As investment terms such as “Aggressive Stocks” “High-Yield Bonds,” “Exchange Traded Funds,” and others go, “tangible assets” isn’t terribly flashy. Some people are, in fact, unfamiliar with it.
Tangible assets are defined as, “Physical objects that have monetary value and can be touched or felt.” Those last five words are the most telling. Humans seem to be the only species with this organic and/or sentimental attachment to physical objects. Hand someone a stained handkerchief and they won’t give it a second thought. Explain it was in Abraham Lincoln’s pocket when he was shot and they’ll worship it like gold....
Actual gold itself has been sought-after, fought-over and coveted for millennia. It’s virtually indestructible. Gold coins from ancient Rome and Egypt appear as bright and bold today as they did thousands of years ago. No rust or corrosion. Domestically, most all gold coins and bars struck in the 1850’s in San Francisco came directly from the California gold fields during the gold rush of the ‘49ers in nugget form. We can still actually hold it. That’s historically pretty cool. In 1857, thousands of pounds of that gold sank to the ocean bottom aboard the SS Central America.
Discovered in 1988 in over 7,000 feet of water, many of those still gleaming SS Central America 1857 coins and bars were recovered and sold to collectors. The tangible magic of simply holding historic coins made from gold panned in California streams 150 years prior which then sank and sat in briny darkness for well over a century underscores the fascination we humans have for these tangible assets. To actually touch such objects is, in itself, intoxicating.
Again, the aforementioned words, “…can be touched or felt” is what’s key to tangibility. It’s also why many investors don’t just own gold but physically possess it. I can’t speak to the intangible stock of gold mining companies. Curiously, as gold prices have soared in recent years, the stock price of some mining companies has dropped. Other than increased costs of recovery, I can’t begin to explain why.
What I do know is that I have forever preached about the absolute necessity of taking possession of gold no matter the form it may be in. Never, repeat never, allow someone else to hold or store your gold for you. Due to very unfortunate recent events, that’s more true than ever.
In Delaware, a coin dealer and gold “custodian” was found to have defrauded over 1,000 people by absconding with some $76 million of their precious metals. Dealer Robert Higgins had been entrusted with gold coins and bars for investors through his Wilmington firm, First State Depository.
Evidently, over the course of years, Higgins casually pilfered tens of millions of dollars in investor’s gold he had in “safekeeping.” He used those ill-gotten assets to pay private debts, bankroll his personal lifestyle, purchase multiple timeshares in Hawaii and take exotic European vacations.
If that weren’t enough, Higgins also underreported his income and filed false tax returns. The theft was so bad it’s reported some of his victims lost essentially all their life savings.
An investigation into his scheme began a few years ago. Higgin’s trial and convictions concluded just last month. In his sentencing, Higgins, now 69, was punished with 65 years in prison and ordered to pay restitution of $76 million. As justice-filled and satisfying as that sounds, it’s sure to be quite hollow. Yes, he’ll invariably spend the rest of his existence in prison. However, certainly, the vast majority of the gold Higgins stole is long gone due to his extravagant spending.
One of the attractions of gold or silver coins is often the incredible beauty of the designs on them. US coins especially have received numerous international awards for their intricate motifs and engraved images. In about a week, on August 21, the Mint will release yet another spectacular gold coin featuring a highly detailed sunflower with a pollinating bee on the front and artistically stylized soaring eagle on the back. It’s not something to entrust to a stranger or lock away in darkness never to be admired.
Of course, the physical possession of gold or silver doesn’t mean bathing in coins ala Scrooge McDuck. However, as is tragically evident with the Delaware custodianship fiasco, keeping any gold, silver or platinum, be it in bullion bars or collectible numismatic coins, in a secure vault or accessible safe deposit box could prove as wise an investment as the precious metals themselves.
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