The distinction between the past, present and future is only a stubbornly persistent illusion.” ~ Albert Einstein
One morning last week underscored why I’m not a financial guru. Those are advisors we are led to believe have an uncanny soothsaying ability to make sound investment decisions based on past, present or future events. Puzzling as that may be to Einstein and others, even more mystifying are those who forecast precious metals prices.
In year’s past, the price of gold, and to an extent silver, was sometimes based on events around us, often geopolitical. For instance, in the 1970s, when the United States abandoned direct convertibility of the US dollar to gold, it fueled the metal’s huge price increase. Or not.
I sound skeptical because, while it’s true some world events helped gold prices soar in 1979 to a then-record of $850 an ounce, it didn’t last. In the following decade through the 1980’s, many other things of note transpired including President Reagan going head-to-head with Gorbachev and the USSR; the space shuttle Challenger disaster; the Chernobyl nuclear meltdown; China’s Tiananmen Square protests; the Iran Hostage Crisis and numerous others.....
You would think all those would justifiably lead financial consultants to suggest gold and/or silver prices skyrocketing due to global instability. It didn’t happen. In fact, it was just the opposite.
Between 1980 and 1989, the price of gold dropped from over $600 per ounce to under $400. Even more dramatic was silver. It fell from over $50 per ounce to under $6.
But, back to that morning last week. As someone who was active in the precious metals markets way back then, I was surprised to awaken to two things of note. First, our president’s threats of the US using force to take control of Greenland had abated. Phew! He also had retracted his warning of steep tariffs to Scandinavian countries aligned with Greenland. Secondly, I learned gold prices had jumped some $45 overnight. Several decades ago, it would take a year or more for such a notable price jump (or decline). Here, it was happening in hours. Throughout that day, gold fluctuated $170 up and down. It ended closing pretty much flat.
I may sound like one of those know-it-all curmudgeons we made fun of growing up. Perhaps. Yet, while I still consider myself relatively young, I can’t help being simultaneously amused, confused and a bit frightened at current soaring precious metal prices (as I write this, silver just hit $100/oz), but also at another sad consequence of them – the palpable and certain loss of irreplaceable history.
I noticed it recently while visiting several local coin dealers in a major Midwest city. That’s where people go to sell their valuables. Inside, I saw lines of people with boxes and bags of silver and gold possessions. Most were clearly items passed down in families over many decades or even centuries. Silver services and flatware, plates, platters and pitchers.
Equally present were albums or bags of silver and gold coins. All had obviously been carefully admired and acquired by hobbyists. Now, nostalgia no longer mattered, replaced with the guarantee of immediate cash.
What’s worrisome is the inevitable sale of rarities including rare-date dimes, quarters, halves and dollars. It happened before in 1979. During that silver and gold rush, people turned in many rare coins lost for the metal content. Some were detected and saved by eagle-eyed dealers. Others were overlooked and disappeared forever.
Case in point, a lowly 1943 quarter. Those are found in most collections. Struck from 90 percent silver, in circulated condition, one would sell today for around $15. That price would be tempting for anyone. However, if upon close examination it turned out to be a 1943 quarter with extremely subtle doubling on the front, the value quickly jumps to $2,000 or $3,000. In uncirculated condition it could exceed $10,000.
The same is true for a common 1942 silver dime. Today, the silver content in it puts the value at close to $6.00. However, some of those show evidence of the 1942 date being struck over a 1941 dime die. In that case, again in common circulated condition the value jumps to over $1,000.
The examples go on and on. With the price of gold on the doorstep of $5,000, it’s tempting to sell an old $10 or $20 gold coin for enough to cover a down payment on a car. Not so fast. A quick check of the date or mintmark could easily quadruple what a seller could get.
Alternately, this could be the ideal time to invest. Not in precious metals but, rather, in a good coin reference such as the “Red Book” guide book by Whitman Publishing sold at most bookstores. Priced at less than $18 it’s an investment that could pay off handsomely.
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