The status of bullion rounds

[bustchaser]

Oh, and the title is kind of misleading. True bullion 'rounds' - those not issued by a government, etc - are not coins at all in my book. They are really medals.

 

 

How is the title misleading? THEY ARE TRUE BULLION ROUNDS!!! They just happened to be issued by a government mint. No they are not coins

[bahabully]

"Marketing? Have we really seen any major increase in gold investment by the public?"

My God yes,,, most gold funds have done very well in the short term, primarily due to public investment spured by fear and timely marketing after the 2000 implosion. I generally listen to the G-man (G.G.Liddy) on my drive home from work each day,,, and generally have to listen to 1-2 gold info-mercials each time... Never heard anyone pushing gold on the radio pre 2000, but maybe I'm missing something. I love the Gman !

 

 

"Central banks have been selling their gold positions for the last decade, and most large brokers are net short gold. Last I checked, if you wanted to dupe the masses by making them pay higher prices for a commodity, the last thing you do is have the largest holders of that commodity very publicly sell it! "

I never said anyone was duping anyone. Just stating that a general model in our economy is to generate demand via marketing, and I'm hearing more marketing of gold than I have in the past,,, which tells me someone who owns it is paying money to generate more demand so that they can pay for the marketing and also make a profit on thier gold holdings as they sell it.

So are you saying the market is awash with gold, all the major players are selling, no one's marketing it,,,,, and the price has still gone up? How do prices go up when supply exceeds demand ? (and you can't say marketing )

 

"As for gold as a growth vehicle, not sure where you picked up on that, but nowhere have I suggested that gold provides growth or income for that matter. It's a hedge against weakening fiat currencies. That's it. It's just another currency as far as I am concerned, but a unique one in that it does not represent someone else's debt."

I think we agree here, sorry if I left the impression that I was implying you were defining gold as a type of investment other than hedge.

 

"The 11% coumpound increase in gold prices since the lows of 2001 roughly correspond to the 9-10% increase in M3 over the same time period. The fact is, we've had significant inflation over the last decade, but rather than seeing the affect of massive increased in money supply on consumer prices we've seen inflation in asset prices. Something the economists hadn't quite anticipated. We first saw it on stock prices, then real estate and commodities."

OK.......... so what?

 

"As for stocks, they have long-run returns superior to gold in nominal terms, but you have to be very careful what time period you measure, since as they say, "in the long-run we're all dead." "

I like the reference to statistically founded laws here, stay at the table long enough and regardless how remote the probability of loss, if you have only a finite amount of funds, sooner or later you'll run into a streak of negative returns that will break you.

As for generating a statistically significant comparison between gold and stocks, I agree with you. You should sample enough years within the range of all available measured years (or months) so that the results of your comparative analysis generate results which present a high degree of confidence for truly representing the differences in thier mean returns.

In short, don't point at one year and say "look here, look what would have happened if you'd invested all your money right there." That's a method generally used by marketing to push an item, or by marketing to scare someone out of buying an item.

I'd sample a range of years that represents your estimated investment lifespan, assume a set amount invested each month over that range, and then use that model overlayed on randomly chosen years in our measured past to establish your investment of choice....... then I'd go 95% in on that item (balls to the wall, make or break). 4% coins, beenie babies, limited edition franklin mint thimbles, fishing, boating,,,etc... what ever you enjoy. 1% bullion (sorry)

 

"A 50-year old investing his life savings in stocks in August of 1929 was likely dead by the time he broke even (that is if he did jump out a window that October). In the same way, I know a number of folks in their 50s who will likely never recover their losses from the Nasdaq implosion in 2000. "

OK,,,abit of cherry picking examples again, but these are facts that cannot be disputed. Other are: a 30 yr old investing his lifes saving after Aug 29 was probably ok at 70.

Implosion of 2000 generally caught wild eyed and somewhat uninformed (ie - the new model employers) investors with thier pants down. I'm actually glad you mentioned it, because it's a perfect example of how marketing can push a company with no income, or net loss and turn it into a $50 stock,,, same team of folks can do the same thing with bullion.....ha, I love capatilism.

 

" All that said, we are talking about coins, not investments. They are a hobby and as such should not be used as a retirement vehicle."

My coins are an investment,,, although I don't care if they lose money and agree that they sould not be employed as a retirement vehicle..., I try to buy coins that I believe have more of an upside than downside. Guessing that most others may hold this opinion also,,,

 

" As for bullion, it is an investment, which should be incorporated into a larger portfolio of diversified investments, including stocks, bonds, cash and real estate. My personal preference is that most folks shouldn't have more than 5-10% of their portfolios in gold or other commodities. "

Good advice,,, very hard to go broke that way, but I don't think Uncle Buffet got rich that way. I'm more radical and probably offer much worse advice than you,,, As I noted above, do your research (I mean bone crushing mathematical investment vehicle comparisons over a good range of time),, if your under 40 pick the fastest pony you can find and put your ask' in that saddle and ride her until she's panting and wet,, then sell her and diversify when your too tired or scared to ride anymore.

 

" And one last thing, your comment about the 3-4% markup on bullion coins is a fair one, but remember that is a one-time hit, unlike the 1-2% in management fees taken out of your mutual fund investments every year that you own them."

Although mutual funds have probably still outperformed bullion coins over the vast majority of measured years,,,, Excellent point,, and why (other than 401k) I manage most of my own money.

 

Good stuff

[Ætheling]

" All that said, we are talking about coins, not investments. They are a hobby and as such should not be used as a retirement vehicle."

   

My coins are an investment,,, although I don't care if they lose money and agree that they sould not be employed as a retirement vehicle..., I try to buy coins that I believe have more of an upside than downside.  Guessing that most others may hold this opinion also,,,

 

 

No... I buy what i like. Not advised if buying for investment. I find i buy coins £50 over book, then if i have to sell them it's usually for £50 less. Net loss of £100 per coin.

 

But am i bothered? Not really... I spend about £120 per month on sweets and chocolate.

[28Plain]

I know a number of folks in their 50s who will likely never recover their losses from the Nasdaq implosion in 2000. 

Add me to that list. What disappeared from my net worth that year is gone for good. My current hoarding of gold is my version of a savings account, though it's one which the feds can't find while sitting at a computer terminal and which will not be wiped out with the stroke of a cursor when some genius at the helm of the Federal Reserve runs the ship of the US dollar aground.

 

I'm not using it as a means of making a profit on paper , just as a way of keeping some of my property portable. Like most of us my age, the bulk of my net worth has always been my house and the land it sits on. That isn't portable and isn't instantly liquid. Gold has both of those qualities, portability and instant liquidity.

 

 

The way I see it, my little gold (and silver) hoard will not become worthless no matter what the morally retarded simpletons in my government manage to do to our economy or currency. The worst that could happen is that it would become unneccessary, which wouldn't be a bad thing anyway.

[mmarotta]

I said "Yes" and I assumed the question was about Rounds, not just government-issued bullion coins.

 

See, for instance:

http://www.silvertownemint.com/

http://www.monex.com/

 

Those are coins.

 

As for how 'historical" they are, time will tell.

[mmarotta]

From rec.collecting.coins Jul 18 2000, 3:00 am

Socrates versus the Mint: WHAT IS A COIN?

©copyright 1994-2000 by Michael E. Marotta

 

The old joke says that I cannot define art, but I know it when I see it. So it is with coins. No definition of the word includes all the the cases. The question is not merely academic.

People have been prosecuted by the federal government for claiming that objects are coins.

In 1994, the Principality of Hutt River Province was prevented from using the word "coin" in its advertising. According to the US Federal Trade Commission, only a government with authority can issue coins. And the United States had no

diplomatic relations with Hutt River and in fact sides with Australia in denying the validity of HRP independence.

Speaking for the entire numismatic community, Alan Herbert claimed in Numismatic News for July 5, 1994, that the US Mint holds legal title to the word "coin." He said:

The term "coin" has been legally and professionally

banned for used in the hobby to prevent applying it

to medals, tokens and other similar pieces.

A coin is defined as a piece that has been issued

and is assigned a specific value by a legal body

entitled to issue money.

 

By this definition, the British gold sovereign is not a coin. It has no specific value. Its weight and fineness are not stated in the coin.

Herbert's definition and most others commonly offered include some reference to a government. Herbert calls it "a legal body entitled to issue money." These words are also meaningless. WHO "entitles" a "legal body"? On the British gold sovereign, the name of the issuer is hidden within the abbreviated Latin

legend, but you can find the names "Victoria" "Eduardus" "Georgius" and "Elizabeth." Who entitled them to issue money and what makes them a legal body?

What about the Confederate States of America or South Vietnam? For many years, the United Nations refused to admit the two Germanies and the two Koreas on the grounds that they were not separate countries but different occupied areas of the same country. Did Israel not issue "coins" for 40 years simply because its neighbors refused to recognize it? And now that they have, do its "tokens" or "medals" suddenly acquire the patina of coinness?

In the context of American history, Pine Tree Shillings were struck without the authority of the King of England. (In a brilliant essay on the subject Michael J. Hodder shows that the government of Massachusetts issued coins and invaded Maine in 1652 because they viewed themselves as an independent nation.)

The coins of the Mormons, Oregon, and California would also fail the Herbert Test.

The American colonies began as corporations. In our day, most cities and other local governments are also incorporated entities. Obviously, then a corporation can issue "coins." If an incorporated city can issue a coin, why cannot an incorporated automobile manufacturer? And if so, then, why must the company be organized as a corporation instead of a partnership or proprietorship? Why must a person be a partner or a proprietor in order to issue coins? Why not strike COINS in your own name as a sovereign individual and call them COINS.

 

I offer the following workable definition: A COIN IS A DURABLE AND PONDERABLE MEDIUM OF INDIRECT BARTER.

Coins are differentiated from banknotes, flooz, bonds, etc., which are paper, or fabric, or immaterial. It also differentiates coins from "tokens" which are a medium of DIRECT exchange. It also separates coins from medals which are not a medium of exchange.

 

This definition allows a coin to be metal, plastic, or wood, round or square or triangular, a disk or an annulus. Coins can come from from kings with families going back 1000 years or from constitutional republics or from outlaws and rebels hiding in the mountains or from businenesses or from you.

 

This definition is a WORKABLE definition for NUMISMATICS. It is not intended to be a LEGAL definition. If I choose to call a plucked chicken a coin and you come to me because you want to make soup from it (clearly, a rich diet, high in bullion) and we agree on a price, that is our business and no business of any third party.

 

-30-

[Conder101]

< I offer the following workable definition: A COIN IS A DURABLE AND PONDERABLE MEDIUM OF INDIRECT BARTER. >

What about tokens that are accepted in general commerce and not just back and forth between the issuer and his customers? Wouldn't these tokens then be a "medium of indirect barter" and qualify as coins as well?

[Guest Stujoe]

How is the title misleading?  THEY ARE TRUE BULLION ROUNDS!!!  They just happened to be issued by a government mint.  No they are not coins

<{POST_SNAPBACK}>

 

I should have guessed your response.

 

 

But, being made by the govt, having a denomination, etc does put them in a different class or at least a different subset than a privately issued round to me.

[Guest Stujoe]

< I offer the following workable definition: A COIN IS A DURABLE AND PONDERABLE MEDIUM OF INDIRECT BARTER. >

What about tokens that are accepted in general commerce and not just back and forth between the issuer and his customers?  Wouldn't these tokens then be a "medium of indirect barter" and qualify as coins as well?

<{POST_SNAPBACK}>

 

I am glad someone brought up tokens. I do consider them to be closer to coins than bullion rounds, coins, etc.

[Ætheling]

By this definition, the British gold sovereign is not a coin.  It has no specific value. Its weight and fineness are not stated  in the coin.

    Herbert's definition and most others commonly offered include  some reference to a government. Herbert calls it "a legal body  entitled to issue money." These words are also meaningless. WHO  "entitles" a "legal body"? On the British gold sovereign, the  name of the issuer is hidden within the abbreviated Latin

legend, but you can find the names "Victoria" "Eduardus"  "Georgius" and "Elizabeth." Who entitled them to issue money and  what makes them a legal body?

 

 

The Sovereign is legal tender as a £1 coin, as far as i am aware the only predecimal coins that are still legal tender are the gold coins from 1817 onwards, the briefly issued Double Florin and the currency silver threepence with the crowned 3 reverse from the 1840s to the 1920s.

 

Everything else that i am aware of has been demonestised.

 

And it's Edwardus. Sovereigns (kings et.) traditionally have the right to issue money through divine right.

 

But as John Stuart Mill would have pointed out the people that entitle a legal body to issue coinage and declare it legal tender are the people themselves. For by accepting the government (i.e not resisting it by taking up arms) you are showing a tacit consent and support for their policies. If one of these policies is to continue suggesting gold sovereigns are legal tender then so be it.

[gxseries]

Isn't coins and tokens differ by one major aspect, which is how the public accepts them?

 

If a so called piece of metal is accepted as a form of payment in a country without any legal restrictions at any period of time, that would most certainly qualify as a coin whereas a token can only be used in some certain areas, like game centers and casinos. Wouldn't that be the difference? Also, bullion usually has to have high quality refined precious metal - of course, it can be used as a piece of token or into coins, but then, who would usually want to do that nowadays

 

So yes, bullions, in precious metals, and where you cannot really use it in any sort of payment except selling it off by it's metal content, is what I consider them to be.

 

Just my random thoughts for now...

[Guest Stujoe]

Isn't coins and tokens differ by one major aspect, which is how the public accepts them?

 

If a so called piece of metal is accepted as a form of payment in a country without any legal restrictions at any period of time, that would most certainly qualify as a coin whereas a token can only be used in some certain areas, like game centers and casinos. Wouldn't that be the difference?

<{POST_SNAPBACK}>

 

There have been times where tokens (I am thinking US Civil War Tokens ad Hard Times Tokens and UK Conder Tokens) where they have been as accepted as regular coins. That is the exception rather than the rule, though, and I think if you add in that a coin has to be issued by a government, it eliminates tokens as coins regardless of their functionality. But, defining something so as to discount its functionality seems kind of arbitrary.

[SlavicScott]

The Sovereign is legal tender as a £1 coin, as far as i am aware the only predecimal coins that are still legal tender are the gold coins from 1817 onwards, the briefly issued Double Florin and the currency silver threepence with the crowned 3 reverse from the 1840s to the 1920s.

 

Everything else that i am aware of has been demonestised.

 

 

All maundy coins are still legal tender. On Decimalization Day in 1971, the maundy coins all increased in face value exponentially, to retain the same value in the new system. (the pre-decimal 1d maundy coins became legal tender as 1p, the 2d became 2p, etc). Not that anyone would spend maundy pennies at face value. But who would drop a Britannia £2 at face value??

[jtryka]

From www.merriamwebster.com:

 

Main Entry: bul·lion

Pronunciation: 'bul-y&n, -"yän

Function: noun

Etymology: Middle English, from Anglo-French, mint

1 a : gold or silver considered as so much metal; specifically : uncoined gold or silver in bars or ingots b : metal in the mass <lead bullion>

2 : lace, braid, or fringe of gold or silver threads

 

Taking the commonly accepted definition in 1a, it would be impossible for bullion coins to be mere bullion, since they have been coined. They contain a specific amount of gold or silver (just like double eagles or silver dollars) they just don't circulate as currency. Silver or gold "rounds" are more like privately issued medals with a specific content of precious metal.

[SlavicScott]

US Silver Eagle UNC

• face value - $1
  
• intrinsic value - 1 ounce pure silver
  
• market value - $10-15 (10-15 times face value)
  
• issued by US Mint
  

US 1982 George Washington half dollar BU

• face value - $0.50
  
• intrinsic value - a handful of paper clips
  
• market value - $5-8 (10-16 times face value)
  
• issued by US Mint
  

So, which one is a coin?

[UncleBobo]

There have been times where tokens (I am thinking US Civil War Tokens ad Hard Times Tokens and UK Conder Tokens) where they have been as accepted as regular coins. That is the exception rather than the rule, though, and I think if you add in that a coin has to be issued by a government, it eliminates tokens as coins regardless of their functionality. But, defining something so as to discount its functionality seems kind of arbitrary.

 

Hmmmm, Makes me wonder...

Norfed silver and gold Liberty currency

 

Are they tokens? Coins? Bullion?

[Guest Stujoe]

Hmmmm, Makes me wonder...

Norfed silver and gold Liberty currency

 

Are they tokens? Coins? Bullion?

<{POST_SNAPBACK}>

 

 

 

I would say that the Norfed is a token as it is meant to be 'spendable' in commerce as a denomination but issued by a non-government entity. True bullion, to me, is not able to be spent as a denomination but rather only meant to be worth a (fluctuating) metal price. Medals are artwork only with no intention to be 'spendable'.

 

 

 

Another random thought...if silver goes down to 2 cents an ounce, an SAE can still be spent for a dollar (as I understand it). A true bullion round would be worth only 2 cents. What would a Norfed Liberty be worth?

[Ætheling]

All maundy coins are still legal tender.  On Decimalization Day in 1971, the maundy coins all increased in face value exponentially, to retain the same value in the new system.  (the pre-decimal 1d maundy coins became legal tender as 1p, the 2d became 2p, etc).  Not that anyone would spend maundy pennies at face value.  But who would drop a Britannia £2 at face value??

 

 

I omitted Maundy coinage on purpose, because it always leads off to; "what's Maundy?"

 

I take sovereigns as a different example to Britannias. Basically because most people know what sovereigns are and have seen one, and a good few know they are (or were they think) £1 coins.

 

 

Britannias don't get that much scope outside the collecting world so most people even if given one would still not accept it as they wouldn't know what it was. Those that know what it is of course wouldn't spend them anyway.

[Ætheling]

US Silver Eagle UNC

• face value - $1
   
  
• intrinsic value - 1 ounce pure silver
   
  
• market value - $10-15 (10-15 times face value)
   
  
• issued by US Mint
  

US 1982 George Washington half dollar BU

• face value - $0.50
   
  
• intrinsic value - a handful of paper clips
   
  
• market value - $5-8 (10-16 times face value)
   
  
• issued by US Mint
  

So, which one is a coin?

 

 

In the words of Bustchaser, neither.

 

One is a lump of bullion, the other is a commem and thus not a coin.

[Guest Stujoe]

On the topic of bullion rounds...

 

Just read in this weeks Coin World that the government considers the recently recovered 1933 Saints as "round discs of gold bullion struck with the gold double eagle coin dies in 1933, and not legal tender coins".

 

So they are just bullion rounds.

 

[GDJMSP]

OK - lemme ask this - if you can spend it as money, at face value, to pay a debt, does that make it a coin ? "it" above is defined as one of these US bullion coins, be it silver, gold or platinum, - or any US commemorative coin with precious metal content or otherwise.

 

 

Now rather than waiting - I'll answer my own question. For you can spend them as money,at face value, to pay a debt. There is one entity that will always accept them as mony for payment of a debt - the US Govt. You can use them to pay your taxes.

 

To me - that also makes them coins.

[ccg]

On the topic of bullion rounds...

 

Just read in this weeks Coin World that the government considers the recently recovered 1933 Saints as "round discs of gold bullion struck with the gold double eagle coin dies in 1933, and not legal tender coins".

 

So they are just bullion rounds.

 

 

[jtryka]

On the topic of bullion rounds...

 

Just read in this weeks Coin World that the government considers the recently recovered 1933 Saints as "round discs of gold bullion struck with the gold double eagle coin dies in 1933, and not legal tender coins".

 

So they are just bullion rounds.

 

 

Them's fightin' words!!!

[bustchaser]

OK - lemme ask this - if you can spend it as money, at face value, to pay a debt, does that make it a coin ? "it" above is defined as one of these US bullion coins, be it silver, gold or platinum, - or any US commemorative coin with precious metal content or otherwise.

Now rather than waiting - I'll answer my own question. For you can spend them as money,at face value, to pay a debt. There is one entity that will always accept them as mony for payment of a debt - the US Govt. You can use them to pay your taxes.

 

To me - that also makes them coins.

 

 

One can "spend" a chicken in order to pay a debt. That only makes it an item of barter, not a coin.

[Ætheling]

I'm inclined to side with Bustchaser on this one.