Travelgall's Guide to Precious Metals and Coins

Discussion in 'Finance, Property, Law' started by Travelgall, Nov 6, 2012.

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  1. After seeing a post on collecting Precious Metals I've been asked to write a quick ditty about collecting Metals as a form of investment.

    Firstly their values. I’m not going to say buy Gold over Silver or vice versa. I will simply say this.. if vermin like Wonga, Cash Converters et all are offering to buy your Grannys wedding rings off you in a Shopping Centre because they sniff a profit, you’re looking at the market being at or a cock hair from its peak. Secondly investing in metals is as a general rule a sign of people believing the economy is****ed. Once they cease to think that the price of metals drops. Never forget though that metals are used for industrial purposes so you are buying an investment that will have a certain minimum level of demand for it. And diversify, diversify, diversify. Have some of your money in Stocks, Property, Pensions Illicit Georgian Lithographs of a Private and Niche nature etc. I collect swords which, as well as the fact they keep their value, I have the added bonus of being able to stab the person who is stealing my coins to death thanks to the Tories liberalizing the Home defence rules. That said Coins are a fun way to boost your pension, you don’t have to pay somebody to look after your money unlike a pension; and should you die - unlike a pension that disappears back to the company - the kids/cattery get to keep the ones you didn’t spend on slippers, denture cream and Readers Digest subscriptions.

    There are 4 types of Precious Metals Investment – Ingots, Investment Coins, Rounds and Old/Scrap Coins. The Metals that are “Precious” and found in some or all of these forms are Gold, Silver, Platinum and Palladium. The latter two are rare in anything but Ingot or the Occasional Coin form.

    Firstly Ingots will track the Intrinsic worth of the metal but are the least collectable. Mostly for the fairly obvious reason that Ingots stay in banks and don’t lend themselves to being carted door to door by Postman Pat. They also tend to be rather dull because unless it has something stamped on it such as a WWII German Nazi Eagle Assay Mark then it is absolutely the same as every other ones and thus not collectible. With all the same downsides that you have to prove that the marks are genuine (Like burred treasure off a ship it has to have "Provinence"). Nowadays you get a holographic card that tells you where you bought your ingot from, the lesson in all this is keep the bloody receipts. If you've bought it from a Mint you automatically prove it is genuine. You get the odd jokey ingot - for some reason you can buy 1 troy ounce Silver ingots with Marajuana leaves on them and the like. But ask yourself this, if you were a precious metals dealer, would you trust a Bar of Gold with a picture of R2-*******-D2 on it?

    Coins are easier to detect as fakes as - like Banknotes - they have distinguishing features. You still get forgeries but they tend to be easier to spot - most obviously because they are not made of genuine Gold/Silver so tend to do highly embarrassing things like being Magnetic or not weighing what they are supposed to weigh etc (a Troy ounce is 31.1034768 gramms). However, the fakers are getting better at it. The fakes tend to stick to certain coin types or certain dates of coins. As mentioned the Chinese Panda's are highly collectible and of all the 15 or so official government approved coins are thus the most faked. The other obvious point is that China is full of most of the world's fakers so if you're buying Pandas off Ebay from China I have a bridge to sell to you.

    Off the top of my Head the official government Silver ones are the Following...

    Chinese Pandas
    British Brittannias
    Australian Koala's
    Austrian Philharmonicas
    Mexican Libertads
    American Eagles
    Somali Elephants
    Armenian Noah's Ark
    Fiji Taku
    NZ Kiwis

    Gold Coins you have most of the above available plus the Famous South African Krugerrands and Swiss 20 Francs and you swap a Koala for a Kangaroo in Australia. Platinum Coins are Isle of Man Nobles, Australian Platypus’s and the like. There are other official Government coins but they tend to be issued on a more Ad-Hoc basis.

    Of all those the only ones that change their pictures on one side are the Pandas, Brittanias or Koala's/Kangaroos. Thus they become more collectible as you get a new pretty picture on them each year. The most boring by a country mile are the New Zealand ones. They've put **** all effort into them. The ones I like the most are Mexican Silver Libertads as you get some nicely shaped tits on them but this doesn't necessarily translate to collectability. And this isn't the lot. Pretty much every country issues coins to celebrate the opening of Public Conveniences, the Anniversary of the tragic Death of the Previous President by Firing Squad etc. But these tend not to be 999 Proof and variable in terms of collectability - although the Royal Mint ones are pretty good at keeping their value. Again, use your common sense. You may love Liverpool Football club, Star Trek, and Niche Sexual Activities. But will collectors want a coin with Patrick Stewart golden showering Kenny Dalglish?

    Coins are pretty and collectible - like stamps that can be melted down to something useful - and as such have a rarity and time value beyond the intrinsic value of the metal. If you stick to the country 999 proof ones then you can't go that wrong.

    You also get a half way house called "Rounds". These are coin shaped discs of precious metal usually in 1 Troy ounce sizes of 999 proof which are usually stamped by the mining company or precious metals company selling them. They differ from coins in that because they are not issued by Government they do not have a nominal value (I.e. Have $5 stamped on them) so are worth less. Some of them have pretty pictures on them, they aren't as many fakes around but aren't as collectible.

    The next types of coins are those that were legal tender and made of Silver. They are also called Scrap coins as their face value is bugger all compared to their Silver Content and you can’t by a Mars Bar with them. Pre WWII most coins were mostly made of 90% Silver 10% Copper to make them hard wearing. This dropped to around 50% in WWII and 30% post war until the switch to Cupro-Nickel. The world is your oyster on this. I collect British India Rupees and Indo China Piastres which are a form of “Trade Dollars”. This is a pretty good divide as Indian Rupees were legal currency; whilst Piastres de Commerce were a 90% proof Trade Dollar (The US, UK, Japan, Mexico also issued them) as a way of promoting the country, stabilizing a colony’s money supply and “promoting” its businessmen to foreigners (Bribing those rulers who weren’t gullible enough to be bought off with Glass beads and Fire Water). So for example when we wanted to sell some Opium to the Chinese, we used these coins to pay off the Chinese customs officials to let our dope through.

    Of course because they were silver they could be both local currency and used as payment abroad. Austro-Hungarian Maria Theresa Thaler (where the word Dollar comes from) are the most obvious ones. For those fans of Flashman out there will know the name, because its what we used to pay off the local Tribes to allow us access during the Abyssinia Campaign – the Eritrean Mohamedians were taken not only with the value of the coins but also because Maria Theresa is sporting a nice low cut dress in the coin. Thus showing off her assets to a nation whose females were all covered up (avoid collecting the sticky ones). Their value depends on the number of collectors willing to part with paper money for them. Indian Rupees for example are considered lucky by Indians (Only the British ones, not the post Independence ones which are worth **** all) and so have a natural support level. The 1939 Rupee is notoriously rare for example as nearly all the 90% 1939 Rupees were called back to the mint and re-melted down into 50% 1940 Rupees as a wartime economy measure.

    All coins have varying value according to their condition. MS-70 or MS-69 mean that they are straight off the Mint. Just like Green Tip ammo being the best as it is the first batch off the molds, MS-70 is the one where the faces are the best. Due to the amount of work that went into molds they used them until they practically fell apart. So the clearer the pair of tits on a Mexican Libertad, the more collectable it is. For those that want the quality guide – look it up on Wikipedia. Coin Companies often “Slab” the best – I.e. Coat them with plastic and put a holograph on them to confirm their quality. Naturally these are worth a great deal more as they have the approval of somebody who knows a damn sight more than you do on the subject that the coin is genuine.

    With all of these as an Investment, I would recommend keeping them somewhere very safe. Because most banks don’t have safety deposit boxes any more, you may have to start planning on a floor safe to keep them in. Worth it to stop some thieving toe rag walking off with your pension money to invest in skag.

    Travelgall is not offering investment advice so if you try to sue him then he'll tell you to jog on.
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  2. Much appreciated - thank you.
  3. BiscuitsAB

    BiscuitsAB LE Moderator

    Sticky'd as promised and thanks for taking the time.

    Whats your view on Canadian Maples.
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  4. Not bad, not bad at all.

    Just like to add that you never, EVER, store precious metals in a safety-deposit box. An SDB is for precious paper only; stuff like house deeds and passports, that have your name on them but no intrinsic value. That applies double (if 200% is a feasible concept) if the SDB is in England or the USA. Both governments have stolen the contents of SDBs and had the cheek to dare the owner to demand the contents back.

    "Mark Taylor, a former fraud investigator for HM Customs and Excise, now an associate director of Vantis, an accountancy firm advising families caught up in Operation Rize, kept a tally.
    Of the 6,717 boxes targeted by detectives in the biggest raid in the Met's history, just over half were occupied. And of those that were full, 2,838 boxes were now handed back, a figure that represents 80 per cent of the number of boxes seized.
    Eight out of ten box owners were provably innocent. Taylor said: 'Of the £53 million in cash that the police took, £20 million has also been given back and £33 million is now being referred to as "under investigation", of which only £2.83 million has been confiscated or forfeited by the courts.'
    Lawyers have seen their Rize cases squeezed and intimidated. Sara Teasdale revealed how the police were first adamant that her client's money was criminal cash, threatening forfeiture, only to try and turn the box-holder's business partner against him, enticing him to wear a wire so as to entrap him into admitting it was also money stolen from his own company.
    Teasdale said: 'They first tried "wrong money". Then it was company money. Even when they dropped criminal proceedings against him in February 2009, they inexplicably continued with civil forfeiture proceedings.' The Yard was trying all it could to get the cash.
    'They were sitting on almost £1 million, and having referred to my client anonymously in press releases as an example of why they had raided, they needed to win.'
    But this case was recently lost by the Met too, leaving the box-holder with £200,000 in fees, money he is now seeking back from the police.
    Others going after the Yard include some who claim that money and jewels have gone missing from their boxes. Many have spoken to Live about their plight, although they have asked not to be named because the information is personal.
    One goldsmith from north London fought for over a year to get his £40,000 cash and valuables back, then claimed it was not all there. He has now filed an official complaint.
    'The police kept saying, "Why have you got all this cash?" and I showed them my books.'
    His premises were raided twice, the second time by 20 officers.
    'They found nothing because I had done nothing and eventually this summer, everything was returned to me. But £10,000 was gone - and my wife's diamond earrings.'
    The Met has strenuously denied all allegations of theft, pointing out that anyone stealing from the boxes would have been caught on camera since officers videoed the entire operation.
    Another box-holder who is alleging theft, a wealthy Russian émigré party-planner from north London, who had £64,000 in cash and £250,000 worth of jewellery, including heirlooms from Russia, successfully challenged the police to produce the video.
    'I am meticulous,' she said. 'I have a receipt for everything. When I got my box back, £9,000 cash and some smaller items of jewellery were missing - a gold baby's bracelet and an 18-carat gold ring.'
    The initial police footage, she claims, had a time code and showed her box being carried to a table. But then the tape was interrupted and when it restarted the footage was being shot from a new camera, at a different angle and without a time code, with real time having moved on many seconds.
    She told Live: 'It only takes seconds for a small envelope of cash or a gold ring to be swiped from the table and into someone's pocket. I was staggered.' After failing to get adequate answers from the Met's own Directorate of Professional Standards, her lawyers have gone to the independent Police Complaints Authority, along with 70 other box-holders."

    There is a safe-deposit system that you might (and only just about "might") trust:


    They are Austrians, and therefore understand fully the concept of out-of-control governments of a jackbooty nature.

    Keep your stuff close, but highly-concealed. If it's too much trouble to open it to gloat, then a burglar won't find it, and you'll keep it for long enough that the contents have made a profit.
  5. Canadian Maples are one of the world's purest silver coins. They are excellent. Buy them with confidence. They also have another, minor, advantage. Americans tend to be pretty clueless on anything not originating on the American continent, so if you want to sell them in the States, then Silver Maples and US Silver Eagles have an advantage there. NOT GOLD. Gold is likely to be increasing in value for many moons to come, to the extent where CGT may be liable on the sale of a few coins. In this event, Sovereigns and Britannias rule the roost, being exempt from CGT.

    Coins of any kind, tend to be more saleable than bars, but get some of each. For silver, you may wish to buy some silver sheet for the jewellery trade, as this would be completely unnoticed by criminals and easy to sell into the jewellery fabrication market.
  6. BiscuitsAB

    BiscuitsAB LE Moderator

    Thanks Maples are my coin of choice all though I'm just starting out, I was also thinking of holding umicor 100g ingots or will that be to much of a faff keeping the certificates. I assume that if you want to sell 100g ingots then if you don't have proof it has to be re-assayed?

    Also what are your views on the whole MS70 MS69 mlarky? I have recently had someone show me a Multilevel Marketing Operation based on MS70 Eagles. I declined politely as the price they were charging per coin was over double what you would pay for an Eagle and significantly more than people were offereing MS70 coins for.

    I am not adverse to making profit from the collectiblity (sp) of something, however I am currently leaning towards "hold if for 20 years and see where the market is" philosophy. I am countering this slow and steady route with Unit Trusts that are significantly more volatile. However as we all know you can't hold a unit trust in your hand but you can a lump of metal.

    ON A MOD PERSPECTIVE. ( just for a second,) When I grabbed the MOD position for this forum it was and still is my intention to make the Finance forum something that is useful to the members. I would like to if possible have an ARRSE Investment club. Would anyone like to comment?

  7. The Canadians make some pretty coins. The bog standard Maple Leafs will probably react the same was as Libertads, Eagles, Noah's Arks et all. Because they don't change the picture on them there will be a slight age premium but if you're a collector you'll have one of any year because they are all the same and pile the rest of your money into something else. Where the Canadians are collectible is the current 999 proof Wildlife Series. It's only been going in its latest incarnation for 3 years. In 2011 they Issued the Grizzly Bear and Timber Wolf, In 2012 the Moose and Cougar and in 2013 they have issued an Antelope so far. The Timber Wolf has gone from around $36.00 to $71.00 US in just over 1 year. The Grizzly from $36.00 to $45-50USD And that's trade prices, not Ebay. You don't get 100% return in many places over 1 year despite what some bloke phoning you up in a Boiler Room Scam operation says.

    My gut for Intrinsic Value Silver is that it's in for a slight drop. But that's short term and dependent very much on the Eurozone not blowing up which is still possible. If the Eurozone blows up all bets are off in terms of safe haven investments like precious metals. I'm looking at pension timescales - 30 years. Long term I'm bullish for the industrial demand and the fact that Silver has undervalued Gold. In terms of the Coins, I have mostly Eagles and Libertads so far, but I really like the Panda, Brittannia and Wildlife coins. The Aussie ones are pretty too but I can't collect everything. My next TA Bonus will end up in Brittannias or Pandas.
  8. Oh and I wouldn't worry about VAT. Just buy them in a country where there is no Vat on coins. To buy them from a UK seller you would have to be certifiable. PM Me and I'll send you my offshore seller.

    I wouldn't bother with Ingots. See my Original post. If you want plain metal go for the Rounds. But there isn't a big collectors market.
  9. BiscuitsAB

    BiscuitsAB LE Moderator

    Nah I keep mine in the dogs cage under his bed, if they can get them they can have them!
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  10. Definitely keep all certificates. I currently buy small press-lock bags and put one bar with it's certificate in each bag. That way it's easy to keep each cert with the ingot. But don't worry too much, as you would never need to have a bar re-assayed. A buyer will simply use ultrasound to check there aren't any lead or tungsten inserts, then acid-test the back of the bar. This would be perfectly good enough, I have bought silver bars off eBay and have complete confidence in my testing process. After a few years, you get to recognise the "patina" on silver, and it's impossible to fake the vague yellow-ochre colour. You can't beat the old acid-test, either. I always acid-test gold unless there's the hallmark is full of crud that indicates the item has been worn for ages. On a really big scale, such as Mr Bairds operation in London, the hallmarks on silver or gold scrap are only used to separate the carat levels out, i.e. 9 carat, 14 carat, etc. He would then smelt the whole lot down and properly assay the resulting lump.

    Don't touch "slabbed" coins unless you are 100% sure of the seller. In fact, don't bother with them at all. An expert will only regard the slab as a holder to allow him to look carefully at the actual coin. He will know exactly what he is looking for, and it isn't the certificate in the slab. The Chinese have been faking graded coins for a while, and although their slabs are identifiable as fake in some cases, the numismatic market is not for most people. You can't weigh the coin or "ring-test" it, or do any of the other things that give you the reassuring "feel" of veracity. I occasionally buy a proof coin for gloating purposes, but the mark-up on numismatic coinage can (not always) defeat the purpose of buying gold, palladium and silver, which is to obtain the metal. My silver and gold buying is a punt on the future value of the metal, not the rarity of the coin. Don't buy any "collector's items" unless you want the pleasure of ownership, rather than investment. An investor in rare wines doesn't normally drink his investments, so a metals investor should theoretically regard the design of the coins as proof of the metal content only. (This is the same problem as gemstones). I am in it for the "quantitative" purpose of investment, not a theoretical "qualitative" value.

    Nice idea.
  11. +1. The short-term ups and downs of the market are just noise in the scheme of things.

    Silver should be AT LEAST twice the current value on historical data alone. Industrial demand is horrendously-bullish for the long-term price of silver; nothing else is so irreplaceable in so many industrial applications, and then gets consumed and maybe lost forever.

    Nice. Very nice. I tend to buy the Australian Lunar series as presents.
  12. Amazing thread! Thanks.
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  13. So would it be rather worth buying a small amount of silver and gold in either coin or bar form throughout the year, I'm not looking for a short term profit, I'm currently 28 and planning on holding on to everything I get until I'm ready to retire.
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