phrenzy said:
mmissinglink said:
I believe what I'm positing is actually simple to understand.
Whether a 2 oz bullion coin like that has 100 or 20,000,000 minted onto it, when you treat its value in terms of the nominal value ascribed on it, you are valuing that bullion in a fiat currency alone.
It's not necessarily the same when you value blobs you have in terms of how much food they can buy for a year because while you will have to swap / sell the blobs for a fiat currency, you are not necessarily valuing it in terms of that currency. For example, if I paid $20/oz for 375 1 oz bars of silver today and in 10 years I have a need to sell those blobs, I don't value it at $20....I value it at the going buy-back rate at the time I sell which, when all is said and done, may yield me a year's worth of 3 good meals a day with enough left over to buy batteries for all my gadgets for the year as well. So you can value those blobs in terms of how much food you can buy....not how much fiat you paid for them. But when you value a coin based only on the nominal value minted onto it, you are valuing it only in fiat.
Besides, if you are valuing a bullion coin only in terms of fiat, wouldn't it make more sense to just store the same amount of value in a paper note? There are 100 notes aren't there? They are much easier to store than a coin, wouldn't you agree?
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If someone offered you 2 fiat notes that cost face value, one a regular 100 note and the other a 100 note that came with completely free insurance that paid out 2oz of sliver in case of inflation or hyper inflation which would you take?
It's not a replacement for bullion bars but it's not meant to be.
There is an old and immutable rule called Gresham's law that says bad money drives out good, meaning the money that's worth more intrinsically is hoarded and sucked out of circulation while people try and spend the debased money with the same face value.
That's why it was very hard to find silver US coins very shortly after they stopped making them in the states even though the silver in them wasn't worth the face value of the coin.
The fiat here has the same face value but 20% less intrinsic value. The coin is more likely to survive a fire and you would need a hell of a lot of them before storing them became that much more inconvenient than paper.
It's not a replacement for bullion and it's not for every day spending but if you hold any cash why wouldn't you have this instead of paper?
Since no one is forcing you to take either, there is a third and much better choice if one believes that the most important value is fiat value; that choice is to buy undervalued currencies perhaps like the Mexican Peso or South Korean Won.
If you believe that silver is insurance, then just buy the lowest cost blobs and don't bother significantly overpaying for a coin that contains only 2 oz of silver.
Arguably, you could stack a lot more paper notes of the same nominal value per note as a coin in the same box that you could coins of that denomination. And, that box would weigh a lot less.
If you are concerned about fire, buy a good quality fire rated safe as opposed to a cheap safe.
If you are concerned about VAT, then buy silver bullion which is held in an accredited vault in an allocated account.
I am aware of what Gresham's Law is and I do know about at least a couple of historical accounts of hoarding "good" money.
But the bottom line is, there are better products that can be stored if you are trying to maximize your purchasing power in British Pounds and you also believe that the value to be concerned about of a coin is the nominal represented value minted onto it.
I am as far from a permabull as I have seen (in comparison to most other silver stackers) yet I am long term bullish on silver. I don't believe silver will go to the moon tomorrow yet I also believe silver will push consistently higher than its current price range is a couple of years or so. As far as I can see, all physical commodities markets tend to generally work in the same way; that is they are sentiment driven.
As I've stated from the very beginning, if you believe the coin will gain in premium to to collector demand, then that's a completely separate issue but I've already stated that I am not smart enough to know whether or not this coin will significantly appreciate in value due to collector demand.
We do know that the Lunar Skulls coin has done very well in that department.
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