Long Position on Silver and Gold?

[lex137]

^^^^ this. I just sold all my PMs even jewelry and melted all my guns down into paper weights today!

[Sawin]

Like the magazine and firearm issue who the hell knows what you have in your possession, UNLESS you post it over the internet?

Jim, you're usually so helpful. haha, I've never been one to say what I have or do not have on the internet. I'm just wondering if there really is a BS law/exception that validates the reasoning for paying higher premiums on Silver Eagles. Can anyone tell me that?

[hatidua]

a BS law/exception that validates the reasoning for paying higher premiums on Silver Eagles. Can anyone tell me that?

I can't speak for Jim, or about any legitimate law, but imagine if you were looking to buy an ounce of silver and you were approached by two individuals, both selling 1oz of silver. One was a Silver American Eagle, and one was a round from Billy Bob's Silver Emporium, complete with a photo of Billy Bob on it. Would you pay a little bit more for the SAE?

[Sawin]

I can't speak for Jim, or about any legitimate law, but imagine if you were looking to buy an ounce of silver and you were approached by two individuals, both selling 1oz of silver. One was a Silver American Eagle, and one was a round from Billy Bob's Silver Emporium, complete with a photo of Billy Bob on it. Would you pay a little bit more for the SAE?

Interesting hypothetical....All things being equal. My answer based on my current, yet subject to change, opinion of generic rounds is, No. I see no reason to pay a premium for 1oz of silver, just because of the impression that's minted into it's face.... If the silver content was identical and the purpose of buying the silver was solely to diversify out of the USD, then I would NOT pay a premium for the SAE. Again, all things being equal.

That is the entire purpose behind my question. I am wondering if there is more to the equation that justifies the premium.... pretty simple concept guys. Stop nitpicking.

[sellersm]

I don't know much about these sites, but according to them, there's a bit of truth to what this seller told you:

This site discusses confiscation:
http://www.americanfederal.com/coins/

Think your $20 St. Gaudens gold coins are safe from Confiscation? This particular topic is used as a scare tactic to sell you over-priced coins that do absolutely nothing to protect you and only serves to let the dealer confiscate your money. If you are concerned about confiscation, there are simple, low cost ways of protecting yourself. You will be surprised which coins are safe…. US Eagles and Buffalos are actually safe from confiscation. Most dealers will claim just the opposite, but the legislation that created them clearly states they are “numismatic” coins.The Gold Bullion Coin Act of 1985 (Public Law 99-185 of Dec. 17, 1985, 99 Statutes At Large 1177, 31 USC 5101, 5111, 5112) provided for minting the American Eagle gold coins. Section 2(3) provides, “For purposes of section 5132(a)(1) of [Title 31], all coins minted under this subsection shall be considered to be numismatic items.”
The Liberty Coin Act of July 9, 1985 (Public Law 99-61 of 7/9/85, 99 Stat. 115, 31 USC 5112) authorized the one ounce silver coin commonly called the Silver American Eagle. At section 202(g) it contains identical language.
The American Eagle gold coins and the silver American Eagles are “numismatic” coins. (31 USC Section 5132(a)(1) requires the Secretary of the Treasury to apply proceeds from selling “numismatic” items to cost of making them.)
In addition, certain dealers maintain that coins with a premium of 15% over bullion value are also defined as numismatic. This too is false. In 1984, this was proposed but never adopted.
So if numismatic coins are exempt, the new Eagles and Buffalos are exempt too since they are specifically defined that way.
I maintain that $20 St. Gaudens and Liberties are NOT exempt.
Dealers will tell you otherwise.

This site discusses reporting: http://www.cmi-gold-silver.com/gold-confiscation-1933/

Reportable Sales

Customer sales to dealers of certain precious metals exceeding specific quantities call for reporting to the IRS on 1099B forms. The 1099B forms are similar to other 1099 forms taxpayers commonly receive; the “B” means they have been issued by a business other than a financial entity.
Reportable sales (again, customer sales to dealers) apply to 1-oz Gold Maple Leafs, 1-oz Krugerrands, and 1-oz Mexican Onzas in quantities of twenty-five or more in one transaction. Reporting requirements do not apply to American Gold Eagles, no matter the quantities. Furthermore, reporting requirements do not apply to any fractional ounce gold coins.
Only one common silver product is reportable when sold: pre-1965 U.S. coins. The quantity that causes the filing of a 1099B, however, is not clear. The IRS bases its authority to require reporting on CFTC-approved contracts that call for the delivery of $10,000 face value. Consequently, many dealers do not report sales of pre-1965 U.S. coins unless the sale totals $10,000 face value; others report $1,000 sales.
Sales of American Silver Eagles, privately-minted Silver Eagle 1-oz silver rounds, and 100-oz silver bars are not reportable, no matter the quantity. Other precious metals products are reportable, but they are not covered here because the average investor does not trade them.

And one more: http://the-moneychanger.com/articles...aw_really_says

[Sawin]

I don't know much about these sites, but according to them, there's a bit of truth to what this seller told you:

This site discusses confiscation:
http://www.americanfederal.com/coins/


This site discusses reporting: http://www.cmi-gold-silver.com/gold-confiscation-1933/


And one more: http://the-moneychanger.com/articles...aw_really_says

Thank you sellersm. I appreciate the links. I am not familiar with those sites either, but have read many like them yesterday and today. I just wanted to see if anyone here knew more assuredly. So far my opinion has not been changed.

[ChunkyMonkey]

Interesting hypothetical....All things being equal. My answer based on my current, yet subject to change, opinion of generic rounds is, No. I see no reason to pay a premium for 1oz of silver, just because of the impression that's minted into it's face.... If the silver content was identical and the purpose of buying the silver was solely to diversify out of the USD, then I would NOT pay a premium for the SAE. Again, all things being equal.

That is the entire purpose behind my question. I am wondering if there is more to the equation that justifies the premium.... pretty simple concept guys. Stop nitpicking.

Marketability, when you need to move them. Minted silver has much larger market..from collector to shtf prepper. Proof? Isn't that why most people doesn't mind paying the premium on the first place? My 1986 Silver eagle MS70 sold for $600 on ebay.

[sellersm]

Marketability, when you need to move them. Minted silver has much larger market..from collector to shtf prepper. Proof? Isn't that why most people doesn't mind paying the premium on the first place? My 1986 Silver eagle MS70 sold for $600 on ebay.

Agreed, for the most part. Look at the ads on this forum, even. Most ads that list "silver" as a payment option, almost always include "SAE" or "Maple leaf" along with the 'silver' word. There are many reasons for each option: generic, certified, rated, etc.

Once again, ask yourself what's your endgame/goal? What tool will be able to achieve that goal for you? Then run with the answer... In the end, however, just keep buying metals!

[sellersm]

And another word of advice for today, from James Turk: http://kingworldnews.com/kingworldne...The_World.html

“Today the Comex options expired. The over-the-counter options expire in the next couple of days, so I suspect the downward pressure on gold will remain a bit longer. But that selling pressure will stop as we get closer to the end of the week.

A lower gold price is what the central planners want. It gives them an opportunity to claim that inflation is under control, even though central bank printing presses are running overtime, which of course is the reason that world stock markets continue to climb higher.



A lower gold price is also what the Chinese want because it enables them to get more physical gold for their dollars. Lower prices are also what the shorts in the hedge fund community want because they have been piling-on and building up their short positions in anticipation of the downtrend in gold prices continuing.



But the rubber band is stretched pretty far at the moment. So the relief rally, when gold and silver bounce from these levels, should be a good one. We only have to wait for the options to expire for some sort of relief rally to start, and hopefully that rally will finally mark the beginning of a new and prolonged uptrend.



I expect that the relief rally will begin as shorts cover before the US Thanksgiving holiday. Liquidity tends to drop over holidays, which makes it harder for shorts to cover in size. Given the huge speculative short position now being carried by hedge funds, anyone short should be focusing on being the first one out the door. Others who follow during periods of low liquidity will typically end up covering their shorts at higher prices.



It is important that the June lows in gold and silver have not been broken. Nor has the June low in the XAU, but it is threatening to do so. The HUI has already slipped below its June low. This drop in the price of mining shares is no doubt contributing to the all of the negative sentiment. The pessimism seems worse now than it was back in June, Eric, and I think this has happened because of the news coverage. The media is not covering all of the Chinese buying the way they did a few months ago.



I guess they think this continuing flow of gold from West to East is old news, and maybe from their perspective it is. But this exceptional demand for physical metal remains one of the most important factors in the gold market today. As a consequence, central banks continue to struggle to find physical gold to meet this insatiable demand for physical metal.



It was therefore not a surprise to me that the central banks are trying to do a deal to get their hands on Venezuela’s gold. The bankers were undoubtedly irked - and I am sure caught off guard - when Chavez demanded a couple of years ago that Venezuela’s gold reserves be returned to Caracas. It took the central planners months to get their hands on that 200 tonnes.



To get to the heart of the matter, Eric, the overall most important factor today that investors should be focusing on is central bank money printing. Stock markets are soaring because of it. And have you seen what is happening in the art market? Record high prices are a regular occurrence.



There are people out there who would rather pay $100 million for a Warhol, than have $100 million sit in a bank. There’s an important message here. That Warhol is not going to be debased like the dollar. There is no printing press turning out more Warhols, which is I think the key point.



The people with big money get it, Eric. People with that kind of money are not dumb. They know what’s coming and they are preparing for it. They are dumping their dollars as fast as the Federal Reserve prints them. And that means it is only a matter of time before the rigging of the gold price blows up.



Remember, hyperinflations don’t start with the middle class dumping the currency. They start with the rich. The rich - the so-called smart money - sees what is happening first, and responds to it. That’s why stock markets and the price of collectibles are soaring. These events are a clear vote of no confidence in the dollar.



It won’t be long before this message about the debasement of the dollar works its way down to the middle class, but by then the hyperinflation of the dollar will be even more obvious. So we should keep doing what the Chinese are doing -- accumulating physical gold and silver. This is how invididual investors can place their money right along side what the truly ‘smart’ money is betting, and that is China betting on dramatically higher gold prices.”

[Irving]

No one is nitpicking, simply pointing out that people don't really have a way to identify of something is good or not based on the appearance of the metal. Kind of like the difference between a certified pre-owned vehicle and one that is not. They may equal in value, but realistically the "certified" one will be easier to unload as more uninformed buyers will feel comfortable with the purchase.

As far as coin collecting goes, it'd be hard to have a coin collection of stuff with no markings.