Thanks for central bankers’ ‘gifts’

Allow me to offer your readers this contrarian collector’s views, tongue-in-cheek, of course.

“Thanks” to all those central bankers who, by selling, drove the gold price down to as low as $250 an ounce during the 1990s, enabling coin collectors to put aside some common, and rare, gold coins. Special thanks concerning fractional gold Eagles with low mintages, now selling for four figures or more!

Contrarians thank, more recently, Mr. Dominique Strauss-Kahn, head of the International Monetary Fund, 2007 and beyond, for holding the gold price down around $600 an ounce with IMF gold sales. Sure, it helped to clear ongoing IMF budget deficits, but it also meant that gold bugs could buy their common 1-ounce gold Eagles, Krugerrands and Maple Leaves at far less than today’s $1,600.

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Contrarians thank China, biggest gold producer in the world, for digging up the yellow metal with low cost labor, then buying gold on the open market. That made profits for alert gold bugs. China’s money managers unloaded paper debts of foreign fiat currencies and put at least some monetary reserves into hard assets.

Contrarian collectors thank silver bugs for buying up 50 to 100 million excess silver Eagles, pushing up silver prices. Collectors got to unload their junk silver coins, as well as old, worn, mutilated common date silver dollars for as much as $30 to $45 each. Silver went up from $5.50 an ounce a few years ago to nearly $30 an ounce in early 2011. In fact, prices got near records of $48 an ounce. The great bounces and fluctuations certainly made short sellers run for cover. If it wasn’t for the high price of silver, who would buy the old, silver, circulated Kennedy 50-cent pieces at bargain prices, or all those old, worn Morgan and Peace dollars that aren’t scarce collector dates?

Contrarian money strategists thank Mr. Bernanke for pushing down, and holding, interest rates close to zero. It makes for nearly free money for the banks. Bank of America, and others, can offer 15-year fixed rate mortgages under 4 percent, plus 30-year FRMs at just over 4 percent. Houses are discounted 30 percent to 50 percent from just four years earlier, making this the best time to buy a house on the cheap in decades.

Contrarians must thank George W. Bush for lowering the taxes on dividends and long-term capital gains. Not only had greed infected Wall Street, but CEOs neglected paying dividends. Such dividends are depended upon by 100 million Americans, including seniors, for their 401(k)s and pension plans.

Contrarian strategists thank dollar devaluers, who knocked the U.S. dollar down 28 percent in recent years. Over-extended borrowers could repay their massive debts with cheaper dollars.

Contrarians thank gossip-mongers for diverting attention with their titillating tales of public personalities. As gossip tabloids went crazy over private doings not kept private, these nonsensical diversions cleared the way for collectors, gold bugs and silver bugs to snap up key coins and hard money while gossipers’ attention was diverted elsewhere.

Contrarians thank all those local and regional coin shows, and vest-pocket dealers, who are displaying so many recent Mint issues. If it wasn’t for all those weekend dealers, vest-pocket dealers, buyers and sellers of factory-made inventory, who else would buy up all the multi-millions of expensive, recent modern issues of foreign and U.S. governments at escalated prices, instead of hard to get key and semi-key early 20th, 19th and even 18th century coins?

Contrarians thank heaven for the lack of a coherent energy policy, and recent developments in oil-producing Middle Eastern countries. You can buy a gallon of gas, before tax, for 10 cents. It’s just that the dime has to be a circulated 10-cent piece dated 1964 or earlier. For four silver quarters, maybe you can even fill your tank.

New collectors are all heated up about the perplexities of buying the silver 5-ounce “hockey pucks,” that is, ATB quarters. Just $1,500-$2,400 fiat dollars will get you a set of five on the Internet, and the new buyers try to make money with them!

Yes, contrarian collectors and money strategists indeed have much to be thankful for, amidst current events that most other view so negatively.

Modern numismatists are not that excited about collecting zinc cents, clad copper-nickel quarters or gold-colored manganese dollars with mintages in the hundreds of millions. Many non-collectors are putting manganese dollars aside because they don’t have a Red Book, and the busy Mint makes hundreds of millions in profit over time. Issuers could use the money. Now, if they could only get more silver and gold planchets to stamp out the Eagles that gold bugs and silver bugs want. That’s a topic for another day.

This Viewpoint was written by John V. Kamin, a hobbyist from The Forecaster Publishing Co., of Tarzana, Calif.
Viewpoint is a forum for the expression of opinion on a variety of numismatic subjects. The opinions expressed here are not necessarily those of Numismatic News. To have your opinion considered for Viewpoint, write to David C. Harper, Editor, Numismatic News, 700 E. State St., Iola, WI 54990. Send email to david.harper@fwmedia.com.