Jude's Rant

2013 Pronghorn Antelope (Wildlife Series) Silver Coin

2012-10-19T22:21:00.000-07:00

It has been a while since I've last updated. School happened, and I haven't been able to find time to blog, so I've decided to give vlogging a try.

This video introduces the 2013 Pronghorn Antelope Silver Coin from RCM, and documents some of the reasons why I think the coin will fetch a significant premium sometime in the future. The silver Grizzly as well as the Wolf are currently selling at big premiums above spot and the Antelope, in my view, has similar potential. You will be paying slightly more for this coin than Silver Maples, but the potential upside is much greater. Thanks and enjoy.

How to acquire silver bullion under spot and profit from it!

2012-08-12T23:36:00.000-07:00

Where and how do you find silver bullion below spot you ask? Quite frankly, there are opportunities to acquire silver under spot everywhere, and it’s very likely that you are surrounded by many of such opportunities. The “secret” to acquiring silver below spot primarily lies in your ability to recognize these opportunities and knowing how to capitalize on them. After all, it is impossible to take advantage of opportunities that you didn't even know existed.

I recently purchased a few lovely pieces of silver (Olympic Silver Maples), and I did not pay anything remotely close to spot for them. And if you are anything like me, you’ll love the feeling of getting the most out of your investment dollar.

2010 Olympic Silver Maple Leaf--Purchased under spot!

With that, I’d like to provide some general tips on how and where to begin your search for cheap silver (or any precious metal for that matter).

Check local classifieds such as Craigslist or Kijiji for leads
Visit local flea markets and/or estate sales
Negotiate wherever possible
Be well learned on values of constitutional/junk silver and semi-numismatics

If you would like some more serious and detailed guidance on how you to buy silver below spot price, I highly recommend purchasing this E-Book; the book promises to transform the novice silver buyer into a local silver guru. It details proven techniques on how to acquire silver on the cheap (and thereby enabling you to make a profit if you choose to sell) and, in my opinion, is well worth the $27 dollar price tag (the cost of less than 1 ounce of silver at current prices). Check out the E-Book here.

Minimizing counterparty risk: How safe are Canadian banks?

2012-08-05T18:16:00.001-07:00

Amid global economic turmoil, have you ever stopped to wonder just how safe your money is in the bank? Counterparty risk is a real issue given the current economic state of affairs, and it’s imperative that due diligence is exercised in minimizing it.

According to Global Finance’s latest evaluation of the world’s 500 largest banks, Canadian banks are among the safest in the world; all of Canada’s Big 5 banks made the list of the world’s 50 safest banks as measured through “an evaluation of long-term credit ratings—from Moody’s, Standard & Poor’s and Fitch Ratings—and total assets…”.

Royal Bank of Canada (RBC)--one of the safest banks in the world according to Global Finance's latest findings

This certainly provides us Canadians with some confident relief given the ongoing Euro crisis and what we have witnessed since 2008 just south of our borders. Let’s not forget, however, that “safest” does not necessarily mean “safe”—the former, after all, is a relative term.

Our banks here in Canada are indeed as strong as any other, but empires have collapsed, and bigger banks have failed. Besides, many of our banks are heavily invested in the U.S. market, and I really don't foresee things getting better in the U.S. anytime soon, despite what "experts" are calling an "economic recovery". It’s really important to remember, then, that whenever you make a deposit or invest money through a bank or broker, you are introducing counterparty risk to the money equation.

In my opinion, it is therefore vital that, in addition to your regular savings, GICs, and stocks, you possess assets that do not have counterparty risk; that is, something in your possession that is of tangible value, regardless of whether or not some other party fulfills their promise(s) or contractual obligations. Good examples, in addition to many others, are physical gold and silver bullion, fine art, wine, etc.

You would never put all your eggs in one basket, so why put all your wealth in a bank?

Investing in copper with zero premiums: Hoarding U.S. Nickels

2012-07-03T17:20:00.000-07:00

I wrote about saving pre-1997 Canadian pennies a little while ago,and now I'd like to share with you another similar way to invest in physical metals. The ROI (%) is lower than that of the penny; however, this method does not require any physical sorting and will therefore save you a lot of time as well as making it easier for you to establish a larger position. And as we all know, time + effort = money.

The U.S. nickel is the only U.S. coin that is still worth it's face value in metal content (75% copper and 25% nickel)*. With the prospect of base metal prices rising, buying U.S. nickels is a smart way to accumulate a physical position in base metals. In my view, what is particularly attractive about hoarding nickels is the fact that it does not carry along with it heavy premiums usually associated with purchasing base metals in bullion form. In fact, you will most likely be able to purchase them below their metal content value depending on the daily spot price. While you won't be able to melt them (illegal), I believe that it is very likely that a market will develop if copper and nickel prices rise significantly--much like how a market developed for old U.S. silver coins. In fact, I recently saw an ad on craigslist selling pre-1997 Canadian copper pennies for $3.50/pound. Worst comes to worst, you can always spend the nickels as currency, and they will always be worth 5 cents. The risk-reward ratio is therefore very attractive in my opinion, and it's an investment definitely worth considering. Check out the video below.

Source: http://whiskeyandgunpowder.com/how-much-is-your-coin-worth/

Some people feel that the debasement of the nickel is imminent, and that investors should hurry in to accumulate as much nickels as possible. The video I posted above certainly suggests that there is a definite level of urgency, but I feel that there is at least 3-5 years time to get into this play. I will most likely accumulate nickels more aggressively when a change in coin composition is officially announced or when copper prices start making a major move, whichever comes first.

*Canadian nickels minted from 1982-1999 inclusive were also composed of 75% copper and 25% nickel.

CHEAP VS FRUGAL

2012-06-12T18:02:00.002-07:00

There are many misconceptions about being frugal, but perhaps one of the most pervasive is the idea that being frugal is akin to being stingy or cheap. In my opinion, however, being frugal is different from being cheap in four major ways:

1. Frugality is goal oriented. Cheapness is not.

For instance, one may practice frugality with the purpose of retiring early, saving for investment, or vacation. Being cheap, on the other hand, has no clear objective/goals.

2. Frugality is a skill (and a quality), while being cheap is not.

More specifically, being cheap is to reluctantly spend indiscriminately while practicing frugality is a much more strategic matter. As an illustration, a “cheap person” would automatically go for the least expensive product and/or service without due consideration of quality. Conversely, an individual that practices frugality would actively seek ways to maximize quality while minimizing costs. Common examples of this taking place in the real world would include the use of coupons to purchase quality goods at lower prices or refusing to pay premiums for intangibles such as certain brand names that do not add real value. In other words, being cheap focuses on price whereas being frugal focuses on value.

3. Being cheap adversely affects you and/or your family’s quality of life, while being frugal has little impact on (or may even increase) your standard of living.

Intimately related to the point made above, being frugal has minimal impact on your quality of living. A cheap person will cut coffee out of his or her life even if she very much desired it thereby undermining his or her standard of living. On the contrary, a frugal person will actively seek ways to enjoy coffee at a lower cost.

4. Being cheap is to deprive yourself of what matters to you. Being frugal is to be tactical in your spending so as to maximize the value you get for your dollar.

You shouldn't feel deprived while being frugal. If you are, you're not doing it right. For example, I've chosen to cut back on eating out, but I've re-channeled that currency towards buying tangible assets--things that, in my opinion, have true value and that keeps me from feeling deprived. In fact, I feel happier that I live a much more focused life. Here is an article I came across that further discusses the topic of deprivation within the context of frugality: Avoid Feeling Deprived While Living Frugally.

NEXT POST IN THE SERIES: Frugal is...

FIRST POST IN THE SERIES:Jude’s Guide on How to Be FRUGAL *INTRODUCTION*

Paper Currencies Are Mortal

2012-05-29T18:19:00.001-07:00

People really need to wake up and smell the smoke; stop watching TMZ and look at what’s happening in the real world. The end of the U.S. dollar is a mathematical inevitability, and nobody will be shielded from the effects of its downfall. I’ve shared this sentiment with a few others and almost everyone thinks I am crazy to suggest such an unimaginable thing.

Before you call me a lunatic, however, consider the fact that paper currencies are mortal; you may not have personally experienced the death of a currency, but it has happened over and over again throughout human history. Indeed, many civilizations in the past have attempted to cheat real money (gold and silver), and all of them have failed miserably.

It has often been said that the very definition of insanity is “doing the same thing over and over and expecting different results”, and today the United States is trying to print its way out of trouble—much like many others have tried to do in the past with little success. The only thing that is different today is that this insanity is an epidemic of global proportions. As Winston Churchill once said, “The farther back you can look the farther forward you are likely to see”. Let’s take a look at a little bit of history then, shall we?

According to a study of 599 currencies that are no longer in circulation, over a quarter of them were destroyed by hyperinflation (over issuance from the government). Another quarter ended through “monetary unions, dissolution, or other monetary reforms”. In another study of 775 currencies, nearly 20% of them were destroyed by hyperinflation while nearly another quarter ended through monetary reforms. More importantly, the median age of all currencies currently in existence is only 39 years.

According to dollardaze.org the U.S. dollar has been in circulation for 217 years and is the world’s third oldest circulating currency. However, I feel that this honour is unjustified. In fact, if we frame the U.S. dollar since its relationship with gold was severed in 1972 in a different light, the “new” U.S. dollar is in fact only 41 years old. Economist Micheal Maloney observes that people always seem to forget that we have a new monetary system every 30-40 years. He further notes that man-made monetary systems are inherently flawed and will "never last".

Where there is smoke there is fire. You can ignore the signs, but if you ignore them for long enough, the fire will ultimately kill you. It’s your choice. Either wake up now and prepare yourself or keep living life as if everything is fine. The best thing you can do, in my opinion, is to start acquiring real tangible assets instead of holding large sums of currency. In a hyperinflationary environment, cash savings could be completely wiped out in a matter of days. As for me, I've chosen to accumulate physical precious metals in bullion form. What you do is, of course, ultimately your decision, but I really don't want to say "I told you so".

It's time to start worrying.

Facebook IPO: Buy high and hope that it goes higher!

2012-05-24T15:51:00.001-07:00

I usually don’t blog about equity and bond markets because I feel that it isn’t the place to put my currency right now. However, I'd just like to offer a word of caution to those considering buying in on Facebook as an investment. If you're a speculator, on the other hand, read no further.

I personally believe that our love for social media has reached an euphoric extreme, and even that might be an understatement. Groupon, Zynga, Facebook and the likes are all over-loved and over-bought in my opinion.

Valuation cycle

Recall the dot-com bubble we experienced just a decade ago? If you’re trying to chase the hype, you’re going to get burned and slaughtered. You don’t need to use very sophisticated indicators of value to understand this: if your mailman, dental office receptionist, and neighbours are all yapping about buying in on Facebook IPO, it can only mean one thing: it’s probably overvalued and the smart money is already exiting. Consider the P/E ratio of Facebook. As I write this, it is at 73.90! The P/E ratio is certainly not an all encompassing indicator, but I’m very much convinced that this bubble is going to burst. As always, it’s always the herd trying to chase the top that gets slaughtered. Facebook's vogue cannot and will not last forever.

Silver market nearing bottom

2012-05-16T20:44:00.003-07:00

It’s been a rough week for all of us; almost everything is down, and precious metals continue to test support levels. There is definitely no shortage of negative sentiment out there, and the bulls seemed to have gone to hiding. A couple weeks back, I made a prediction that if silver breaks through $30 dollars an ounce, we would likely see $26 dollar silver again. Indeed, that happened today as silver continued to fall, trading at an intraday low of around $26.75.

Intraday chart depicting silver market movement-May 15th, 2012

The good news, however, is that I think we are nearing a major bottom. A single whisper of news from Europe can change all that but in the end, regardless of the magnitude of this dip, this downturn is all short term and the fundamentals that will drive silver skyward haven't changed. We all know where the global economy is headed, and I think we can ultimately expect greater gains in the precious metals market in general. Having said that, there is a possibility that we may see silver in the $20-$23 dollar range if we break through support at around $26 dollars, but there are several reasons why I feel silver is at or near a bottom:

1.       Commercial short positions are down to 17.9K contracts—only slightly above December, 2012 levels which marked a 10 year low.

2.       A bottom seems to be developing in mining equities.

3.      Pan Asia Gold Exchange is set to open June, 2012—this could dramatically increase demand for physical gold and silver.

It always surprises me when investors have little to no trouble buying at $30, $35, $40, or even $45 dollars an ounce, but when it comes to $26 dollars for the very same ounce of silver, pulling the trigger seems to become so much more difficult. I can understand the doubt, but consider precious metals to be on sale right now. Could a better sale come up tomorrow? Possibly, but if you do your own due diligence, you will know that there is a good possibility that precious metals will see greater gains in the long run, and it's better to be 3, 9, or 12 months too early than to be 12 hours too late. I see this as a huge buying opportunity, but windows can close as quickly as they open.

Both the United States and Europe are in a huge mess and more money printing or “quantitative easing”, whether overtly or covertly, is called for just to keep the economy afloat. As well, a number of indicators point to the long-term weakening, if not the demise, of the U.S. dollar. The ultimate beneficiaries, should this scenario play out, (which I am convinced that it will) are silver, gold, and other tangible assets. The seemingly inevitability of this is why I am still bullish despite our recent downtrend. As always, keep your eyes on the prize.

Take a Penny & Save Three: Why you should give your pennies a second chance

2012-05-07T20:32:00.000-07:00

In March 2012, the Government of Canada announced in its Economic Action Plan that it will cease production of the penny from Canada’s circulating coins. Amidst increasing metal costs and rising inflation, the penny is more expensive to make than what its face value is worth says Finance Minister Jim Flaherty. He also notes that it now costs 1.6 cents to mint one penny and by eliminating the coin, the government will save 11 million dollars annually.Given this, the demise of the penny was simply inevitable. In fact, the material composition of the penny has changed over the years as a result of rising base metal prices. More specifically, earlier pennies that were minted are primarily made from copper while newer pennies are made mostly from either zinc or steel. As such, not all pennies are worth the same in terms of its metal content. Allow me to elaborate.

The most unloved coin...once it hits the ground, no one bothers picking it back up.

Pennies minted prior to 1997 are at least .995 pure copper. Post 1996 pennies, on the other hand, are minted from mostly zinc or steel (a considerably less valuable metal). As of today, the price of copper is $3.75 per pound. If my calculations are correct, that means that the metal content in a penny is worth nearly 3 cents! My point is that this is a great opportunity to accumulate physical metal, and since the penny is being phased out, this window of opportunity is closing.

Saving copper pennies is perhaps the most economically sound way to accumulate physical copper. Copper bullion (.999 pure copper bars/rounds ) usually sell for significant premiums over spot, and so I think stacking copper pennies is still the best way to establish a physical position in copper. A similar scenario played out rather nicely when the U.S. stopped minting coins with silver; in fact, a bag of old U.S. silver coins (face value of $100 dollars) is currently selling on APMEX for close to $2200 dollars.

I predict that one day people will be buying “junk copper” in the same way we buy “junk silver” today. I can’t say what the price of copper will be, and I certainly cannot make any guarantees. What you do is, ultimately, your own decision, but I believe that the penny deserves a better fate. It certainly doesn't belong under your couch, abandoned on the streets of the DTES, or in the garbage. Please, the next time you’re tempted to toss that tarnished penny into the garbage, think again.

Technical Analysis: Silver and Gold Market

2012-05-03T20:53:00.001-07:00

Is this a good time to buy silver and gold? Did you already miss the boat?

Micheal Maloney talks technical analysis (Gold and Silver) and U.S. dollar crisis

Personally, I am not buying at the moment. In my opinion, there seems to be strong psychological support at the $30 level. I'd like to see a solid reversal trend before I start buying again, however. Indeed, if we break through $30 an ounce silver, I think it will go down to the mid-$20 level--which would be a huge buying opportunity. Having said that, if you currently do not own any position in precious metals, I believe it is a good time to make your first purchase. Ultimately, however, the decision is yours. As always, I encourage you to do your own research and use this as a starting point to further your financial education.

Jude -______________-

Edit: May 4th, 2012

Silver broke through $30 dollars. It's the first time this year it has slipped under $30 an ounce. We will have to see if this holds. The next level of support, in my opinion, is probably around $26 an ounce. We may be in for a wild ride. On the other hand, we may see a good move when this downward pressure reverses. Keep your eyes on the prize in the meantime.

Silver Investment: The $20 Fine Silver Commemorative Coin FREE SHIPPING

2012-05-02T02:02:00.001-07:00

For those of you who know me well, you're all fully aware of my love for silver. I like to categorize myself as a silver investor (as opposed to a speculator or a collector), and I have spent some time trying to convince those around me to do the same and set aside part of their investment portfolio in silver (or other precious metals for that matter). There is indeed some real resistance to the precious metals market--a topic which I will almost inevitably cover here in the upcoming months. Undoubtedly, one of the primary reasons why most unseasoned investors are turned off by silver is because of the inherent volatility of the silver market. Risk is an intrinsic part of all investments, and it's very easy to just cling on to the relative "safety" of a GIC or a good old savings account (more on this later), regardless of whether or not it is the smart thing to do.

With that said, I'd like to introduce to you a silver coin that you can invest in that has almost ZERO risk.

$20 Fine Silver Commemorative Coin - The Queen's Diamond Jubilee (2012)

*CLICK HERE TO VIEW/ORDER THIS COIN FROM THE ROYAL CANADIAN MINT

This is one of many "20 for 20" silver coins issued by the Royal Canadian Mint. It contains roughly 1/4 oz of .9999 fine silver. The silver content in the coin at current market price is about 8 dollars. However, the coin is legal tender and has a face value of 20 dollars. I'm usually not a fan of numismatics, but this is a no-brainer. You simply trade in your 20 dollars of fiat currency and you get 20 dollars back in the form of a fine silver coin. Keep in mind, however, that the price of silver will have to surpass $80 dollars an ounce (a very real possibility in my opinion) before you start making any gains on the silver content, but you have almost nothing to lose on this one--except for whatever you're getting in the form of interest. And if you have your money in a GIC or savings account, I'm sure that amount is negligible at best.

Personally, I don't think this is the best way to invest in silver, but given the fact that this "investment" ,should you regard it as such, involves almost zero risk, it is one that is very worthy of consideration--especially if you do not currently hold a position in real, tangible precious metals.

Be sure, however, that if you are interested in this coin that you submit your order promptly. These tend to sell out rather quickly (the last design sold out in 25 days). Each household is limited to 3 coins. Shipping is normally $2.99 (for regular letter mail), but if you enter the "free shipping" promo code "gazette 1", shipping is FREE! And there you go--your first gift from me to you!