends will be gone soon. Then what will you own?
Funk is its own reward. All of this talk about economics and finance is a meaningless illusion to distract you from looking inside of yourself. Think, Think, it ain’t Illegal Yet.