Official Gold & Silver Price Thread 1 1

[RWB]

The coin-related market for precious metals is minuscule -- maybe smaller. The smaller the market the higher the mark-up.

[VKurtB]

On 11/12/2021 at 3:29 PM, RWB said:

The coin-related market for precious metals is minuscule -- maybe smaller. The smaller the market the higher the mark-up.

Put this on a stone tablet. Truth. OTOH, I recently watched a 100 Troy ounce silver bar sell at auction for a bit UNDER melt.

Edited November 14, 2021 by VKurtB

[Cat Bath]

At these saint prices, I'm a spectator. Holy moly 

[GoldFinger1969]

On 11/13/2021 at 9:37 PM, VKurtB said:

Put this on a stone tablet. Truth. OTOH, I recently watched a 100 Troy ounce silver bar sell at auction for a bit UNDER melt.

Not surprising.  If nothing special about it, melt or a bit under is expected.

I saw a beautiful Pope John Paul II 10-ounce gold coin -- yup, 10 ounces -- sell for about $30,000 when gold was $2,000/oz.  It was a PF70 (I believe DCAM)....very limited minting...very rare....beautiful and artistic....numismatic, religious, and precious metal rarity and value.

It depends on scarcity value.  The JPII coin had it (even though liquidating it will be a problem) while a 100-ounce silver bar (very liquid) has no scarcity value.

[Henri Charriere]

On 11/11/2021 at 12:33 PM, World Colonial said:

That's why Miami is the financial capital of Latin America, maybe along with NY.

 No way I'm going to let you slide on this one!  The real reason is explicitly depicted in the 1983 re-make of the film "Scarface." A huge surplus persists in the FRB servicing that city.  Last I checked, U.S. dollars are the official currency of all U.S. territories, El Salvador, and three other countries.  I assume the millions the CIA off-loaded in Afghanistan are likely still there. I don't know what was ultimately done with the three tractor-trailer loads of USD Saddam Hussein "withdrew" from Iraq's central bank prior to taking a powder.

[Henri Charriere]

On 11/13/2021 at 9:37 PM, VKurtB said:

Put this on a stone tablet. Truth. OTOH, I recently watched a 100 Troy ounce silver bar sell at auction for a bit UNDER melt.

🐓:  You going to let him get away with this?

Q.A.:  I'm afraid not. In fact, it's probably the most outrageous comment I have ever read -- unsupported by the written records whether in cuneiform on clay tablets, papyri or codices.  I don't believe it but only the Great Zadok would know for sure. 

[GoldFinger1969]

Auction Results:  Recent GC activity had an MS-66 1927 Saint go for $3,400/$3,825 (1 bid)...and that MS67 1924 Saint finally got 1 bid and sold for $12,000/$13,500...a 1923-D MS66 Saint sold for $4,800/$5,400 (I bought one even nicer IMO 2 years ago at FUN for $3,500).

A 1908 NM MS-66 OGH got lots of bids and went for $3,118/$3,507, which I thought was kinda low.....an MS66+ 1908 NM Saint $3,400/$3,825 but only 1 bidder.

Finally, an AU58 1927 Saint went for $1,900/$2,137 as a bullion substitute with gold trading at about $1,800 2 weeks go.

[GoldFinger1969]

Modern Silvers:  Those National Park Foundation commemoratives continue to sell for nice prices. 

All PF70 Ultra Cameo.....a Barber 1 ounce sold for $89/$100......an Indian Head went for $185/$208.....and a Winged Liberty $79/$88...Winged Liberty Reverse Proof $113/$127.

Newbies and Covid stay-at-homes buy these coins when they can't buy more expensive Morgans and other silver coins, let alone gold.

Edited December 8, 2021 by GoldFinger1969

[EdG_Ohio]

I haven't purchased from the U.S. Mint or elsewhere since the inflated cost of the new bullion coins except the transition between ASE type 1/2. (OK, I bought that pretty 08'-w G$25 buffalo )
You can never disagree that the more older and rarer of coins will always bring a higher premium but I've been purchasing instead some bars while the price has receded some and hope for the best in the future...or my kids/grand-kids future.
Avg. cost for this one was  $23.61 per oz, that includes any taxes, fees & S/H.

 

[GoldFinger1969]

Nice, Ed.....it's whatever YOU like. 

I have never spent Big $$$ on an expensive numismatic coin as for the most part they all will track the price of gold somewhat.  Obviously, if I bought a mostly numismatic coin like an MCMVII HR Saint it probably goes up if gold goes to $3,000 an ounce but nowhere near the leverage and many other variables compared to buying 1924 or 1927 Saints or even that 1923-D I paid $3,500 for (which wouuld certainly go up if not dollar-for-dollar).

I HAVE purchased lesser-priced coins and commemoratives that trade a big premiums to their underlying metallic value, like the National Park Foundation coins I cited above.  To me, they are pieces of art and I like them for their historical and artistic features.  I'd never buy dozens of them to play a rise in silver or gold prices.  Just 1 or 2 or 3 of them in various high grades, usually PF70 or 69.

The 5-ounce silvers for the National Park Foundation are tougher to find but I see them now going for under $200 which isn't bad.  It's still a 75% premium to the silver price, but you do get a beautiful coin/commemorative and the larger size makes the features on a 70 or 69 really stand out compared to the 1-ouncers.

Edited December 8, 2021 by GoldFinger1969

[World Colonial]

On 12/8/2021 at 11:00 AM, GoldFinger1969 said:

Auction Results:  Recent GC activity had an MS-66 1927 Saint go for $3,400/$3,825 (1 bid)...and that MS67 1924 Saint finally got 1 bid and sold for $12,000/$13,500...a 1923-D MS66 Saint sold for $4,800/$5,400 (I bought one even nicer IMO 2 years ago at FUN for $3,500).

A 1908 NM MS-66 OGH got lots of bids and went for $3,118/$3,507, which I thought was kinda low.....an MS66+ 1908 NM Saint $3,400/$3,825 but only 1 bidder.

Finally, an AU58 1927 Saint went for $1,900/$2,137 as a bullion substitute with gold trading at about $1,800 2 weeks go.

Since the grades mean nothing to me, I'd consider every one of those bullion coins.  Large to big premiums for a label on a piece of plastic.

[Henri Charriere]

On 12/8/2021 at 4:42 PM, World Colonial said:

Since the grades mean nothing to me, I'd consider every one of those bullion coins.  Large to big premiums for a label on a piece of plastic.

I am going to have to call you out on this one; no way I am going to let you slide.

There is numismatic value. And then there is bullion value.

If we dispense with grading guidelines, all the leading economic indicators come to a grinding halt. That will be the death knell for the hobby as we know it.  🐓 

[GoldFinger1969]

On 12/8/2021 at 4:42 PM, World Colonial said:

Since the grades mean nothing to me, I'd consider every one of those bullion coins.  Large to big premiums for a label on a piece of plastic.

To each his or her own. 

If you don't want to pay above bullion value, that's your choice.  And you can argue with the grades or fair value for specific grades.

But there is scarcity value in many of those coins for their particular type, grade, and year.

[Henri Charriere]

On 12/8/2021 at 6:39 PM, GoldFinger1969 said:

 

....If you don't want to pay above bullion value, that's your choice....

[Huh?  How do you "argue" with the guy holding the gavel?  Coins of this calibre are almost always auctioned off.]  🐓 

[World Colonial]

On 12/8/2021 at 5:03 PM, Quintus Arrius said:

I am going to have to call you out on this one; no way I am going to let you slide.

There is numismatic value. And then there is bullion value.

If we dispense with grading guidelines, all the leading economic indicators come to a grinding halt. That will be the death knell for the hobby as we know it.  🐓 

I will agree with you on one thing.  It would be the end of financialized "collecting".

The "numismatic" value is in the label.  Most buyers can't grade most coins in these grades "accurately" outside the holder and most would not pay these premiums without the expectation of getting most of their money back.  I'll grant you more of those who buy these specific coins (in 65 or better) can on occasion, but that's because of money.  No one cared enough before.

You're aware of how these coins were priced up to the early 70's I assume?  The change in the pricing is due to the financialization of "collecting" (buying coins as "investments") in the 70's and marketing (TPG labels, CAC stickers, and registry sets) starting in the 80's.  It's the same coin now it was then.

For the consensus to be true, here's what someone has to believe.

Until the 1970's, prior buyers were operating out of ignorance by treating the coins essentially equal.  At some point starting in the 70's (or maybe the late 80's for Saints), buyers experienced a collective epiphany where they miraculously discovered the merits which no none knew before.

Sorry, but nothing of the sort ever happened.  It's nonsensical.

When the asset mania collapses (which it will "eventually"), buyers will collectively forget this epiphany to once again mostly or entirely view these coins as their predecessors.  That's what happens when the price of a collectible is (totally) disconnected from the actual collectible merits..

I also wasn't trying to single out Saints.  This is equally true any most series where buyers have the same or similar motives.

[Henri Charriere]

@World Colonial

Is this your quaint way of saying that the $20 bill festooned with a Del Monte label from Ecuador that was auctioned off for nearly $400,000 earlier this year may become worthless one day, and I am wasting my time hot steam-pressing Chiquita brand labels from Guatemala and Honduras on my double-sawbucks?  😉 

[GoldFinger1969]

On 12/8/2021 at 7:10 PM, Quintus Arrius said:

[Huh?  How do you "argue" with the guy holding the gavel?  Coins of this calibre are almost always auctioned off.]  🐓 

Auctioned, online websites, whatever...point is, if you don't want to pay numismatic premiums above PM spot prices, then that's someone's choice.

Isn't mine, but to each his own......

 

[GoldFinger1969]

On 12/8/2021 at 7:16 PM, World Colonial said:

I will agree with you on one thing.  It would be the end of financialized "collecting". The "numismatic" value is in the label.  Most buyers can't grade most coins in these grades "accurately" outside the holder and most would not pay these premiums without the expectation of getting most of their money back.  I'll grant you more of those who buy these specific coins (in 65 or better) can on occasion, but that's because of money.  No one cared enough before.

You are correct, there has been a financialized collecting premium as coins become more specialized with more accurate grading (good) and hyped-up labels (bad).  But net-net, I think it's BETTER today because things are more transparent.  I can get dozens of price quotes for a generic 1924 MS65 Saint or several quotes in the last month for a more specialized 1923-D MS66 CAC Saint.

That wasn't the case 25 years ago and would take you days of calls or driving around 40-50 years ago.

On 12/8/2021 at 7:16 PM, World Colonial said:

You're aware of how these coins were priced up to the early 70's I assume?  The change in the pricing is due to the financialization of "collecting" (buying coins as "investments") in the 70's and marketing (TPG labels, CAC stickers, and registry sets) starting in the 80's.  It's the same coin now it was then.

You make a fair point, at the same time, lousy coins today are more easily ID'd.   So people are paying up more for quality, CAC or CAC-like higher quality coins within a particular grade.

Relying on a Red Book from pre-1970 or pre-1986 (TPGs) is light-years different than today.  You really needed to be an expert and spend lots of time to justify what were relatively high prices for some coins, even thought the absolute price level might have been lower than today.

On 12/8/2021 at 7:16 PM, World Colonial said:

For the consensus to be true, here's what someone has to believe.  Until the 1970's, prior buyers were operating out of ignorance by treating the coins essentially equal.  At some point starting in the 70's (or maybe the late 80's for Saints), buyers experienced a collective epiphany where they miraculously discovered the merits which no none knew before.  Sorry, but nothing of the sort ever happened.  It's nonsensical.

I think once the TPGs standardized grading in 1986/87 buyers became more confident that they were buying accurately graded or at leaast market-acceptably graded coins.  A TPG might be off by 1 grade, MAYBE occasionally 2 grades...but not 3 or 4 or 5 or more.  If a dealer said a coin was AU-58 and a buyer said it was EF-40, no transaction would take place before the TPGs.

Even among veterans here at the NGC Forums (or other coin sites)...when you have GTG Threads or a coin that folks are asked to grade, even veterans with DECADES of experience in that particular coin are often off by 1 or 2 and sometimes more increments.  It's simply never has been nor ever will be an exact science.  Even CAC, standing behind their grades with $$$ and John Albanese's well-deserved reputation and penchant for being a tough grader of gold coins, has been known to have a blooper every now and then.

On 12/8/2021 at 7:16 PM, World Colonial said:

When the asset mania collapses (which it will "eventually"), buyers will collectively forget this epiphany to once again mostly or entirely view these coins as their predecessors.  That's what happens when the price of a collectible is (totally) disconnected from the actual collectible merits..I also wasn't trying to single out Saints.  This is equally true any most series where buyers have the same or similar motives.

I don't think that the collapse in the "asset mania" (you mean stocks and bonds and maybe collectibles and crypto ?) will impact coins because neither the underlying metal prices nor the numismatic values have had an extended rise. 

You could make a stronger argument that we are an out-of-favor-sector and $$$ should rotate into our group like a stock sector that sits out a bull run or bubble mania.

Previous "coin manias" occurred in the 1970's when gold and silver went up 35-40x.....1985-1990 with TPGs and Wall Street rumours fueling a 400% rise in 4-5 years.....and MAYBE 2002-12 as gold went up 6-fold and some sectors overshot to the upside on expectations of greater PM gains which never materialized and bullion, numismatic, and traditional American coins proceeded to go into a bear market for 10 years.

Edited December 9, 2021 by GoldFinger1969

[World Colonial]

On 12/8/2021 at 9:23 PM, GoldFinger1969 said:

You are correct, there has been a financialized collecting premium as coins become more specialized with more accurate grading (good) and hyped-up labels (bad).  But net-net, I think it's BETTER today because things are more transparent.  I can get dozens of price quotes for a generic 1924 MS65 Saint or several quotes in the last month for a more specialized 1923-D MS66 CAC Saint.

That wasn't the case 25 years ago and would take you days of calls or driving around 40-50 years ago.

I wasn't expressing an opinion on whether it is "better" or "worse" in my last post.  Only stating (once again) that these price differences aren't actually based upon collecting, but financially motivated marketing.  I have stated numerous times on coin forums but there are a lot of collectors and "investors" who have no clue of it.

If anyone wants to spend their money that way, great.  Just don't believe the fallacy that it's because the buyer likes it that much as a collectible because the anecdotal evidence (mostly from coin forums) demonstrates they don't.

This is exactly what common sense leads anyone to believe, as there isn't a dime's worth of practical difference between many and sometimes most of these coins. 

And it isn't just Saints or US coins either, as evidenced by some of the examples I have documented here with coins I have owned.

Your last point is also a function of the internet, not my prior reply.  This is an improvement (undoubtedly) but a separate consideration entirely.  It's also easier to sell anything generally on eBay.

[World Colonial]

On 12/8/2021 at 9:23 PM, GoldFinger1969 said:

You make a fair point, at the same time, lousy coins today are more easily ID'd.   So people are paying up more for quality, CAC or CAC-like higher quality coins within a particular grade.

Relying on a Red Book from pre-1970 or pre-1986 (TPGs) is light-years different than today.  You really needed to be an expert and spend lots of time to justify what were relatively high prices for some coins, even thought the absolute price level might have been lower than today.

The risk was different then versus now.  There was greater risk of buying fakes or over graded coins.

Today, it's easier to avoid both but when a mistake is made on one of the higher or highest graded coins, it is a lot more expensive than it ever was then.  This is a function of the much higher price level and price spreads between grades.

On 12/8/2021 at 9:23 PM, GoldFinger1969 said:

I think once the TPGs standardized grading in 1986/87 buyers became more confident that they were buying accurately graded or at leaast market-acceptably graded coins.  A TPG might be off by 1 grade, MAYBE occasionally 2 grades...but not 3 or 4 or 5 or more.  If a dealer said a coin was AU-58 and a buyer said it was EF-40, no transaction would take place before the TPGs.

Even among veterans here at the NGC Forums (or other coin sites)...when you have GTG Threads or a coin that folks are asked to grade, even veterans with DECADES of experience in that particular coin are often off by 1 or 2 and sometimes more increments.  It's simply never has been nor ever will be an exact science.  Even CAC, standing behind their grades with $$$ and John Albanese's well-deserved reputation and penchant for being a tough grader of gold coins, has been known to have a blooper every now and then.

The confidence buyers have to pay "recent" prices (varies with the coin) where it is "material" (to them) is overwhelmingly contingent on the buyer's belief that they can recover most, all, or more than all of their money back.

Part of it is related to TPG (or CAC) and part of it is due to other reasons such as "investment" buying.  The "reason" doesn't matter, only that they believe it.  Without this belief, there is no possibility the price level would be anywhere near its current level because too many coins sell for prices which are "too high" for the collectible merits where hardly any buyer will pay it as an alternative consumption expenditure.

 A small proportion (which I will get to in my next reply) are also dependent upon the asset mania.  The buyer presumably (usually) finds it interesting enough as a collectible, but not anywhere near its current or recent price.

Look at the 1933 Saint or 1822 half eagle, as it's no different than high priced art.  The asset mania is the only explanation for these inflated prices.  Without it, prices would be a low fraction.

[World Colonial]

On 12/8/2021 at 9:23 PM, GoldFinger1969 said:

I don't think that the collapse in the "asset mania" (you mean stocks and bonds and maybe collectibles and crypto ?) will impact coins because neither the underlying metal prices nor the numismatic values have had an extended rise. 

You could make a stronger argument that we are an out-of-favor-sector and $$$ should rotate into our group like a stock sector that sits out a bull run or bubble mania.

Previous "coin manias" occurred in the 1970's when gold and silver went up 35-40x.....1985-1990 with TPGs and Wall Street rumours fueling a 400% rise in 4-5 years.....and MAYBE 2002-12 as gold went up 6-fold and some sectors overshot to the upside on expectations of greater PM gains which never materialized and bullion, numismatic, and traditional American coins proceeded to go into a bear market for 10 years.

We have different opinions on this subject for a variety of reasons.

First, based upon history, I know the major asset markets (bonds first, stocks second, and real estate third) are a lot more inflated than you have implied in your prior posts.  This overvaluation isn't uniform across every asset class and market versus the past, but it absolutely is in the aggregate. As an example, most global stock markets are lower or barely higher versus 1999 and 2007.  Conversely, bonds and debt generally in all major markets are far more inflated than ever.  It's not even close and this is the asset class ultimately supporting everything else.

Second, I also know the actual economic "fundamentals" are either disproportionately mediocre or awful today and have been since 2008.  It's artificial prosperity supporting unsustainable living standards.

So, manic collective psychology supports ridiculously overpriced aggregate asset prices while a fake economy since at least 2008 (from unsustainable government deficit spending and the loosest credit conditions in human history) supports inflated living standards.

The combination of these two is what leads me to conclude that asset prices and living standards are ultimately destined to decline and fall a lot more than you believe.

I haven't claimed it will happen overnight and it doesn't appear "imminent" either, (since this mania keeps on going like the Energizer Bunny) but it's going to end because there is never something for nothing in life.  When it ends, it's like to be a long-term process, not an event.  Probably measured in decades and not months or years.  (My guess is the biggest decline in asset markets initially with the larger decline in living standards later.)

With coins, as such a small illiquid market, it's entirely possible that gold and silver will provide support initially, as it did in the 70's.  But I wouldn't count on it for most coins of any "meaningful" value.

The coin price level is far more inflated and most people will almost certainly become poorer or a lot poorer.  

The primary reason coins increased this much since the 70's isn't due to bullion prices, though this was the initial catalyst.  It's primarily a combination of an increased number of affluent buyers (from the financialization and marketing of "collecting") while the asset mania made it much easier for them to pay higher prices due to this huge increase in mostly fake wealth.

[Revenant]

On 12/8/2021 at 9:27 PM, World Colonial said:

Second, I also know the actual economic "fundamentals" are either disproportionately mediocre or awful today and have been since 2008.  It's artificial prosperity supporting unsustainable living standards.

It's been funny seeing what seems like an uptick in interest in modern hyperinflation notes in the last 6 months to a year. My Zimbabwe set seems to continue to get more views over time.

[Henri Charriere]

@World Colonial

While I have difficulty identifying the sources from which you base your prognostications -- the hue and cry has been raised many times before -- I have to admit I find your comments to be insightful and at times bewildering and confounding but refreshing in that you hold nothing back. It is almost as if there ought to be a trailer reading, fail to take heed at your own peril.     🤔 

[GoldFinger1969]

On 12/8/2021 at 10:27 PM, World Colonial said:

We have different opinions on this subject for a variety of reasons.

First, based upon history, I know the major asset markets (bonds first, stocks second, and real estate third) are a lot more inflated than you have implied in your prior posts.  This overvaluation isn't uniform across every asset class and market versus the past, but it absolutely is in the aggregate. As an example, most global stock markets are lower or barely higher versus 1999 and 2007.  Conversely, bonds and debt generally in all major markets are far more inflated than ever.  It's not even close and this is the asset class ultimately supporting everything else.   

Yes, and if I could post a great research piece from Equity Strategist Mike Wilson of Morgan Stanley (maybe you can find him on CNBC.com) you would see how he is talking about the end of the pandemic being the end of WW II circa 1946.  That period ushered in a 35-year bear market in bonds with yields doubling from 2% in 1946 to just over 4% by the mid-1960's.  Equities did very well over the period because valuations were lower, dividend yields higher, and earnings growth poised to accelerate from good-to-outstanding thanks to global growth.  Today, valuations are high, dividend yields low, and earnings growth mediocre-to-OK at best with China a big question mark.

Check this out:

https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/?gclid=Cj0KCQiAzMGNBhCyARIsANpUkzMis1VmsMCLxB3YVpCNFR7EC_EgKJvDY0_qY7Vi9kVPiQAaOADEodoaAoMUEALw_wcB&gclsrc=aw.ds

Focus on pages 4, 5, 9, 11, 23, 47, 54, & 67.

Bottom Line:  Certain pockets are very expensive, even bubble-like....but large areas of the market offer good value for 3-5 years down the road.  You just have to be selective.

On 12/8/2021 at 10:27 PM, World Colonial said:

Second, I also know the actual economic "fundamentals" are either disproportionately mediocre or awful today and have been since 2008.  It's artificial prosperity supporting unsustainable living standards.  So, manic collective psychology supports ridiculously overpriced aggregate asset prices while a fake economy since at least 2008 (from unsustainable government deficit spending and the loosest credit conditions in human history) supports inflated living standards.  The combination of these two is what leads me to conclude that asset prices and living standards are ultimately destined to decline and fall a lot more than you believe. I haven't claimed it will happen overnight and it doesn't appear "imminent" either, (since this mania keeps on going like the Energizer Bunny) but it's going to end because there is never something for nothing in life.  When it ends, it's like to be a long-term process, not an event.  Probably measured in decades and not months or years.  (My guess is the biggest decline in asset markets initially with the larger decline in living standards later.) With coins, as such a small illiquid market, it's entirely possible that gold and silver will provide support initially, as it  did in the 70's.  But I wouldn't count on it for most coins of any "meaningful" value.  The coin price level is far more inflated and most people will almost certainly become poorer or a lot poorer.  The primary reason coins increased this much since the 70's isn't due to bullion prices, though this was the initial catalyst.  It's primarily a combination of an increased number of affluent buyers (from the financialization and marketing of "collecting") while the asset mania made it much easier for them to pay higher prices due to this huge increase in mostly fake wealth.

I think you overstate the potential for an economic downdraft.  Even a 3rd-rate tourist-dependent Socialist economy like Greece took 30 years to collapse.  I wouldn't bet against the U.S., China, or even the EU with Eastern Europe a dynamo.

If a collapse does happen -- and I doubt it does -- it will be quick, just like corrections.  Slow-moving trends to the downside are compressed and have been since the 1980's as information now moves at the speed of light.

There are some potential pitfalls.  I am not sure the Euro will hold together (they've wasted a decade of low rates to get their house in order)....China is turning authoritarian and will lose 25% of their labor force as their labor supply SHRINKS in coming decades (ours will still grow albeit at a slower rate of growth)....Asia and South America need to get themselves weened off exports and commodities, respectively.

The middle class globally will DOUBLE in the next 20 years.  That is HUNDREDS OF MILLIONS of new consumers of goods...services....and precious metal (gold, silver collectors).  Yes, many will trust deposits in banks and crypto on their smartphone but many will want a small stash of gold or silver, too.

Bottom Line:  I agree that valuations are rich on the equity side and super-rich on the debt side (esp. for high-yield bonds).  But that doesn't mean a collapse....and even if prices FALL you could be looking at a trend that is so slow-moving that even if you get the direction right, without employing big leverage (and high risks) that trend is uninvestable.

I actually attended a luncheon years ago on that topic: what do you do when you have a bear market coming but prices will correct to the downside at glacial speeds ?  We are likely to see that with inflation and interest rates and maybe equity risk premiums but NOT stock prices, which tend to move lightning-quick.  If I told you that bond prices were headed LOWER and yields HIGHER in 1946 for the next 35 years.....you probably wouldn't have been able to profit off that information until the late-1960's and really profit from it until the late-1970's.

Stock prices go up 2/3rds of the time.  Living standards, GDP, and lifespans increase over time.  Technology, education, and medical progress expand and continue to be accessed by more people.  "Poor" people today have running water...heat....air conditioning....smartphones.....HDTVs.  30 years ago, only the "Rich" had those things.  Betting on DECADES of impoverishment is not a wise bet.  Even The Depression lasted only a decade and our knowledge of economics and how to avert crises was light-years behind what we know today.  We got lucky with the 1918 Spanish Flu burning itself out yet it still took 500,000 American lives out of 105 million.

Betting against America has been a losing proposition.  I think it will remain so.

Edited December 9, 2021 by GoldFinger1969

[World Colonial]

On 12/9/2021 at 12:56 AM, GoldFinger1969 said:

Yes, and if I could post a great research piece from Equity Strategist Mike Wilson of Morgan Stanley (maybe you can find him on CNBC.com) you would see how he is talking about the end of the pandemic being the end of WW II circa 1946.  That period ushered in a 35-year bear market in bonds with yields doubling from 2% in 1946 to just over 4% by the mid-1960's.  Equities did very well over the period because valuations were lower, dividend yields higher, and earnings growth poised to accelerate from good-to-outstanding thanks to global growth.  Today, valuations are high, dividend yields low, and earnings growth mediocre-to-OK at best with China a big question mark.

Check this out:

https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/?gclid=Cj0KCQiAzMGNBhCyARIsANpUkzMis1VmsMCLxB3YVpCNFR7EC_EgKJvDY0_qY7Vi9kVPiQAaOADEodoaAoMUEALw_wcB&gclsrc=aw.ds

Focus on pages 4, 5, 9, 11, 23, 47, 54, & 67.

There is no analogy between the end of WWII and now.  

Sentiment and valuations then were the opposite of now and to imply that after a 20+ year bubble (since 2000) we are going to get up to several more decades of market advance (that's what happened after 1946 into 1966) makes no sense.

The fundamentals then are also practically the mirror opposite of now and the recent past.  US federal debt was high (as now) but I see no other similarity.  

The primary reason I disagree with you and the financial community on valuations is because all of you insist on primarily relying on one of if not the weakest measures of value, earnings.

Yes, earnings have been unprecedentedly high during most of the mania (mostly excepting Q4 2001 to sometime in 2003 or near it and the GFC) because of the fake economy.  When the government runs consistent deficits of $1T+ ($3T in 2020), it has to show up somewhere and much of it ends up in corporate net income.

That's not evidence of a fantastic economy but a distorted one.  If the economy has been so great, why is it necessary for the government to run deficits to these levels for over a decade and why has the FRB found it necessary to run what used to be considered extreme monetary policy over the same time period?  (This is a rhetorical question. I'm not really asking.)

Let me give you the only real answer:

One:  Those in charge are really dumb or ignorant enough to believe there is something for nothing.

Two:  A combination of "kicking the can down the road" and political expediency.  At least some of these people must know the real state of the economy (and society) and understand or infer the social consequences of "normalizing" fiscal and/or monetary policy, a (massive) economic depression.

[World Colonial]

On 12/9/2021 at 12:56 AM, GoldFinger1969 said:

Bottom Line:  Certain pockets are very expensive, even bubble-like....but large areas of the market offer good value for 3-5 years down the road.  You just have to be selective.

It isn't just certain pockets.  Look at the entire bond market.  Are you going to tell me it isn't in a massive bubble?  The US stock market (which has also never been more overpriced) isn't the only market and doesn't exist in a vacuum.

The "good value" you infer is based upon the fake economy.

On 12/9/2021 at 12:56 AM, GoldFinger1969 said:

I think you overstate the potential for an economic downdraft.  Even a 3rd-rate tourist-dependent Socialist economy like Greece took 30 years to collapse.  I wouldn't bet against the U.S., China, or even the EU with Eastern Europe a dynamo.

At market peaks, the economic fundamentals never look bad to most people.  That's how you get manic bubble valuations.  Why would you expect anything else?  Do you think the environment looked bad at the US stock market peak on September 3, 1929?

On 12/9/2021 at 12:56 AM, GoldFinger1969 said:

If a collapse does happen -- and I doubt it does -- it will be quick, just like corrections.  Slow-moving trends to the downside are compressed and have been since the 1980's as information now moves at the speed of light.

I don't expect an economic collapse like the one into 1933.  The economy and actual state of American society (and much of the world) is far worse now but optimism and belief that government can prevent declining living standards means that politicians are guaranteed to do "something" to try to prevent it, just as they did last year and during the GFC.

As for market prices, I ultimately expect a decline worse than the 1930's but I don't know whether it will be quick or extended.  I also don't know whether the decline will be worse measured in nominal or inflation adjusted prices.  US stocks lost 89% from September 3, 1929 to July 8, 1932 but the decline was less (excluding dividends) adjusted for price changes than from February 9, 1966 to August 13, 1982.

[World Colonial]

On 12/9/2021 at 12:56 AM, GoldFinger1969 said:

There are some potential pitfalls.  I am not sure the Euro will hold together (they've wasted a decade of low rates to get their house in order)....China is turning authoritarian and will lose 25% of their labor force as their labor supply SHRINKS in coming decades (ours will still grow albeit at a slower rate of growth)....Asia and South America need to get themselves weened off exports and commodities, respectively.

The middle class globally will DOUBLE in the next 20 years.  That is HUNDREDS OF MILLIONS of new consumers of goods...services....and precious metal (gold, silver collectors).  Yes, many will trust deposits in banks and crypto on their smartphone but many will want a small stash of gold or silver, too.

Market prices aren't determined by the economic "fundamentals".  Contrary to what most people believe, it has little if any predictive value.

Priced are based upon collective optimism or pessimism.  This is true for both individual securities and entire markets.  Look at Bitcoin, Special Purpose Acquisition Companies (SPAC), and stocks like Tesla or Uber.  None of these are priced based upon the "fundamentals".  Bitcoin and crypto currency are literally nothing. SPAC are the equivalent of the 1720 South Sea Bubble example "an undertaking of great advantage but no one to know what it is", in spades.  Tesla is a real business but has lost billions and faces entrenched deep pocket competitors in a mature market.  Uber and all other similar companies are cash burn machines that should be worth zero and would be in any sane market.

The US stock market is about the only market in a current bull run.  It's on an island in deep outer space and has been post GFC.  This valuation difference isn't supported by any meaningful difference in "fundamentals" either versus the rest of the world, but manic psychology.  

[GoldFinger1969]

FYI....I can't post that piece likening the present period to 1946 post-WW II because PDFs can't be attached on this site.  

I've reached out to Deena and the NGC people but no luck yet.  If some of you have some pull with them, I don't think that an occasional PDF or Word Document should be a problem here.  I have some useful financial, economic, and coin pieces that can benefit our membership here and I would love to post/attach them directly to this site rather than having to use something like Dropbox or Box or whatever.

[World Colonial]

On 12/9/2021 at 12:56 AM, GoldFinger1969 said:

Stock prices go up 2/3rds of the time.  Living standards, GDP, and lifespans increase over time.  Technology, education, and medical progress expand and continue to be accessed by more people.  "Poor" people today have running water...heat....air conditioning....smartphones.....HDTVs.  30 years ago, only the "Rich" had those things.  Betting on DECADES of impoverishment is not a wise bet.  Even The Depression lasted only a decade and our knowledge of economics and how to avert crises was light-years behind what we know today.  We got lucky with the 1918 Spanish Flu burning itself out yet it still took 500,000 American lives out of 105 million.

There is absolutely nothing in history which guarantees that living standards should or will increase for most of the population, in or out of the United States.  It may or may not happen but it's entirely a faith based assumption.  It's predicated on circumstances specific to our time and recent past which may or may not last and are not within the control of any society or government.  In the more recent past, it's actually primarily been from pulling demand forward by increased debt.  Someone is going to have to pay it back, even if it's by inflation or default.  It isn't going to increase forever either where there is no consequence.

The depression did not happen due to any "policy mistake".  I know every conventional economist will dispute this but it's a myth.  It's the thinking that's driven post WWII monetary and fiscal policy under the false belief that government has the ability to prevent declining living standards.  By some miraculous coincidence, this ability somehow only applies to developed countries and central banks, not anywhere else.

What government is actually doing is distorting the economy and financial system to where when they "lose control", the consequences of these economic and financial distortions will be compressed into a shorter time period into one or a lower number of "events" instead of spread out as it was in the past.

If anyone claims this isn't true, then they believe in something for nothing.  Virtually no one believes it because the "fat tail" equivalent event hasn't happened yet.  This is what leads practically everyone to believe it never will.

On 12/9/2021 at 12:56 AM, GoldFinger1969 said:

Betting against America has been a losing proposition.  I think it will remain so.

I received a similar reply from someone on the PCGS forum last time I was there.

The US of today and the recent past isn't the same "America" you infer and the change isn't an improvement either.  On the PCGS forum, the other poster quoted Buffet using an argument from authority logical fallacy to supposedly rebut my comments.

There has been substantial social decay over my entire life, back into the 1960's.  That's one reason for 21st century fiscal and monetary policy.  At least some of these policy makers must know it.  They see what the Balkanization of the country and breakdown in the social order implies for the future of the country.  This is a topic beyond the scope of this forum and it's one where even more disagreement exists than in finance and economics.  The point I am making is that social decay is the actual primary root cause behind the deteriorating economic "fundamentals", including exponential increase in US federal debt.

The more immediate question is, is there anything preventing this fake economy and bubble from continuing for the immediate future?

No, because people aren't robots.  It's possible the current manic optimism will allow the fake economy to persist for the rest of the decade (into 2030 or something like it). 

This isn't something I will bet my future on but anyone else is free to act otherwise.

[GoldFinger1969]

On 12/9/2021 at 9:01 AM, World Colonial said:

There is no analogy between the end of WWII and now. 

His point is that if you believe that inflation, interest rates, and ERPs are going to march slowly higher over the years it is a tight analogy.

On 12/9/2021 at 9:01 AM, World Colonial said:

Sentiment and valuations then were the opposite of now and to imply that after a 20+ year bubble (since 2000) we are going to get up to several more decades of market advance (that's what happened after 1946 into 1966) makes no sense.  The fundamentals then are also practically the mirror opposite of now and the recent past.  US federal debt was high (as now) but I see no other similarity.  

I said that valuations today are on the high side, compared to pretty low in 1946.  But that does NOT mean a bubble.  Tech stocks were in a bubble in 2000 because they didn't have earnings for the most part and those that did (like CSCO or MSFT) sold at 60-80x earnings. Today, Big Tech is pricey but often sells at 20-35x EPS.  Not cheap, but not a bubble.

Our debt is high but we are a reserve currency superpower.  That means betting on our demise is going to be a losing proposition even if turns out to be right because neither you nor I will be around to see the payoff (see my GREECE analogy above).

On 12/9/2021 at 9:01 AM, World Colonial said:

The primary reason I disagree with you and the financial community on valuations is because all of you insist on primarily relying on one of if not the weakest measures of value, earnings.  Yes, earnings have been unprecedentedly high during most of the mania (mostly excepting Q4 2001 to sometime in 2003 or near it and the GFC) because of the fake economy.  When the government runs consistent deficits of $1T+ ($3T in 2020), it has to show up somewhere and much of it ends up in corporate net income.  That's not evidence of a fantastic economy but a distorted one.  If the economy has been so great, why is it necessary for the government to run deficits to these levels for over a decade and why has the FRB found it necessary to run what used to be considered extreme monetary policy over the same time period?  (This is a rhetorical question. I'm not really asking.)   Let me give you the only real answer:  One:  Those in charge are really dumb or ignorant enough to believe there is something for nothing.  Two:  A combination of "kicking the can down the road" and political expediency.  At least some of these people must know the real state of the economy (and society) and understand or infer the social consequences of "normalizing" fiscal and/or monetary policy, a (massive) economic depression.

There is no doubt that without QE and the Fed buying $120 BB a month in Treasuries and MBS that headwinds appear.  Of that I have no doubt.

But the QUALITY of American S&P 500 EPS is the highest it has ever been.  American companies are also well-poised to gather sales and profits from overseas.  In 1950 only 5% of the S&P 500 profits came from non-U.S. sources.  Today, it is over 40%.

"Normalizing" fiscal (already being done) or monetary policy (coming) will mean SLOWER growth it does NOT mean an economic depression.