Ignore crisis, sleep well with coins

They say hindsight is 20/20.

Is it?

We passed the 10th anniversary date of the bankruptcy of the Wall Street firm of Lehman Brothers on Sept. 15, 2008.

The Great Recession commenced then.

Unemployment soon soared to over 10 percent.

In addition to jobs lost, homes were lost to foreclosure.

It was a terrible time.

What do you recall?

Perhaps you remember the fear.

Perhaps you remember the mad scramble to buy gold and silver American Eagle bullion coins that soon followed.

They were in short supply.

The Mint couldn’t keep up with demand.

In consequence, it struck no silver Eagle proofs in 2009 because there were not enough blanks.

Consider that you now have the chance to go back to that disastrous financial day Sept. 15, 2008.

What would you buy?

Silver?

Gold?

The Dow Jones Industrial Average?

I took the market closes on that day as the point from which to do some calculations.

On Sept. 15, 2008:

Silver closed at $11.07 an ounce.

Gold closed at $780.94.

The Dow Jones was 10,918.

If you had bought silver, you would have a profit of 28.4 percent at yesterday’s close of $14.215.

The profit on gold is 54.5 percent at yesterday’s close of $1,206.20.

For the Dow Jones, the profit is 144.2 percent at yesterday’s close of 26,656.98.

How does that square with your memory?

You probably remember the sickening plunge in the Dow and what it did to your retirement account as it fell to 6,507.04 on March 9, 2009.

Also vivid in your mind is silver’s peak of over $48 an ounce at the end of April 2011.

Gold hit its most expensive ever in trading at the beginning of September 2011 at $1,900 an ounce.

The profit figures look different at different points.

Had you sold your silver at the top in 2011, your profit in less than three years would have been 333 percent.

For gold, the gain to the mountain pinnacle in 2011 was 143 percent.

To have held the Dow Jones until now, you first would have had to grit your teeth through the loss of 40.4 percent to March 9, 2008.

Could you? Many people didn’t.

How do these numbers compare to what you actually did these last 10 years?

It is clear that getting in and getting out at the correct moments greatly amplify potential gains.

If I want to brag, I would point out that I sold some silver coins at the Central States Numismatic Society convention that occurred as silver peaked in 2011.

Before I take any kind of bow, I have to admit that the coins I sold then were some modern silver dollar commemoratives that I had foolishly purchased at issue price in prior years.

Even at $48 an ounce, I realized hardly any profit at all.

Correct buying is hard.

Correct selling is hard.

To do both in the proper sequence is almost miraculous.

As I wrote yesterday, coin collecting is what keeps me sleeping well at night.

 

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