Summer focus is not at the beach

At this time of year, Americans tend to want to take some time off to get away on vacation, or put meat on the grill and relax.

The markets are not cooperating.

Gold and silver, and especially silver, are on a tear. People want to buy. Going away for a vacation will cost more bullion-related sales than usual this year. for dealers.

It has happened before. The summer of 2011 was one such summer. Silver had hit its high that year at the end of April and gold was building to its trading high in early September.

Everything was humming. But to do business, you have to be present and not off somewhere with the family.

How inconvenient.

Collectors, too, seem to be staying focused on their coins this summer because of the present excitement in bullion. They even are writing letters to the editor in growing numbers at a time of year when I can find myself wondering if I am the only one at my desk. I think I have bullion to thank for this ongoing attention to numismatic matters.

The question is will this summer attention be worthwhile in the long run? Anybody who was drawn into the bullion market in the summer of 2011 lived to regret it. The high prices receded little by little until we hit cycle lows as 2015 came to an end.

So should I be comparing this summer’s activity not to the 2011 highs but to one nearer a seasonal low point?

That would make a difference in potential outcome, wouldn’t it.

Fortunately for me, I don’t have to answer my own question. If I knew the trajectory of the precious metals, all my money would be riding on them and I would be off relaxing somewhere myself.

Instead, I am a believer in time-tested conventional financial wisdom. That wisdom states that individuals who have investable funds should put no more than 10 percent of these funds into precious metals.

Unfortunately, the hard thing about this advice is to take it. When silver and gold are exciting as they are this year, the natural urge is to want more money riding on them.

Collectors can bend the rule a bit by continuing to collect. Coin collections don’t count as investable funds. When silver and gold get frisky, the value of a collection can rise with them.

But even with a collection included, the point is to avoid betting the farm on a hoped for outcome. If the metals spend the next six months giving back the gains of the previous six months, this unfortunate occurrence should not cripple your retirement plan, or affect your day-to-day living.

Just as dealers make their money on constant turnover, collectors make their money on taking the long view and systematically accumulating assets, numismatic and otherwise, by buying low, buying medium, and occasionally buying high, but fortunately being able to average it all out.

More Collecting Resources
• Are you a U.S. coin collector? Check out the 2017 U.S. Coin Digest for the most recent coin prices.
• Celebrating 30 years of coin excellence, Donald Scarinci’s Coin of the Year is a great reference book to some of the best coin designs ever conceived.