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100 dollars buys you a $100 silver coin

Discussion in 'PM's - Coins - Numis - Base Metals' started by Argentsum, May 17, 2013.



  1. Argentsum

    Argentsum Gold Member Gold Chaser

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    Okay, this is really twisted. The Royal Canadian Mint is now offering a silver coin with a legal tender "face value" of $100 CAD.

    They are selling them for...$100 CAD.

    The catch being that they only contain slightly more then a troy oz of silver.

    http://www.mint.ca/store/coin/coin-prod1680033#.UZW8UrHn_1J

    Its an interesting premise. If we go into a deflation the face value becomes more valuable. Whereas if we go into an inflationary environment
    your pretty much screwed unless silver rises to a $100 an oz in which case you break even.

    Mintage is only 50,000 which makes this an interesting numismatic investment in that there is no risk of the coin depreciating in value below what you initially pay for it.

    As a bullion investment its obviously crap.

    How would History Student weigh in on this one?
     
  2. Zed

    Zed Kangarude! Midas Member

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    It is a hell of a premium! but I guess it is hedged!
     
  3. ttazzman

    ttazzman Gold Member Gold Chaser

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    how friggin easy is this one ...DUH......which one would you want....a hundred dollar bill or this hundred dollar coin....

    i wonder if i can buy the whole lot...

    in all seriousness if i were canadian i would have a lot of my disposable funds in this product....as Zed said its hedged beats the heck outa paper
     
    Last edited: May 17, 2013
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  4. Cornelius

    Cornelius Gold Member Gold Chaser

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    This coin is an interesting development. In effect, there is roughly, 1% silver for the money. (if Canadian traditional money laws were like the U.S.). Because, a dollar is supposed to be about an ounce of silver, right?

    I do NOT recommend buying this coin because your putting your faith in the Canadian dollar by doing so. If the Canadian dollar defaults, you are left with one ounce of silver, therefore, you paid about 75 dollars in premium for it. You could have taken that same 100 dollars (today) and bought about 4 ounce of silver instead of one ounce.
     
  5. Dvorak

    Dvorak Seeker Seeker

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    I think you are looking at it from the wrong angle. If you are someone who normally keeps cash on hand for emergencies or whatnot, these coins would be FAR superior to paper money for that exact same reason.
     
  6. Cornelius

    Cornelius Gold Member Gold Chaser

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    I do understand your viewpoint and agree that it is better than keeping 100 paper dollars. However, one major reason to acquire precious metals, is an insurance policy in case of continued default on paper currency (otherwise called inflation).

    my two cents.
     
  7. Professur

    Professur Gold Member Gold Chaser

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    The only problem lies in trying to convince anyone to give you $100 for it a week after you buy it. Face value is only good if people will accept it. Even banks choke if you take them a maple leaf and ask for face value
     
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  8. Argentsum

    Argentsum Gold Member Gold Chaser

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    I know what you mean Professur. In theory you could take one of these pristine coins and mangle it. Its still worth $100 CAD. But if the banks won't accept it then I guess all you could do is sue the government for...counterfeiting?

    Perhaps the Royal Canadian Mint will take them back? They do have a money back guarantee. I'm curious, though, why would they need a money back guarantee? If you don't like it just exchange it at any bank for a $100 CAD. A guarantee makes no sense unless...it's not worth face value.
     
  9. Heads_Up

    Heads_Up Seeker Seeker

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    FastTT has responded in another thread on this subject saying that it is indeed worth $100 Canadian to the Bank of Canada. That being said, so far I see that it will cost you about $115 to get it out the door a distributor (as long as this province doesn't consider it a collectable which would also add sales tax to it [done to the last 3 animal bullion RCM coins)
     
  10. chewy

    chewy Seeker Seeker

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    if the us did this, overnight silver is worth 100 an ounce.

    Any Canadian with any sense at all would exchange ALL of their cash for these coins. If they are legal tender and cost 100 for a coin that buys the same thing as a canadian 100 bill, what reason could you possibly have NOT swap out cash for these?

    We all know one day the canadian dollar with be worthless, and we also know silver will always have value.

    If the US did this, I would be all in on it.
     
  11. iamwayne

    iamwayne New Member

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    The ASE which is worth $1 USD legal tender to 1oz of silver worth $20+ right now. People don't need to hedge because no matter what, 1oz .999 silver will always be worth over $1 USD. The $1 USD there is just to let them have the secure feeling because they will never use it as $1 USD, always higher value (good investment feeling or having a strong feeling about the gold/silver standard)...

    This canadian $100 for $100 silver coin is different. No matter what the 1oz silver price, the coin will be worth $100 CAD. This is reversing the hedge. It's like having a $100 CAD silver coin that cost around $20 to produce (silver price) instead of having a $100 CAD paper fiat money worth a couple of cents to produce.

    For currency folks playing the fiat end game, would you want rather have $100 CAD in paper or $100 CAD in silver. You don't have to worry about the paper/physical silver *manipulation game* because your coin's face value is worth based on the CAD fiat currency tied into other fiat currencies around the world...
     
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  12. iamwayne

    iamwayne New Member

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    Just called, over 20 min wait, was only able to order 1. They are limited the order number to 1 instead of 3 now.
     
  13. earplugs

    earplugs Gold Member Gold Chaser

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    I thought canada tried to do this, and then hte banks said they don't have to accept for face value. I think it was the 20 dollar coin or something.
     
  14. iamwayne

    iamwayne New Member

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    In the US, a business can chose what to accept as payment, and not accept FRN or others...

    Same as Canada I guess if you treat banks as businesses. People online will post stories about this. All you have to is call a bank in Canada and ask if they will accept it.

    from an article:
    http://www.thestar.com/business/2012/07/05/coin_collector_learns_the_difference_between_legal_tender_and_spending_money_the_hard_way.html

     
    Last edited: May 17, 2013
  15. curmudgeonista

    curmudgeonista Banned

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    Pretty sure it's there to ensure that gov't bullion is subject to the same counterfeiting laws as other US currency...

    unless that's what you meant by "secure feeling". :sarc:
     
    Last edited: May 17, 2013
  16. iamwayne

    iamwayne New Member

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    Depends on how you see it:

    Yes, seeing the United States of America, 1oz. fine silver ~ one dollar give you the feeling of it being back by the US government and against counterfeiting. But we all know counterfeits exist and if you accidentally bought one, will the secret service reimburse you for it while they try to catch the SOB? People get the feeling of security that there will be less counterfeits because criminals are less likely to commit a crime if the federal government gets involved, criminals don't want to deal with the federal government too. I guess that's a secure feeling of your investment.

    IE: US Mail, government got involved to help the railroads and since it's a federal crime to impede delivery of mail and more, saving the railroads... Government gets involves to prevent counterfeiting to keep a currency stable and sound, too much fakes will destroy any market.

    For gold/silver bugs, it also give the feeling of what really is money; the printed face value or the actual physical/intrinsic value of the currency. Until the day you can't even get $1 USD FRN for the 1oz ASE...
     
  17. curmudgeonista

    curmudgeonista Banned

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    No, it's not a matter of how one sees it. It's just the reason. You're trying to read too much into it.

    Please read my previous post again with my edit.
     
  18. earplugs

    earplugs Gold Member Gold Chaser

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    Any guesses as to how that factors into the "full faith and credit" of Canada.
     
  19. iamwayne

    iamwayne New Member

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    Called to canceled, the guy on the phone was asking if I was sure since it's going to be sold out.

    Somehow I can't stand the reverse, portrait of a monarch queen...

    $111 that I saved will get me 2x 2013 ASE west points or even 3 bullion. Go Lady Liberty!
     
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  20. Talah

    Talah Seeker

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    I was gonna buy these when there was a limit 3 on the website and now its by phone only and a limit of 1...missed the ship, still gonna call tomorrow and see if they'll sell me one.
     
  21. chewy

    chewy Seeker Seeker

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    I've been thinking about this all day. Here's what I have come up with.

    So, the (US) dollar has an intrinsic value, which naturally is the value of the paper it is printed on.

    When the US makes a gold or silver coin, it is always valued (on it's face) a fraction of what the current spot or melt value of the coin truly is.

    This, in all but the most extreme cases, guarantees that the US minted gold and silver coins will not enter circulation.


    HOWEVER

    Canada took the complete opposite approach. The minted a coin with a $100 dollar (CDN) face value, yet it only contains about $25 dollars (CDN) of silver.

    This turns precious metals on their heads and promotes circulation in the economy. If you consider the intrinsic value when taking payment, you would always opt for the coin, as it has real value, whereas the paper note for $100 does not.

    Additionally, if you were well versed in paper monies, and realized their true value is zero, you would always prefer to hold the silver coins as a store of value over the paper money.

    The real question is: What year will the coins be worth more (melt value) than the 100 dollar bills they currently compete with? My guess: 2017
     
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  22. Gcubed

    Gcubed Banned

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    Ya can't get that coin for a "net" $100. WHY would a purchaser spend it into circulation? It actually costs OVER $100.
     
  23. McBlzr

    McBlzr Seeker Seeker

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    Well, I was one of the idiots that ordered the limit of 3 on the web yesterday. The Buffalo (Bison) is one of my favorites on coins, so I did this because of the personal collector value. :w00t:
     
  24. chewy

    chewy Seeker Seeker

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    How much does it cost?

    Would it not be more probable that it gets circulated than a GAE with a face value of $50, but a cost of $1700?

    I hope you answer, I would like to continue this conversation.


    Regards,

    Chewy.
     
  25. Gcubed

    Gcubed Banned

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    Face value PLUS shipping from what I understand. Like $111. I damn sure wouldn't spend it into circulation. Would you? Hell, I wouldn't even and wont buy it. ;)
     
  26. smooth

    smooth Gold Member Gold Chaser

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    Did I read that the mintage was 50,000 coins? this is not promoting circulation. maybe 50,000,000 would be a good start if the RCM actually wanted the coins to be used as money. It seems like a cool idea.... money with some intrinsic value. If it were a 5 ounce coin with a much larger mintage I'd be very excited.
     
  27. Gcubed

    Gcubed Banned

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    I guess Chewy didn't really want to continue the conversation.
     
  28. smooth

    smooth Gold Member Gold Chaser

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    Thats cool.. I didnt really want to either.

    i was just saying..
     
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  29. Tinbox

    Tinbox YOU GET NOTHING! YOU LOSE, GOOD DAY SIR! Site Supporter Gold Chaser

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    Canada does not want to get a knock on its door from its southern neighbor. It would be a cool idea but not allowed for long.
     
  30. TAEZZAR

    TAEZZAR LADY JUSTICE ISNT BLIND, SHES JUST AFRAID TO WATCH Site Supporter Midas Member

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    Is my head screwed on tight? I have read eveyones post, a couple of times.
    I am still trying to figure out why anyone would want to buy one of these coins for ANY reason.

    Here is my thinking.

    As a PM hoarder for 40 years, I see this coin as an attempt by Canada to return to a PM backed currency & that is a good thing. Am I on it so far ? OK, now, as long as Canada keeps their fiat money in circulation & the people accept it, why would anyone spent this 1 oz. coin that they paid a $111 dollars for ? My reasoning is that the old adage of "bad money drives good money out of circulation" comes directly to mind. So, again, why buy this 1 oz. coin for $111 of fiat $$$ when you could buy 4 oz. of silver bullion for $111, or $111 worth of groceries, because you are NOT going to spend that 1 oz into circulation, if you are smart. What have I missed here ?

    Just an old fart's 4 oz. worth.
     
  31. curmudgeonista

    curmudgeonista Banned

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    The only thing I disagree with you on is it being "an attempt by Canada to return to a PM backed currency". Given the arguments you rightfully make for these not showing up in circulation, it would appear to be merely a marketing ploy to sell silver for several times spot.

    It reminds me somewhat of the USPS pushing sheets of newly issued stamps as "collectibles". Great for them if they can get you to fork over the dollars for a few cents worth of printing expense and have you to lock those stamps away so they never have to deliver on the services or value the stamps represent.
     
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  32. TAEZZAR

    TAEZZAR LADY JUSTICE ISNT BLIND, SHES JUST AFRAID TO WATCH Site Supporter Midas Member

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    In my opinion, you are spot on !!!
    I was being careful to not skew my comment toward a conclusion.
    Your examples of marketing ploy & USPS stamps, to me, are great !!

    Thank You
     
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  33. chewy

    chewy Seeker Seeker

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    It's currency, backed by silver. It has a 100$ face value and it is LEGAL TENDER. If silver is cheaper than 100$, you can trade it in anytime for $100 worth of silver (which protects you), or anything else that costs 100. If silver goes over $100, you have a coin worth over 100$ in silver(which protects you. You simply CANNOT LOSE.
     
  34. chewy

    chewy Seeker Seeker

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    So, you have a problem with Canada "selling silver for several times spot"? This makes no sense. It's legal tender. Legal tender. Backed by silver. I simply cannot understand how you people cannot realize that. So, you have a problem with them turning a silver coin into 100$ legal tender, but it's fine if they print $100 on a scrap of paper and call it money?

    Like I said earlier, if silver stays/gets cheap, you can always trade this in for $100 spot price worth of silver. If (when) silver goes over 100, you have a coin with over 100$ worth of silver.

    I would buy every one of these they make if I could.
     
  35. curmudgeonista

    curmudgeonista Banned

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    Reportedly it costs $111 CAD to acquire one.

    Scenario A:
    Suppose you buy 2 of them...
    $222 spent for 2 oz silver in 2 x $100 CAD coins.
    Silver stays around $25. You have $200.
    Silver drops to $10. You have $200.
    Silver goes to $50. You have $200.
    Silver goes to $100. You have $200.

    Scenario B:
    Suppose instead you hold on to 2 x $100 bills and buy an ounce of silver...
    Call it $225 spent.
    Silver stays around $25. You have $225.
    Silver drops to $10. You have $210.
    Silver goes to $50. You have $250.
    Silver goes to $100. You have $300.
     
    Last edited: May 21, 2013
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  36. curmudgeonista

    curmudgeonista Banned

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    Chewy, it's a math trick meant to make you think you have $100 AND an oz of silver. You don't. You either have $100 OR an oz of silver. It's not backed by silver... not until the POS = FV (actually FV + the premium)... it merely contains silver that is locked up.

    Did you figure out which of my scenarios above is best? Unless and until ALL currency is once again backed by silver and/or gold, keep your money and your bullion separate. That way you don't have to give away your money in order to sell your bullion or give away your bullion in order to spend your money.
     
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  37. chewy

    chewy Seeker Seeker

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    What about silver goes to 300? Or when all the paper money is good for is to wipe you azz? I guess the ONLY, and I mean ONLY downside is that they cost a little more than trading a $100 bill for another $100 bill. If they were selling them for $100 out the door, that would be ideal.

    I would rather have 100 of these SILVER, LEGAL tender 100$ dollar coins, as opposed to 100 Canadian paper $100 bills.

    I bet they will be selling on EBAY for much over 111 in a few months anyway. So they are likely to be even a better deal than I previously stated.
     
  38. chewy

    chewy Seeker Seeker

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    There's no trick.

    It's money in the bank, and if silver goes over 100, its even more.

    If silver goes to a dollar, you can take this MONEY, real MONEY - down to the coin shop and trade it for a hundred silver coins whenever you please. Just like you could withy a $100 bill. If silver goes to 50$ - you can take it to the coin store and buy 2 coin- just like you would do if you had a hundred dollar bill. If silver goes to $200 - you have a coin worth $200 - whereas if you stayed in paper money, you would not..... you would just have a 100 bill..........
     
  39. chewy

    chewy Seeker Seeker

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    Why would you possible prefer a scrap of paper with a declared value of $100, when you can have a silver coin (that can buy everything the scrap of paper can buy) instead of the $100?

    Piece of paper, or silver?
     
  40. curmudgeonista

    curmudgeonista Banned

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    I purposefully left out Scenario C... buy silver at normal bullion prices. There's your greatest upside potential if you really believe POS will go to extremes. In fact it's got upside on meager rises too. However, it also carries the greatest downside risk, as many can attest.

    But, you were focused on how you just couldn't lose with these $100 CAD coins. Risk aversion! You said you'd buy every one they made. Remember? That would be Scenario A and silver would have to go above $111 oz before you see the first dollar of upside. In the meantime you're upside-down... down about 10% all the way up to $100 silver... and that's a long way.

    The truth is, if you want the protection of FV you said you liked, along with an upside potential on silver you also liked, go with Scenario B... just spend the premium on silver bullion and keep your FV in cash. Otherwise you're letting 'em play you like a large mouth bass... hook, line & sinker.
     
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