Here comes the wolf!
Written by Andy Schectman
For the last fifteen years at Miles Franklin, we have watched investment opportunities come and go. Three of the most visible opportunities were the parabolic rise in the NASDAQ, the US dollar, and the current real estate bubble.
There is another opportunity that is in the very early stages that we want you to be aware of, so you can take full advantage of this historic market change.
Anyone can invest, it’s easy. But making money is hard! Seasoned pros understand that associated with making money is the concept of “risk.” Safety is fine and a good night’s sleep that comes with a “conservative” portfolio makes sense. The sixty-four-dollar question is when to take a chance? When is the risk-reward ratio high enough to take the leap?
Looking back some 25 years, we find gold selling for $850 (two and a half times what it sells for today), silver was $50 (nearly seven times what it sells for today) and the Dow traded in a range of 800-900, a one-to-one ratio with gold and a eighteen to one with silver. The early ‘80s represented the end of the bull market in gold and silver and the beginning of the bull market in stocks. Of course, in 1980 everyone wanted gold and silver and no one would touch stocks. It was the “classic” mistake the investors inevitably make. They buy too late, pay too much and loose. Also, they invariably miss the next opportunity by buying the “out-of-favor” asset that is selling for dirt! The few “enlightened” investors commonly called “contrarians” were in the process of selling their gold and silver for $800 and $50 per ounce respectively, and switching into a grossly undervalued and overlooked stock market. They were the people who “took a chance” and “rode the bull” for two decades to major wealth! The same opportunity is here for you once again, awake after more than 20 years. But this time it is the reverse.
“Wolf, wolf,” I call it the “boy who cried wolf” syndrome. We have been suggesting that a new bull market in gold and silver was inevitable and we have been a bit early. That never bothered us because we also live with the philosophy that gold and silver is “an insurance policy” against the unexpected and as a hedge against troubled times. We are right you know, the wolf is at the door now. Just like the fable, the wolf does come and he has arrived.
Silver has historically been the most affordable precious metal, and this remains true today. We also believe that silver also offers great profit potential. Do you realize that an investment today of $156,000 or 28 bags of junk silver was valued at just over one million dollars in 1980? Making things even more interesting and potentially profitable, the money supply in the has increased many times over since 1980. In other words, bags of junk silver are selling for about 6 ½ times less than they were in 1980.
Dimes, quarters and half dollars minted prior to 1965 contain 90% silver and 10% copper. In circulated condition these coins are sometimes called “junk silver coins” because they have no collector value above and beyond the silver content. Because US Mints originally shipped these coins in $1,000 face value canvas bags, today a bag of junk refers to $1,000 in face value. In other words, a bag of dimes contains 10,000 dimes; a bag of quarters contains 4000 coins; and a bag of half dollars 2000 coins. Although, $1,000 face value is a standard unit for circulated coins, smaller quantities such as half bags ($500 face value) and quarter bags ($250 face value) are also commonly sold. When minted, a $1,000 face value bag contained 723.4 ounces of silver. However, because of wear through circulation a junk bag contains approximately 715 ounces when refined. Therefore, to calculate per ounce price, simply divide the cost of the bag by 715 ounces. A bag weighs approximately 55 pounds.
If you are like many of our clients, then the idea of getting some silver sounds great-but the logistics of storing and shipping silver can really be a problem. We have addressed that issue with a new partnership with the Delaware Depository Service Company (DDSC). They store all forms of gold, silver platinum and palladium.
Delaware Depository Service Company (DDSC) is an Exchange-approved, Delaware-based, limited liability company providing a full range of specialized precious metals custody, accounting and shipping services to financial institutions, industrial companies and individual investors worldwide. It’s customer list includes investment banks, brokerage firms, refining companies, commodity trading houses, major retailers, coin dealers and investors, including many high net individuals.
Specifically, DDSC receives, inspects, securely stores, internally transfers, and ships worldwide precious metals bullion (in bar, coin and industrial form) and certified rare coins for its customers. Relevant accounting support (i.e., account deposit/withdrawal confirmations, inventory reports and detailed shipping manifests), as well as personalized customer assistance, is also provided.
For more information on this please call Miles Franklin at 1 (800) 822-8080 and request our Delaware depository fact sheet and please remember us for all of your precious metals needs. Remember the wolf is coming!