Silver coins beat the house

(Image courtesy www.gaithersburgcoin.com)

Fifty years ago, my mother purchased a home for $29,000.

Three years ago, one of my brothers purchased the home from my mother’s estate for $100,00. Did this home really more than triple in value over the years?

Absolutely not!

According to the Federal Reserve Bank of Saint Louis at https://fred.stlouisfed.org/series/M1SL, the M1 definition of the U.S. money supply when my mother purchased her home was $177 billion. When this house sold three years ago, the U.S. money supply had grown to more than $2.8 trillion, an increase of more than 15 times.

Had the value of the home simply kept up with the inflation of the money supply, it should have sold for more than $450,000. Instead it went for less than one-fourth of this amount.

Obviously, the value of this home did not come anywhere close to offsetting the loss of purchasing power caused by government inflation of the money supply.

By the way, when my mother purchased this home, she was saving the silver coins in her pocket change. When she died, these coins had increased in value almost the exact same amount as the increase in the U.S. M1 money supply.

That’s right. Owning silver coins better protected her from the economic losses suffered from government inflation of the money supply than did owning her own home. This short personal anecdote from my family is a perfect demonstration of why it is prudent for most everyone to own some bullion-priced physical gold and silver coins and ingots.

Think about it.

Louisiana win

In this column two weeks ago, I reported some 2017 achievements in the efforts to gain sales and use tax exemptions on retail sales of rare coins and precious metals bullion in several states. There has been further progress since then.

Last Friday, Louisiana Governor John Bel Edwards signed into law HB 396 to re-establish such an exemption as of Oct. 1, 2017. This state had a similar exemption that was revoked more than two decades ago. A new exemption was later enacted, which had a minimum purchase requirement of $1,000 for the transaction to be exempt from sales and use taxes. Still later, the minimum purchase threshold was eliminated.

It was this second Louisiana exemption that was “suspended” as of April 1, 2016, and to last until June 30 2018, along with almost 300 other sales tax exemptions and tax credits. This drastic move was made to reduce the state’s huge budget deficit that resulted from falling oil and gas tax collections.

In March 2016, three Louisiana dealers and I testified before Louisiana Senate Revenue and Fiscal Affairs Committee to explain that revoking the coin and bullion sales tax exemption would almost certainly result in a net decrease in the state treasury’s tax collections (a contention that was generally later confirmed by the Industry Council for Tangible Assets national coin dealer survey of 2015 industry sales, sales tax collections and coin show attendance). Louisiana coin dealers, working with an awesome lobbyist, have now regained a similar sales and use tax exemption that will take effect nine months sooner than would have otherwise occurred.

Consequently, on Oct. 1, there will be 35 states that have either no sales taxes at all or complete or partial sales tax exemptions on rare coins and precious metals bullion. This number may increase if similar laws are enacted in Alabama or North Carolina yet this year.

Patrick A. Heller was the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He was also honored by the Numismatic Literary Guild in 2016 for the Best Dealer-Published Magazine/Newspaper and for Best Radio Report. He is the communications officer of Liberty Coin Service in Lansing, Mich., and writes “Liberty’s Outlook,” a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com. Some of his radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com).