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Weekly Silver Chart
Silver made another break-out over $19.00. This is significant. Silver seems to be consolidating at this level and poised for a run-up.
1856-O Double Eagle Gold Coin Debuts in Heritage September Long Beach Auction
by Heritage Auctions on August 30, 2010
in Auctions, Coin Shows and Numismatic Events,Coin or Numismatic News,Featured Coin News Articles,Press Releases and Announcements
The Bullock Specimen of the famous 1856-O double eagle, recently discovered in Ohio and graded XF45+ by NGC, is the main attraction in Heritage Auctions’ September 2010 U.S. Coin Auction, Sept. 22-25, in Long Beach, CA.
This rare 1856-O double eagle, found in family holdings in Ohio, is expected to bring $300,000+. It will be offered to the collecting public for the first time at the September Long Beach Auction.
“The 1856-O double eagle is a very rare date,” said Greg Rohan, President of Heritage. “No more than two dozen are known, and the real number is probably smaller. Any example is a real treasure, and this piece made a remarkable debut. The announcement of its discovery was front-page news in Coin World, a sign of how important the 1856-O double eagle is to numismatists.”
Noted collector John McCloskey identified the coin in the holdings of a family, where it had passed down for three generations. The earliest known owner of the coin was James Bullock, a farmer who lived near Livermore, KY. He acquired the coin some time before his death on June 26, 1923, when it was passed on to his heirs.
The double eagle, along with several other more common gold coins was kept in a safe deposit box until McCloskey was asked to examine the group this year.
McCloskey went through a meticulous process to satisfy himself of the coin’s authenticity before announcing his findings. His process and research appeared – as mentioned above – alongside the announcement in the July 26, 2010 issue of Coin World, and an image of the double eagle appeared on the issue’s front cover.
“This coin shows all the major diagnostics associated with other 1856-O double eagles,” said Rohan. “The most obvious is a die crack on the bottom of the reverse, but there are other, smaller markers as well, such as a ‘notch’ in the numeral 1 in the date.”
NGC has confirmed the authenticity of this 1856-O double eagle, certifying it as genuine and giving it a grade of XF45+.
It will be offered to the collecting public for the first time at the September Long Beach Auction. It is estimated at $300,000+.
Silver Jumps up 6%!
Over the last two days we have seen Silver jump nearly 6% from $17.90 to $19.01 an ounce. Gold also did well rising almost 3% to $1241 an ounce. If you have any questions don’t hesitate to call me.
Sincerley,
Todd Klimson
352-426-2716
2010 MS 70 NGC Chinese Silver Panda 10Y
2010 MS 70 NGC Chinese Silver Panda 10Y
A favorite of children and adults alike, the 2010 Chinese Silver Panda coin features two Pandas playfully enjoying a bamboo field. The design on the reverse of the coin, which remains consistent each year, displays the “Temple of Heaven”. Devotion to the tiniest detail and painstaking craftsmanship are the hallmarks of these scrupulously minted coins. Such dedication is evidenced by the almost lifelike imagery of these beloved bears.
Struck in one Troy ounce of 99.9% fine silver, each coin is a large 40 mm.
Numis Network is making these coins very affordable. Of course these Silver Pandas are always a great gift for young and old alike, and they also make a wonderful addition to your personal collection. Get yours now!
Retail: $129.00
Why do dimes and quarters have ridges on the their edges?
Many years ago, when precious metals were commonly used in (some) coins, dishonest people would sometimes shave a bit of metal off the edge of a coin. The change in the amount of metal in the coin, and therefore the value of the coin, would not be large enough to notice easily; the cheater could still spend the coin. When the cheater had gathered enough bits of metal, he could trade them in for something of value, getting more for his money (but not legally).
To make this practice more difficult, the people who made the coins added ridges to the edges. This made it very evident when a coin had been shaved; a cheater could not easily spend it without being noticed.
Because dimes and quarters used to be made of silver, they were given this protective shape too, although in more modern times the practice of coin shaving declined. (As the overall value of the coins declined, largely due to inflation, there was not much profit to be had from coin shaving.)
Modern dimes and quarters retain the ridged shape even though they are no longer made of precious metal; it’s just tradition now.
Nickels and pennies were never made of precious metal, so they didn’t need to have protective ridges.
Platinum Eagle Goes on Sale
 |
By Numismatic News August 13, 2010 |
This article was originally printed in Numismatic News.
>> Subscribe today!
Do you have $1,892?
That’s what you’ll need to purchase a 1 ounce 2010 American Eagle platinum proof coin.
The coins, of which 10,000 will be minted, went on sale at noon Aug. 11.
 2011 U.S. Coin Digest: Bullion Coinage Your best reference for the latest details and values for these circulating and non-circulating bullions. Buy the download today! |
The Mint is limiting orders to five coins per household for the first week of sales. It will then evaluate sales and determine whether to extend, adjust or remove the limit.
The new coins are collector versions of the American Eagle platinum bullion coins. The obverse features Lady Liberty symbolizing vigilance and faithfulness to duty. The reverse design is emblematic of the principle “To Establish Justice,” the second of six principles of American democracy found in the Preamble to the U.S. Constitution.
The six-year platinum coin program was launched in 2009. The themes are:
• 2009 – To Form a More Perfect Union
• 2010 – To Establish Justice
• 2011 – To Insure Domestic Tranquility
• 2012 – To Provide for the Common Defence
• 2013 – To Promote General Welfare, and
• 2014 – To Secure the Blessings of Liberty to Ourselves and our Posterity.
Supreme Court Chief Justice John G. Roberts Jr. wrote the narratives used to insprire the designs for the coins’ reverses.
Coins may be ordered online at usmint.gov or by calling 1-800-USA-MINT.
Gold, silver and sardines – barter solutions for hyperinflation ahead
Economist and ShadowStats editor, John Williams, foresees a systemic collapse, a hyperinflationary great depression and the cessation of normal commerce. Interview with The Energy Report.
Author: The Energy Report
Posted: Friday , 06 Aug 2010
KENWOOD, CA -
The Energy Report: A few months back, John, you said, “if you strangle liquidity you always contract an economy and deliberately or not, liquidity is being strangled, resulting in sharp declines in consumer credit, commercial and industrial loans.” Does this mean it would spur more economic growth if banks actually started lending?
John Williams: It sure wouldn’t hurt. We’re still seeing contractions in liquidity, and that’s adjusted for inflation. In real terms, M3 money supply is down almost 8% year-over-year. It’s the sharpest fall in the post -World War II era. It’s not so much the depth of the decline in the liquidity or the duration, but the fact that the liquidity turns negative year-over-year that signals the economy turning down.
We had the signal in December of 2009 indicating intensification of the downturn, in this case, within six to nine months. We’re in that timeframe now and see softening numbers. People are talking about a weaker economy. Even Mr. Bernanke has described the economy as “unusually uncertain” in terms of its outlook. Wording like that from the Fed is a pretty good indication that something’s afoot.
TER: Why is M3 still contracting?
JW: Just as you noted, the banks are not lending. The money the Fed put into the system in terms of buying mortgage-backed securities from the banks and trying to help bank liquidity ended up back with the Fed as excess reserves. We have well over $1 trillion there; had the banks loaned that money in the normal stream of commerce, it would have added more than $10 trillion to the broad money supply, which otherwise is up around $14 trillion. That certainly would have had some inflationary impact if not in terms of actual business activity. You can’t always get the economy to grow by pushing money into it. Sometimes it’s like pushing on a string.
TER: And you say that a contracting money supply is a sure sign of trouble?
JW: When it contracts year-over-year adjusted for inflation, that’s a signal for a downturn or an intensified downturn. It happens every time. Squeeze liquidity and business activity contracts.
On occasion, we’ve had recessions without a preceding downturn in the money supply. And sometimes, the money supply has turned positive but the economy has not followed-again, pushing on the string. Expanding money supply has led to upturns as well, so the Feds had to give it a try to stimulate the economy. But the one sure signal is the downturn. You don’t get it often but it’s very powerful when you do.
We’re beginning to see the data break. Some unusual factors have been at work. I expect an accelerating pace of downturn in the next couple of months. The numbers will turn sharply worse. Consensus estimates are already moving in that direction and most everything will follow. Industrial production is still up but retail sales have been falling. Payroll numbers have been flat when you take out the effects of the census hiring. Those employment numbers will turn down in the next month or two, providing an important indicator of renewed economic contraction.
So we’ll see how it develops, but we’re at that turning point. It is happening as we speak. At the end of July, we got an estimate of the second quarter GDP, where the pace of annualized growth slowed to 2.4%. The early GDP estimates are very heavily guessed at, so most of the time you don’t know if you’re getting a positive or a negative number. You get a margin of error of plus or minus 3% around the early reporting. That happens also to be about average growth.
Nevertheless, on a quarter-to quarter-basis, I think we’ll see GDP down again in the third quarter. With the bulk of the reported GDP in the first half due to inventory building, the stage for renewed contraction has been set. By then we’ll find the consensus pretty much in the camp that we’re in a double-dip recession. The popular press will describe it as a double dip, but we never had a recovery. Actually, this is just a very protracted, very deep downturn that has had a pattern of falling off a cliff, bottoming out, having a little bit of bump due to stimulus and then turning down again. Sort of shaped like the path of a novice skier going down a jump for the first time. Speeding sharply down the hill, he goes up in the air and starts spinning wildly as he tries to figure out which end is up with his skis. Then he takes a pretty bad tumble. We’re beginning to spin in the air.
TER: But we’ve been in recession for three years now?
JW: The second leg that I’m talking about is the one now underway as we get to the middle of 2010. December 2007 is when this recession officially started, although I contend that it started earlier in 2007. At any rate, the economy plunged through 2008 and well into 2009. The numbers were pretty much bottom-bouncing during the second half of 2009. The auto deals and the homebuyer deals added a little spike to the growth pattern, but that growth was stolen from the future. It didn’t create new demand.
Let me just clarify a bit. Recession, at least traditionally, was defined as two consecutive quarters of contracting real GDP growth adjusted for inflation. The National Bureau of Economic Research, the defining authority as to whether we’re in a recession, will deny it, but at one time they used that general guideline as well. They’ve always used other numbers, too, such as employment and industrial production, trying to time the beginning or the end of a recession to a particular month. Significantly they did not call an end to this recession. They said it was too early to call, but I think they had a pretty good sense of what was going to happen. So what we’re seeing now just looks like an ongoing deep recession. The next down leg is going to be particularly painful and I’m afraid particularly protracted.
TER: Can the governments pull any more stimulus levers yet this year?
JW: Oh, I think they’ll try, but nothing much they can do will have anything other than short-term impact. If they write everyone a check, people go out and buy things. That would give the economy a quick boost but do nothing to change the underlying fundamentals or to correct the structural problems in this recession. Those are tied to the lack of robust growth in consumer income.
TER: So consumer income is a key factor.
JW: Absolutely. If you put in housing that’s related to the consumer, that’s three-quarters of the GDP. The average household is not staying ahead of inflation, and unless income grows faster than inflation, the economy won’t grow faster than inflation-and that means that GDP is not growing. Income sustains consumption. When income grows, consumption grows. The only way to have sustainable long-term economic growth is to have healthy growth in income. You can buy some short-term economic growth, though, without growth in income, through debt expansion, which is what Greenspan tried.
Most of the growth we’d seen in the last decade prior to this downturn was due to debt expansion. The debt structures have pretty much been put through the wringer and consumers are not expanding credit, generally because it’s not available to them. Absent debt expansion and/or significant growth in income, no way can the consumer expand personal consumption. You have to address employment, quality of jobs.
TER: You’re suggesting that problems with the quality of jobs, if not the quantity, goes back to Greenspan-before the recession kicked in.
JW: Yes. A lot of high-paying jobs have been lost to offshore competition, to U.S. companies moving facilities offshore and to outsourcing offshore. That’s been the primary driver of declining household income.
TER: We no longer really have the option of expanding the debt and it’s doubtful that even short-term stimulus will have much impact. Looking at this next leg down against that backdrop, what projections would you make about unemployment, housing prices, GDP as we look through the end of 2010 and into ’11?
JW: Unemployment will be a lot worse than most people expect. Housing will continue to suffer in terms of weak demand. But in this crazy, almost perverse circumstance, the renewed weakness to a large extent will help push us into higher inflation. Real estate tends to do better with higher inflation, but it’s not going to be a happy circumstance for anyone.
The government is effectively bankrupt. Using GAAP accounting principles, the annual deficit is running in the range of $4 trillion to $5 trillion. That’s beyond containment. The government can’t cover it with taxes. They’d still be in deficit if they took 100% of personal income and corporate profits. They’d also still be in deficit if they cut every penny of government spending except for Social Security and Medicare. Washington lacks the will to slash its social programs severely, to change its approach to ever bigger government. The only option left going forward is for the government eventually to print the money for the obligations it cannot otherwise cover, which sets up a hyperinflation.
All of what I just described was already in place when the systemic solvency crisis broke. Before this crisis the government was effectively bankrupt. In response to the crisis, the government may have gone beyond what it had to do, but you err on the side of conservatism when you’re trying to prevent a systemic collapse. That was a real risk. It still is. Irrespective of the politics of big government spending, quantitative easing, renewed bailing out of banks, whatever is involved, I’d argue that the government still will do whatever it takes to prevent a systemic collapse. That last series of actions had the effect of rapidly exploding the deficit. In just a year, we went from something under $500 billion in official reporting, on a cash basis as opposed to GAAP basis, to something close to $1.5 trillion.
TER: How big will that deficit grow in this second painful and protracted period?
JW: I can’t give you a hard number, but I can tell you this. The markets came into this year on consensus projections that we’d have positive economic growth. Forecasts for the federal deficit, treasury funding, banking system solvency, etc. all were based on assumptions of recovery, of positive growth. Those assumptions presumably still underlie what I consider to be an irrational stock market.
But those projections and assumptions were wrong. We’re going to have negative growth. The downturn will intensify. We’re not in recovery. We have states on the brink of bankruptcy. The federal government isn’t going to let California or New York or Illinois collapse. Those are threats to the systemic survival. They’re also going to spend a lot more to support people on unemployment. Again, putting aside election year politics and such, the banking industry will need further bailout as solvency issues come to a head again. The federal deficit is going to balloon. It’s going to blow up much worse than any formulas would give you, and Treasury funding needs will explode.
TER: Clearly you see us spiraling out of control.
JW: We’ve been talking about an economic recession, but we are headed for something far worse. I define a depression as a 10% peak-to-trough contraction in the economy. In terms of the broad economy, we’re not down 10% in GDP yet. So while we’re not formally in depression, we’re certainly seeing it in a number of indicators and I think we’ll be in a depression, with GDP down 10%, in the near future.
A contraction greater than 25% peak-to-trough puts you in a great depression. That is what I envision, but we’ll be taken there by hyperinflation and a resultant cessation of normal commerce.
TER: Hyperinflation means different things to different people. How do you define it?
JW: My definition has been and will remain very simple. When the largest-denomination note in circulation-the $100 bill in the case of the U.S. dollar-has the same value as toilet paper, you have a hyperinflation. You saw that in the Weimar Republic. People papered their walls with money.
TER: I think you’ve said that the only reason that Zimbabwe’s economy survived is because they started using dollars as black market currency.
JW: But you don’t have anything like that in the United States as a backup. We’re going to have a much rougher time in the U.S., of all places, than they had in Zimbabwe. Zimbabwe was able to function because people could exchange the local currency into dollars, and then buy things with the dollars, so the economy continued to function. Without some kind of a backup system, as the currency becomes worthless you’ll see disruptions to key supply chains. When people don’t have food, you end up in very dangerous circumstances.
TER: Do you see any real potential for precious metals or another currency as a backup?
JW: Well, yes. I think they will become a backup fairly quickly, but we don’t have any widely developed black market for another currency at this point because the dollar remains the world’s reserve currency. All sorts of things may develop that we don’t anticipate. What will be used to cover for the dollar? Gold and silver? The precious metals are limited in supply and not widely held by the population in general. Hard currency from Canada or Australia? That wouldn’t be in wide circulation, at least not early on. I think a barter system is where it will go until the currency system is stabilized, but the currency system can’t stabilize until the government’s fiscal house is in order.
There’s no sense in setting up a currency on a gold standard if you can’t live within your means, because you’d just end up going through successive devaluations against gold. So whatever’s done to set up a new currency system will have to be in general conjunction with the overhaul of the government’s fiscal condition. But in the interim, something of a barter system would evolve. Even that, though, is something that may take six months to get stabilized.
TER: It’s hard to imagine.
JW: In the Weimar Republic, you could go into a fine restaurant one evening and enjoy its most expensive bottle of wine with a nice dinner. You’d probably negotiate the price before you sat down, because the price would be higher by the time you finished dinner. By the next morning the empty wine bottle would be worth more as scrap glass than it had been worth as an expensive bottle of wine the night before. That’s how rapidly things change in a hyperinflation.
But we have a circumstance that did not exist in the Weimar Republic. Our society is heavily dependent on electronic cash. Say you have a credit card with a $10,000 limit. In hyperinflation, that $10,000 might be enough to buy you a loaf of bread.
TER: There’s not even enough physical cash running around anywhere in the United States that actually represents what goes back and forth electronically. If you can’t use your debit card, how do you pay for your coffee at Starbucks? And how will companies and banks adjust?
JW: You’re not going to have electronic payments that are in-barter equivalent that I can foresee. That would be a fairly sophisticated system and the needs are going to be immediate. When hyperinflation starts to break, it can unfold in a matter of weeks, months. You’ll need to be able to handle things rapidly. Frankly I think the system will tend to break down. It’s not a happy circumstance. How will a small company get its goods to people? There might be blackouts. Who’s going to get the fuel to the power plants?
TER: And to the gas stations for the cars for people who still have jobs?
JW: Yup. It will get very difficult. Society won’t run as we’re used to it. People will find a way, but it’s going to take a little while for that to stabilize.
In an electronic society it’s going to take some creative thinking by businesses. I’m sure some people will figure out some ways to accommodate these changes, but it’s going to be a painful, costly process that won’t be conducive to normal revenue flows-at least not as measured in inflation-adjusted dollars.
TER: I’m almost afraid to ask, but how will the stock markets fare when the system breaks down?
JW: Stocks generally tend to reflect inflation, since revenues and profits are in inflated dollars. If you look at stock prices adjusted for inflation, you can have a bear market as well as a bull market. But these are not going to be good economic times. So I think we’re going to have a real bad stock market adjusted for inflation. I’d stay out of stocks in the U.S. With the U.S. markets in serious trouble, the rest of the world probably will see lower stock prices as well, but they’re not going to have the hyperinflation.
TER: What will plunge us into this abyss? And when?
JW: I think the odds are extremely high that we’ll see it break within the next year. I would put it six months to a year, outside. We’re getting extraordinary protestations from other central banks about the U.S. finances, its solvency, risk of the dollar. Before the current crisis you never would have heard any central banker making such comments. As this breaks, it’s going to be obvious that the U.S. is moving to debase its dollar. It’ll have no option to do otherwise. I would fully expect some foreign holders looking to dump the Treasuries. With the dollar plunging, the Treasury won’t be able to get the funding that it needs from a practical standpoint in the open markets.
The Fed will come in to salvage that situation, becoming the lender of last resort to the Treasury-literally monetizing the Treasury debt. The Fed might have a couple different ways to address the dollar situation, from raising interest rates to direct intervention, slapping on currency controls. I can’t tell you exactly how it’s going to go. But you’ll have an environment that’s effectively creating a perfect storm for the U.S. dollar. I hate to use the term but it’s a good one.
Heavy dollar selling will be exceptionally inflationary. Oil prices will spike in response to the weakness in the dollar. Oil is a primary commodity that drives consumer inflation; that’s how you can have inflation in a recession. The traditional wisdom is that strong demand against limited supply causes inflation, but you can also have inflation due to commodity price distortions, which is what we had back in ’73 and what we’ve seen over the last year or so.
Most of the recent volatility in the CPI has been due to swings in oil prices, which have been directly tied to swings in the value of the U.S. dollar. About $7 trillion in liquid dollar assets that overhang the market outside the U.S. could be dumped overnight. We’re going to be seeing a lot of pressure to accept that back in our system, and it will be very inflationary. The Fed’s options will be limited, but again I’d expect them to try and maintain systemic solvency.
So what we end up with is a circumstance where the dollar is under heavy selling pressure. People will feel the squeeze on their inflation-adjusted income with much higher prices for gasoline and fuel oil. The route to the monetary inflation will take hold from the Fed’s direct monetization of Treasury debt. As we discussed earlier, the mortgage-backed securities taken off the bank balance sheets have generally gone to excess reserves and are sitting with the Fed. That hasn’t been inflationary so far because it hasn’t gone into the money supply.
TER: How do we get through this, John?
JW: If there’s no solution for the system-and I don’t see one; I think it just has to run its course-there still is good news. We as individuals have ways of protecting ourselves, our families, our friends, our businesses-whatever is important to us. To do that we have to preserve the value of our wealth and assets in order to ride out the storm. As terrible as it will be, it will end. A time will come when things become self-righting and the people who have been able to survive will be able to do some extraordinary things.
TER: And what do you advocate in terms of individuals preserving wealth and assets?
JW: Hold some gold, silver, precious metals. I’m talking physical possession. Preferably coins because coins, sovereign coins, are recognized as such. They don’t have liquidity issues. Having some assets outside the U.S., and certainly some assets outside the U.S. dollar, is a good thing. I like the Australian dollar, the Canadian dollar, the Swiss franc in particular. They won’t suffer the same hyperinflation in Australia, Canada and Switzerland as we do in the U.S., so those currencies will tend to act as ways of preserving wealth. Over time real estate is a traditional store of wealth, but it’s not portable and sometimes it’s not liquid.
If I’m right about what’s going to unfold, a significant shift in government is possible; suppose the government moved so far to the left where maybe private ownership of property was not allowed. Having a lot of assets in real estate under those circumstances might not be so good. I think generally real estate is a good bet but you also have to consider the risks. Use common sense. Think through different things that could happen.
Most importantly, build up a store of supplies, more than you would normally consume over a couple of months, particularly food and water, canned goods. Having those goods can save your life in a number of ways. You’d have food to eat, and if you have extra you can use it to barter. I met a guy who’d been through hyperinflation and found for purposes of the barter system those airline-size bottles of high-quality scotch proved quite valuable. Buy things that you would otherwise consume and rotate your inventory. Don’t go out buying all sorts of things you’ll never use. Keep what makes sense to you and your circumstances. Make sure you have things that are stable. Not too perishable.
I had a professor at Dartmouth who’d lived for a while in a hyperinflationary environment that devolved into a barter system. He told a story about how his father had traded his shirt for a can of sardines. He decided to eat the sardines, which was a mistake because they had gone bad. But nonetheless that can of sardines had taken on monetary value. So when you look to trade things you want to be careful what you’re doing.
TER: How long does a hyperinflation environment typically last?
JW: I guess it depends on how comfortable people can be in the environment. It went on for a couple of years in Zimbabwe, but they were able to function. Here, in a system that can’t function well with it, it’s not going to last too long. You won’t have a usable currency. It’s likely a barter system would evolve, and if it became stable and functioned well, it could last for a while. People don’t want to starve. If that’s a real risk, they will take action to protect themselves. We may have rioting in the streets. The government might declare martial law. If people can live comfortably with hyperinflation it would tend to linger. The more difficult things are, the faster people will move to remedy it.
TER: Well on that note is there anything that we can do as voting citizens to turn this around? Or minimize the impact?
JW: If things break slowly enough that people can see what’s coming and respond, tremendous change may result from what comes out of elections. Incumbents are going to have a rough time. The circumstance is open for the development of a major third party that could knock out either the Republicans or the Democrats as a second party. Over time, pocketbook issues tend to dominate elections. If things are going well, if people are prosperous, they ignore the corruption in political circles as being just part of the system. But when they’re hurting, they turn out the bastards and look to put in some change. We sure need change. I can tell you that. It’s not just one party. Both major parties have an equal share of guilt in what’s unfolding. . .whichever one is in power keeps making it worse.
TER: Not very happy thoughts, John, but we appreciate your insights and look forward to talking with you again as we move through these trying times.
Walter J. “John” Williams, is a Baby Boomer who has been a private consulting economist and a specialist in government economic reporting for more than 25 years, working with individuals and Fortune 500 companies alike. He received his AB in economics, cum laude, from Dartmouth College in 1971, and earned his MBA from Dartmouth’s Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. John, whose early work prompted him to study economic reporting and interview key government officials involved in the process, also surveyed business economists for their thinking about the quality of government statistics. What he learned led to front page stories in the New York Times and Investor’s Business Daily, considerable coverage in the broadcast media and a joint meeting with representatives of all the government’s statistical agencies. Despite a number of changes to the system since those days, he says that government reporting has deteriorated sharply in the last decade or so. On the bright side, it keeps John and his economic consultancy, Shadow Government Statistics, in the limelight. His analyses and commentaries have been featured widely in the popular domestic and international media.
Article published courtesy of The Energy Report – www.theenergyreport.com
The chart below shows the monthly average of money supply increase or contraction. A downward slope does not necessarily mean Supply decreased. Money supply below zero% would indicate a contraction.
July 2010 US Mint Silver Eagle Sales: Top 10 Month, Best July Ever
2010 American Silver EaglesAmerican Silver Eagle bullion coins
Saturday, August 7, 2010
by Darrin Lee Unser on August 3, 2010 in Coin or Numismatic News,Featured Coin News Articles,Mint Sales Figures,United States Mint News and Information
2010 American Silver EaglesAmerican Silver Eagle bullion coins turned in slightly lower numbers for July 2010 than the month before, according to the most recent figures released by the United States Mint.
While this may come as welcome news to collectors who have been hoping for a decline in the numbers to make way for proof versions, any celebration would be premature. True, sales of the strikes showed a drop of 20,000 units, but put in perspective, the decline is negligible.
Total sales for the month of July still came in at an astonishing 2,981,000. That amount was enough to cement the month as the best ever July since the debut of the coins back in 1986. In fact, it was a leap of 171,000 coins from the previous July record set just last year.
The month also ranks as the seventh best in history for American Silver Eagles. This distinction is not entirely surprising as 2010 has turned out to be a record year. As it stands right now, five of the top ten months for bullion coins have occurred this year.
Top Ten Silver Eagle Sales Months
1
December 1986
3,696,000
2
May 2010
3,636,500
3
January 2010
3,592,500
4
March 2010
3,381,000
5
March 2009
3,132,000
6
June 2010
3,001,000
7
July 2010
2,981,000
8
October 2009
2,939,000
9
July 2009
2,810,000
10
December 2009
2,773,500
2010 already ranks as the second best year ever with a total of 21,149,500 sold. This comes in behind 2009 which closed out at 28,766,500, but there are still five months left to go this year.
This is disheartening news for collectors of the numismatic proof and uncirculated versions. As the U.S. Mint is required by law to strike the bullion eagles to meet demand, the collector coins have been suspended indefinitely.
Collectors will recall with grief that the Mint did not produce any last year due to the rush on bullion, and it is appearing more likely that without Congressional intervention the same will happen in 2010. U.S. Mint Director Ed Moy recently testified before a House Subcommittee on the topic. He urged members to give the Treasury Secretary the discretional power to strike numismatic coins even if the Mint was not able to adequately meet bullion coin demand.
If Congress acts quickly and the waiver on bullion production is signed into law by President Obama, there still is hope for the proof and uncirculated coins. Moy indicated they could mint up to 830,000 of them this year, if they can start production by September. However, if Congress fails to act, the demand for the bullion coins may spell another year of cancellations.
Do we need to prepare for hyperinflation?
As a student of world politics, history, economics, and law I have recently taken a keen interest on the current state of world affairs. Ever since I first began voting at the age of 18, I had a perpetual, optimistic outlook in the future of our country. That outlook still permeates me today, however, I am proceeding with extreme caution.
Roughly six months ago I was in a second-hand bookstore and browsing through the shelves I saw a title that caught my eye: “Dying of Money: Lessons of the Great German and American Inflations.” The book was written in 1974 by the author Jens O. Parsson. Ironically a report by Ambrose Evans-Pritchard appeared July 26, 2010 Entitled “Elite Bankers Preparing for Hyperinflation.” To my astonishment the article references Parssons’ book and found out that a copy had sold for $699 on ebay. The article outlines how bankers are scrambling to buy the book that remained so obscure for 36 years.
Is this a prelude for what’s to come? Is it a sign? Could the German hyperinflation of the 1920′s happen in the US? I don’t know but if my guess is correct we may see unprecedented levels of US hyperinflation. I’m sure my kids or maybe grandkids will know for certain as history unravels. Pay very close attention to what the report says so vividly explained by The Black Swan Blog.
From the Black Swan Insight Blog: Evans-Pritchard goes on to describe some of the conclusions reached in the book as to what sparked hyperinflation in the Weimar Republic:
People’s willingness to hold money can change suddenly for a “psychological and spontaneous reason” , causing a spike in the velocity of money. It can occur at lightning speed, over a few weeks. The shift invariably catches economists by surprise. They wait too long to drain the excess money.
”Velocity took an almost right-angle turn upward in the summer of 1922,” said Mr O Parsson. Reichsbank officials were baffled. They could not fathom why the German people had started to behave differently almost two years after the bank had already boosted the money supply. He contends that public patience snapped abruptly once people lost trust and began to “smell a government rat”.
This is a very important point that few people understand regarding hyperinflation. Hyperinflation does not happen immediately after money printing; it usually takes time to develop as people gradually lose confidence in their currency. It took two years after a increase in the money supply before it hit, but once it began, the genie was out of the bottle. You will note that current economists and deflationists state that because the US has not yet entered high inflation as a result of the Fed’s money printing, then it is proof that we will not have inflation. This is the same specious argument used by Weimar economists who contended that an increase in the money supply does not lead to inflation (they even said this during the hyperinflation). One other point to remember is that once the velocity picks up, it is to late to stop it by reducing the money supply. This is another bogus argument used by apologists for the Federal Reserve who state that if we ever have the beginnings of significant inflation, the Fed will simply drain excess reserves from the banking system, and that will solve the problem. This is completely impossible. The only way the Fed could stop hyperinflation would be to drain the excess reserves before the velocity started to pick up–not wait until it starts because then it is too late. Evans-Pritchard goes on in his article to describe how German society collapsed with neighbors turning against each other as they fought for survival:
Near civil war between town and country was a pervasive feature of this break-down in social order. Large mobs of half-starved and vindictive townsmen descended on villages to seize food from farmers accused of hoarding. The diary of one young woman described the scene at her cousin’s farm.
“In the cart I saw three slaughtered pigs. The cowshed was drenched in blood. One cow had been slaughtered where it stood and the meat torn from its bones. The monsters had slit the udder of the finest milch cow, so that she had to be put out of her misery immediately. In the granary, a rag soaked with petrol was still smouldering to show what these beasts had intended,” she wrote.
Grand pianos became a currency or sorts as pauperized members of the civil service elites traded the symbols of their old status for a sack of potatoes and a side of bacon. There is a harrowing moment when each middle-class families first starts to understand that its gilt-edged securities and War Loan will never recover. Irreversible ruin lies ahead. Elderly couples gassed themselves in their apartments.
This passage sends chills down my spine because it could easily happen here in the US. You also note how people start to look for scapegoats like hoarders, speculators, etc. This way of thinking is usually encouraged by the government to shield itself from responsibility. They tell the people that prices would not be going up if it were not for these evil people. This kind of sentiment within a society leads to violent mobs going around killing people they suspect of hoarding or speculating. The only problem with Evans-Pritchard’s article is that he refuses to surmise that this terrible situation could ever happen to the US or Europe in modern times. He notes:
As a signed-up member of the deflation camp, I think the Bank and the Fed are right to keep their nerve and delay the withdrawal of stimulus — though that case is easier to make in the US where core inflation has dropped to the lowest since the mid 1960s.
He seems to have forgotten the lessons in the book he is discussing. One last thing to remember in this great debate on inflation versus deflation is considering which one is worse. Modern economists and most certainly the Federal Reserve will tell you that deflation is a greater evil, and thus we should err on the side of inflation. If you asked Germans who lived through both (between 1920-1940,) they would contend that hyperinflation is to be feared more than deflation.
If you find a copy of Parssons’ book and buy it. Remember, It’s what we don’t know that will shock us if it pops up like a black swan. Being prepared is what prevents being wiped-out when a shocking event occurs. The Fed is printing money into thin air. Don’t believe me look at this chart:
www.moneyandmarkets.com
“Look Ma, No Hands!”
source: The Big Picture
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Todd Klimson
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