1921 Saint Gaudens Double Eagle NGC AU58

Very Rare, Nearly Mint State

The 1921 Saint-Gaudens double eagle is one of the major rarities in the series, despite an innocuous-sounding mintage of 528,500 coins. But the issue is the only gold coin the United States struck during the year. The date was not exported for international trade; neither did it circulate in the United States. Rather, the coins stayed in Treasury vaults until the 1930s, when they were melted in the great extinction event of the era, the Gold Recall of 1933. Examples are absent in overseas holdings returned to the States, and no domestic hoards have been uncovered. It is likely that no more than 175 examples of the issue survive in all grades.

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The History Of Interest Rates Over 670 Years

on November 15, 2019

By Nicholas LePan

Today, we live in a low-interest-rate environment, where the cost of borrowing for governments and institutions is lower than the historical average. It is easy to see that interest rates are at generational lows, but, as Visual Capitalist’s Nicholas LePan notes below, did you know that they are also at 670-year lows?

This week’s chart outlines the interest rates attached to loans dating back to the 1350s. Take a look at the diminishing history of the cost of debt—money has never been cheaper for governments to borrow than it is today.

Courtesy of Visual Capitalist

The Birth of an Investing Class

Trade brought many good ideas to Europe, while helping spur the Renaissance and the development of the money economy.

Key European ports and trading nations, such as the Republic of Genoa or the Netherlands during the Renaissance period, help provide a good indication of the cost of borrowing in the early history of interest rates.

The Republic of Genoa: 4-5 year Lending Rate

Genoa became a junior associate of the Spanish Empire, with Genovese bankers financing many of the Spanish crown’s foreign endeavors.

Genovese bankers provided the Spanish royal family with credit and regular income. The Spanish crown also converted unreliable shipments of New World silver into capital for further ventures through bankers in Genoa.

Dutch Perpetual Bonds

perpetual bond is a bond with no maturity date. Investors can treat this type of bond as an equity, not as debt. Issuers pay a coupon on perpetual bonds forever, and do not have to redeem the principal—much like the dividend from a blue-chip company.

By 1640, there was so much confidence in Holland’s public debt, that it made the refinancing of outstanding debt with a much lower interest rate of 5% possible.

Dutch provincial and municipal borrowers issued three types of debt:

  1. Promissory notes (Obligatiën): Short-term debt, in the form of bearer bonds, that was readily negotiable
  2. Redeemable bonds (Losrenten): Paid an annual interest to the holder, whose name appeared in a public-debt ledger until the loan was paid off
  3. Life annuities (Lijfrenten): Paid interest during the life of the buyer, where death cancels the principal

Unlike other countries where private bankers issued public debt, Holland dealt directly with prospective bondholders. They issued many bonds of small coupons that attracted small savers, like craftsmen and often women.

Rule Britannia: British Consols

In 1752, the British government converted all its outstanding debt into one bond, the Consolidated 3.5% Annuities, in order to reduce the interest rate it paid. Five years later, the annual interest rate on the stock dropped to 3%, adjusting the stock as Consolidated 3% Annuities.

The coupon rate remained at 3% until 1888, when the finance minister converted the Consolidated 3% Annuities, along with Reduced 3% Annuities (1752) and New 3% Annuities (1855), into a new bond─the 2.75% Consolidated Stock. The interest rate was further reduced to 2.5% in 1903.

Interest rates briefly went back up in 1927 when Winston Churchill issued a new government stock, the 4% Consols, as a partial refinancing of WWI war bonds.

American Ascendancy: The U.S. Treasury Notes

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The United States Congress passed an act in 1870 authorizing three separate consol issues with redemption privileges after 10, 15, and 30 years. This was the beginning of what became known as Treasury Bills, the modern benchmark for interest rates.

The Great Inflation of the 1970s

In the 1970s, the global stock market was a mess. Over an 18-month period, the market lost 40% of its value. For close to a decade, few people wanted to invest in public markets. Economic growth was weak, resulting in double-digit unemployment rates.

The low interest policies of the Federal Reserve in the early ‘70s encouraged full employment, but also caused high inflation. Under new leadership, the central bank would later reverse its policies, raising interest rates to 20% in an effort to reset capitalism and encourage investment.

Looking Forward: Cheap Money

Since then, interest rates set by government debt have been rapidly declining, while the global economy has rapidly expanded. Further, financial crises have driven interest rates to just above zero in order to spur spending and investment.

It is clear that the arc of lending bends towards ever-decreasing interest rates, but how low can they go?

1854 Kellogg & Co. $20 NGC MS60

Rare Mint State

John Grover Kellogg was one of the most respected assayers and coiners in San Francisco during the Gold Rush. He was involved in many of the preeminent refining operations of the period, partnering with the likes of John Moffat, G.F. Richter, and Augustus Humbert from 1849 through 1860. In 1854, these twenty dollar gold pieces served a vital role in commerce during the time between the closure of the United State Assay Office and the full operation of the San Francisco Mint, which opened in April of that year. As is the case with many of our offerings, this coin is somewhat lighter and brighter than seen in our images. The NGC population is just 9 with 17 graded higher.

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Guess Who Is Preparing For A Major Stock Market Crash?

Courtesy of TMIN

Pessimism is spreading like wildfire on Wall Street, and this is particularly true among one very important group of investors. And considering how much money they have, it may be wise to listen to what they are telling us. According to a very alarming survey that was recently conducted by UBS Wealth Management, most wealthy investors now believe that there will be a “significant” stock market decline before the end of next year. The following comes from Yahoo Finance

Wealthy people around the globe are hunkering down for a potentially turbulent 2020, according to UBS Global Wealth Management.

A majority of rich investors expect a significant drop in markets before the end of next year, and 25% of their average assets are currently in cash, according to a survey of more than 3,400 global respondents. The U.S.-China trade conflict is their top geopolitical concern, while the upcoming American presidential election is seen as another significant threat to portfolios.

Of course this could ultimately become something of a self-fulfilling prophecy if enough wealthy investors pull their money out of stocks and start increasing their cash reserves instead. Nobody wants to be the last one out of the barn, and it isn’t going to take too much of a spark to set off a full-blown panic. Perhaps the most troubling number from the entire survey is the fact that almost 80 percent of the wealthy investors that UBS surveyed believe that “volatility is likely to increase”

Nearly four-fifths of respondents say volatility is likely to increase, and 55% think there will be a significant market sell-off before the end of 2020, according to the report which was conducted between August and October and polled those with at least $1 million in investable assets. Sixty percent are considering increasing their cash levels further, while 62% plan to increase diversification across asset classes.

During volatile times for the market, stocks tend to go down.

And during extremely volatile times, stocks tend to go down very rapidly.

Could it be possible that many of these wealthy investors have gotten wind of some things that the general public doesn’t know about yet?

Of course the truth is that anyone with half a brain can see that stock valuations are ridiculously bloated right now and that a crash is inevitable at some point.

And as I noted yesterday, corporate insiders are currently selling off stocks at the fastest pace in about two decades.

But why is there suddenly so much concern about 2020?

A different survey of business executives that was recently conducted found that 62 percent of them believe that “a recession will happen within the next 18 months”

A majority of respondents – 62% – believe a recession will happen within the next 18 months. Private companies are particularly worried that a recession lurks in the near term, with 39% anticipating a recession in the next 12 months. This compares with 33% of public company respondents who felt the same way. About one-quarter – 23% – of respondents do not expect a recession within the next two years.

62 percent is a very solid majority, and without a doubt we are starting to see businesses pull back on investment in a major way.

In fact, according to Axios business investment in the United States has now dropped for six months in a row…

  • Business investment has fallen for six months straight and declined by 3% in the third quarter, the largest drop since 2015.
  • The retrenchment by businesses helped turn Wednesday’s U.S. workforce productivity report — a key economic metric that compares goods-and-services output to the number of labor hours worked — negative for the first time in four years.

I know that I bombard my readers with numbers like this on an almost daily basis, but I cannot stress enough how ominous the economic outlook is at this point.

And it isn’t just the U.S. that we need to be concerned about. Two other surveys that measure the business outlook for the entire globe just fell to their lowest levels in a decade

The IHS Markit global business outlook—which surveys 12,000 companies three times a year—fell to the worst level since 2009, when data was first collected.

The Ifo world economic outlook, which surveys 1,230 people in 117 countries, fell in the fourth quarter to the worst level since the second quarter of 2009.

Markit’s poll found optimism for activity, employment and profits in the year ahead were all at the lowest level since the financial crisis. Markit also reported a decline in planned investment spending, with inflation expectations at a three-year low.

It is really happening.

The global economy really is heading into a major downturn.

And once this crisis really gets rolling, it is going to be exceedingly painful.

All across America, big companies are already starting to go under at a pace that is absolutely frightening. For instance, on Tuesday one of the biggest dairy companies in the entire country filed for bankruptcy

Dairy giant Dean Foods filed for Chapter 11 bankruptcy protection as declining milk sales take a toll on the industry.

Dean Foods – whose more than 50 brands include Dean’s, Land O’ Lakes and Country Fresh – said it intends to continue operating.

The company said it “is engaged in advanced discussions” for a sale to Dairy Farmers of America, a national milk cooperative representing farmers, producers and brands such as Borden cheese and Kemps Dairy.

I have quite a few relatives in Minnesota, and I have always had a soft spot for Land O’Lakes butter. So it definitely saddened me to hear that this was happening.

But a lot more major casualties are coming.

Of course the economic optimists will continue to insist that we are just experiencing a few bumps on a path that leads to a wonderful new era of American prosperity. They will continue to tell us of a great “financial harvest” that is about to happen even when things are falling apart all around us.

You can believe them if you want, but most wealthy investors and most business owners believe that hard times are dead ahead.

I have never seen so much pessimism about a coming year as I am seeing about 2020 right now.

There is a growing national consensus that it is going to be a very chaotic year, and I would recommend using what little time you have left to get prepared for it.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse BlogEnd Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The EndGet Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. This article may contain opinions on political matters, but it is not intended to promote the candidacy of any particular political candidate. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.

Trading the Gold-Silver Ratio

For the hard-asset enthusiast, the gold-silver ratio is common parlance. For the average investor, it represents an arcane metric that is anything but well-known. The fact is that a substantial profit potential exists in some established strategies that rely on this ratio. The gold-silver ratio represents the number of ounces of silver it takes to buy a single ounce of gold. Here’s how investors benefit from this ratio.

KEY TAKEAWAYS

  • Investors use the gold-silver ratio to determine the relative value of silver to gold.
  • Investors who anticipate where the ratio is going to move can make a profit even if the price of the two metals fall or rise.
  • The gold-silver ratio used to be set by governments for monetary stability, but now fluctuates.
  • Alternatives to trading the gold-silver ratio include futures, ETFs, options, pool accounts, and bullion.

What Is the Gold-Silver Ratio?

The gold-silver ratio refers to the ratio investors use to determine the relative value of silver to gold. Put simply, it is the quantity of silver in ounces needed to buy a single ounce of gold. Traders can use it to diversify the amount of precious metal they hold in their portfolio.

Here’s how it works. When gold trades at $500 per ounce and silver at $5, traders refer to a gold-silver ratio of 100:1. Similarly, if the price of gold is $1,000 per ounce and silver is trading at $20, the ratio is 50:1. Today, the ratio floats and can swing wildly. That’s because gold and silver are valued daily by market forces, but this has not always been the case. The ratio has been permanently set at different times in history and in different places, by governments seeking monetary stability.

Gold-Silver Ratio History

The gold-silver ratio has fluctuated in modern times and never remains the same. That’s mainly due to the fact that the prices of these precious metals experiences wild swings on a regular, daily basis. But before the 20th century, governments set the ratio as part of their monetary stability policies.

Here’s a quick overview of the history of this ratio:

  • 2007: For the year, the gold-silver ratio averaged 51.
  • 1991: When silver hit record lows, the ratio peaked at 100.
  • 1980: At the time of the last great surge in gold and silver, the ratio stood at 17.
  • End of the 19th Century: The nearly universal fixed ratio of 15 came to a close with the end of the bi-metallic era.
  • Roman Empire: The ratio was set at 12.
  • 323 BC: The ratio stood at 12.5 upon the death of Alexander the Great.

Importance of Gold-Silver Ratio

Despite not having a fixed ratio, the gold-silver ratio is still a popular tool for precious metals traders. They can, and still do, use it to hedge their bets in both metals—taking a long position in one, while keeping a short position in the other metal. So when the ratio is higher, and investors believe it will drop along with the price of gold compared to silver, they may decide to buy silver and take a short position in the same amount of gold.

So why is this ratio so important for investors and traders? If they can anticipate where the ratio is going to move, investors can make a profit even if the price of the two metals fall or rise.

Investors can make a profit even if the price of the two metals fall or rise by anticipating where the ratio will move.

How to Trade the Gold-Silver Ratio

Trading the gold-silver ratio is an activity primarily undertaken by hard-asset enthusiasts often called gold bugs. Why? Because the trade is predicated on accumulating greater quantities of metal rather than increasing dollar-value profits. Sound confusing? Let’s look at an example.

The essence of trading the gold-silver ratio is to switch holdings when the ratio swings to historically determined extremes. So:

  1. When a trader possesses one ounce of gold and the ratio rises to an unprecedented 100, the trader would sell their single gold ounce for 100 ounces of silver.
  2. When the ratio then contracted to an opposite historical extreme of 50, for example, the trader would then sell his 100 ounces for two ounces of gold.
  3. In this manner, the trader continues to accumulate quantities of metal seeking extreme ratio numbers to trade and maximize holdings.

Note that no dollar value is considered when making the trade. That’s because the relative value of the metal is considered unimportant.

For those worried about devaluation, deflation, currency replacement, and even war, the strategy makes sense. Precious metals have a proven record of maintaining their value in the face of any contingency that might threaten the worth of a nation’s fiat currency.

Drawbacks of the Trade

The difficulty with the trade is correctly identifying the extreme relative valuations between the metals. If the ratio hits 100 and an investor sells gold for silver, then the ratio continues to expand, hovering for the next five years between 120 and 150. The investor is stuck. A new trading precedent has apparently been set, and to trade back into gold during that period would mean a contraction in the investor’s metal holdings.

In this case, the investor could continue to add to their silver holdings and wait for a contraction in the ratio, but nothing is certain. This is the essential risk for those trading the ratio. This example emphasizes the need to successfully monitor ratio changes over the short- and mid-term to catch the more likely extremes as they emerge.

Gold-Silver Ratio Trading Alternatives

There are a number of ways to execute a gold-silver ratio trading strategy, each of which has its own risks and rewards.

Futures Investing

This involves the simple purchase of either gold or silver contracts at each trading juncture. The advantages and disadvantages of this strategy are the same—leverage. That is, futures trading is a risky proposition for those who are uninitiated. An investor can play futures on margin, but that margin can also bankrupt the investor.

Exchange-Traded Funds (ETFs)

ETFs offer a simpler means of trading the gold-silver ratio. Again, the simple purchase of the appropriate ETF—gold or silver—at trading turns will suffice to execute the strategy. Some investors prefer not to commit to an all or nothing gold-silver trade, keeping open positions in both ETFs and adding to them proportionally. As the ratio rises, they buy silver. As it falls, they buy gold. This keeps the investor from having to speculate on whether extreme ratio levels have actually been reached.

Options Strategies

Options strategies abound for the interested investor, but the most interesting involves a sort of arbitrage. This requires the purchase of puts on gold and calls on silver when the ratio is high and the opposite when the ratio is low. The bet is that the spread will diminish with time in the high-ratio climate and increase in the low-ratio climate. A similar strategy can be applied to futures contracts also. Options permit the investor to put up less cash and still enjoy the benefits of leverage.

The risk here is that the time component of the option may erode any real gains made on the trade. Therefore, it is best to use long-dated options or LEAPS to offset this risk.

Pool Accounts

Pools are large, private holdings of metals that are sold in a variety of denominations to investors. The same strategies employed in ETF investing can be applied here. The advantage of pool accounts is that the actual metal can be attained whenever the investor desires. This is not the case with metal ETFs where certain very large minimums must be held in order to take physical delivery.

Gold and Silver Bullion and Coins

It is not recommended that this trade be executed with physical gold for a number of reasons. These range from liquidity and convenience to security. Just don’t do it.

The Bottom Line

There’s an entire world of investing permutations available to the gold-silver ratio trader. What’s most important is that the investor knows their own trading personality and risk profile. For the hard-asset investor concerned with the ongoing value of their nation’s fiat currency, the gold-silver ratio trade offers the security of knowing, at the very least, that they always possess the metal.

BY CAROLINE BANTON  Updated Oct 8, 2019

Courtesy of Investopedia

1879-CC Capped Die Morgan Dollar NGC MS64 DPL

Just 1 Graded Higher

VAM 3. Top 100 Variety. A generation ago, the Capped Die ’79-CC was considered a “poor man’s” 1879-CC and was deeply discounted over its “perfect mintmark” counterpart. The advent of population data has drastically changed the pricing structure for this rarer variety, and attitudes have followed, with the Capped Die coins now fully accepted by the collecting community. This particular example offers a flashy appearance, enhanced by the strong cameo contrast between the reflective fields and frosted devices. The NGC population is just 9 with 1 higher.

Offered at $40,250 delivered

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1924-S Standing Liberty Quarter PCGS MS66FH

Just One Graded Higher

The availability of the 1924-S quarter in Full Head plummets above MS65, where it becomes one of the lesser-known condition rarities of the series. Coins are rarely seen in MS66 Full Head and are nearly unknown finer at PCGS. In fact, this is one of only sixteen MS66’s recognized by PCGS with a single (MS67) example graded higher. This one is very nicely detailed and exhibits plentiful luster.

Offered at $25,300 delivered

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Pension Bailouts Could Raise the National Debt by $7 Trillion

Courtesy of THE DAILY SIGNAL

Rachel Greszler / November 07, 2019

On Oct. 31, the national debt hit $23 trillion. That’s equivalent to a credit card bill of $178,000 for every household in America.

This marks an enormous increase. Even after adjusting for inflation, it’s a jump of $60,000 over just 10 years for the average household.

In other words, even after accounting for inflation, the U.S. added more debt per household over the past 10 years than it did over its first 200 years.

Low interest rates today make our debt seemingly manageable, but the higher America’s debt grows, the more likely it is that rates could suddenly spike, sending terrible shocks throughout the economy.

Now, an obscure pension “fix” could hasten such a shock by opening the door to massive pension bailouts that could push our $23 trillion debt closer to $30 trillion, or $230,000 per household.

Unbeknownst to most Americans, Congress is considering legislation to “fix” underfunded private union pension plans that have promised at least $638 billion more in pension benefits than they’ve set aside to pay.

The “fix” that mismanaged pension plans have lobbied Congress for is to shift those broken promises onto taxpayers. Politicians who receive hefty donations from unions, along with some lawmakers who have lots of constituents that would benefit from a taxpayer bailout, are pushing for just that—a massive bailout without reform.

Because the proposed bailouts do nothing to penalize plans for their past recklessness and nothing to impose proper funding requirements going forward, those plans’ unfunded obligations would only rise further.

But this time, it would be on the taxpayers’ dime.

Worse, if Congress bails out private union pension plans, how will it say no to teachers, police, and firefighters who come to the federal government asking for a bailout of their state and local pensions that have an estimated $4 trillion to $6 trillion in unfunded pension promises?

Tacking as much as $6.7 trillion onto our national debt to cover broken pension promises would raise the average household’s debt burden by $52,000, to $230,000.

And that would come before Congress tackles Social Security’s $13.9 trillion shortfall that would require an additional $108,000 per household to fix.

All told, the current deficit plus Social Security’s and private and public pension plans’ shortfalls would amount to about $338,000 in debt for the average household.

That’s more than five times the median household’s income.   

America’s debt already threatens our freedom and prosperity. Unfairly forcing taxpayers to take on the broken pension promises of private and public sector unions would raise that threat level.

Congress should help alleviate and prevent pension shortfalls—but not through taxpayer bailouts.

First, policymakers must tackle Social Security’s unfunded promises by updating the program and better focusing benefits on those who need them most.

Doing so would prevent massive tax increases—an additional $1,000 to $2,000 per year for middle-class households—on workers.

Congress should then address pension underfunding by maintaining the solvency of its pension insurance program and by enforcing proper funding rules to hold employers and unions liable for the benefits they promise.

1893-CC $20 NGC MS 61

The Last Year of Issue for Carson City Double Eagles

All Carson City Double Eagles are scarce in Mint Quality, and the 1893 is no exception – with collector demand increasing every year, Mint State examples of all dates are becoming less available.

On offer today is a lustrous MS 61 example, frosty with reddish highlights – it is a specimen worthy of serious consideration.

Offered at $11,600 delivered

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1845 No Motto Seated Liberty Dollar NGC PR67

Exceptionally Rare

This incredible proof is pedigreed to the John Jay Pittman Collection, where it was part of Pittman’s “Complete 1845 Proof Set in Original Case.” In his discussion of this coin, David Akers wrote:

“This proof silver dollar is essentially perfect and is unquestionably the finest proof dollar of the decade that I have ever seen. It is fully struck with a sharp square edge and deep mirror fields that are immaculate and pristine. The few lines present in the fields are actually planchet lines that were not eliminated by the minting process; they are not hairlines. The toning is as extraordinary and perfect as the technical quality of the surfaces, a superb medium multicolored iridescent blend of reddish-gold, which is the predominant color, and considerate violet and blue. Every star is boldly defined with all of its radial lines, and the head and foot of Liberty are extremely sharp. All of the eagle’s features and talons are also fully struck.”

It’s estimated that there are approximately 15 Proof examples known. This is the only PR67 graded by NGC with none higher and PCGS hasn’t graded any higher than PR65.

Offered at $155,000 delivered

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