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Tin cans filled with $10M in gold coins found buried in California

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Re: Tin cans filled with $10M in gold coins found buried in California

#81

Post by robbrown451 »

iandanforth wrote: post #15

My favorite part about this is why it's worth $10 million. Because it's currency? Nope. Because it's gold? Nope. Because it's collectable? Yes! Really highlights how price and value can come unstuck.

I'm curious what the melt value would be. I didn't see that in the article. I assume when they say $27,000 they mean the currency value, but if you were to melt it and sell it at the current price for the metal (~$1300/ounce), it would probably be a lot more than that....while less than the $10 million it is supposedly worth as collectibles.

Re: Tin cans filled with $10M in gold coins found buried in California

#82

Post by absherwin »

robbrown451 wrote: post #81
iandanforth wrote: post #15

My favorite part about this is why it's worth $10 million. Because it's currency? Nope. Because it's gold? Nope. Because it's collectable? Yes! Really highlights how price and value can come unstuck.

I'm curious what the melt value would be. I didn't see that in the article. I assume when they say $27,000 they mean the currency value, but if you were to melt it and sell it at the current price for the metal (~$1300/ounce), it would probably be a lot more than that....while less than the $10 million it is supposedly worth as collectibles.

Approximately $1.76 million

Starting in 1837, gold coins in the US had 0.48375oz of gold per $10. So $27,000 in coins would be worth $1,755,432 given a price for gold of $1344 per oz. This excludes the value of the copper with which the gold was alloyed, which would be worth roughly another $30.

Re: Tin cans filled with $10M in gold coins found buried in California

#83

Post by dredmorbius »

prawn wrote: post #79
jonnathanson wrote: post #61

At the risk of stating the obvious, it's worth noting that $27,000 was a lot of money in 1849. To give a rough estimate, we're talking about the inflation-adjusted equivalent of $750,000 (give or take). Who buries $750,000 in tin cans? Who has $750,000 in unbanked, walking-around money in the first place? The mid-19th century Walter White? Maybe someone cleaning out his bank account in anticipation of a financial apo…

"Who buries $750,000 in tin cans?" Not quite the same amount, but my grandfather buried around $10k a few decades ago in his backyard. He'd migrated from Europe where he was well-off and lost a large amount of money entrusting money with a lawyer. I think he also had reason not to trust banks, but can't remember specifics. Fast forward to Australia where, now decidedly working class, he had saved up a new sum and wan…

Reminds me somewhat of this old saw (other variants mention money):

http://www.familyfriendjokes.com/joke/father-son-prison-joke

Re: Tin cans filled with $10M in gold coins found buried in California

#84

Post by nerfhammer »

WalterBright wrote: post #76
WalterBright wrote: post #75

Earlier quoted context omitted.

> The Federal Reserve's gold reserve requirements and the gold price of the dollar were set by Congress. Yes. > This is not the normal meaning of the word inflation. (Nor do I know where your 85% number comes from). Perhaps I should have said deflated. Anyhow, it comes from any of the various historical inflation calculators you can find on the internet. > That's not what that means. If that were true then the gold s…

Here's one: http://www.usinflationcalculator.com/ It's giving me 72.7% 1913-1929.

Ok, so you subscribe to the notion that price increases equals "dollar inflation"

The fallacy in your thinking is that because prices increased, dollars were "inflated" vs. gold, in which prices would have otherwise remained fixed. But the gold supply increased dramatically over the same period.

As you point out prices increased ~75%, but at the same time US gold reserves increased nearly 3x. 2293 tons in 1913 vs 6358 tons in 1930:

http://i.imgur.com/Sy8uzSQ.png

Remember, the Fed still had a gold reserve ratio it was required to maintain. So as the money supply increased, so did its gold supply. You might seem to imply that the reserve ratio was getting smaller and smaller as part of "dollar inflation" evidenced by price level increase, while gold had a fixed quantity and value. This is not the case.

Re: Tin cans filled with $10M in gold coins found buried in California

#85

Post by WalterBright »

nerfhammer wrote: post #84
WalterBright wrote: post #76

Earlier quoted context omitted.

Here's one: http://www.usinflationcalculator.com/ It's giving me 72.7% 1913-1929.

Ok, so you subscribe to the notion that price increases equals "dollar inflation" The fallacy in your thinking is that because prices increased, dollars were "inflated" vs. gold, in which prices would have otherwise remained fixed. But the gold supply increased dramatically over the same period. As you point out prices increased ~75%, but at the same time US gold reserves increased nearly 3x. 2293 tons in 1913 vs 635…

The value of gold is not determined by the quantity the Fed has. The global supply of gold did not increase 3x. The Fed kept a fixed exchange rate for gold, while inflating the currency supply. As I said, such pegged systems inevitably result in a sharp correction.

Re: Tin cans filled with $10M in gold coins found buried in California

#86

Post by wintersFright »

nerfhammer wrote: post #70
wintersFright wrote: post #54

Earlier quoted context omitted.

They immediately revalued the price of gold afterward so I'm sure it was seen as theft by the govt.

The price of gold was increased at the same time , not afterwards. So they repaid people 65% more than it had been worth the day before.

wrong (ok it wasn't immediate, 8 months later they repriced it)

Executive Order 6102 required all persons to deliver on or before May 1, 1933, all but a small amount of gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve, in exchange for $20.67 (equivalent to $372.75 today[3]) per troy ounce.

The United States Gold Reserve Act of January 30, 1934 required that all gold and gold certificates held by the Federal Reserve be surrendered and vested in the sole title of the United States Department of the Treasury.[1][2]

The Gold Reserve Act outlawed most private possession of gold, forcing individuals to sell it to the Treasury, after which it was stored in United States Bullion Depository at Fort Knox and other locations. The act also changed the nominal price of gold from $20.67 per troy ounce to $35.

Re: Tin cans filled with $10M in gold coins found buried in California

#87

Post by wintersFright »

iandanforth wrote: post #58
wintersFright wrote: post #53

Earlier quoted context omitted.

Is the mono lisa only worth $2.50 for the price of canvas, paint and wood frame? Old paint at that! The price of a collectable is because someone else (not necessarily you) values it. And the odds are that many other wealthy collectors would value it at the same price, allowing the buyer to hold it and then trade it later for similar value.

Indeed, but here it's something that has two well understood prices. One, currency, which doesn't change over time, and two, gold, which fluctuates but generally increases over time. And despite being composed of these other things it has a third almost-totally-unconnected price related to artificial scarcity! I think that is super neat. It may also signal that humans are totally insane, but no matter.

"currency, which doesn't change over time"

eh? currency then or now? Currency then was on the gold standard so the two didn't fluctuate. Currency today, they target inflation of 2% / year by design.

re: insane price of collectibles

You are thinking like a salaryman. Think of one of great wealth with a flow of currency more than what one can sensibly spend money on - the market for these coins. The pleasure gained from owning the 20th rolls is not the same as the first. The utility gained less so. How about a rare collection of gold coins from 1850? Now that is something you can talk about over some cognac and cigars with a like minded fellow. An object of beauty, desire and a fantastic store of value for when you want to transport value across to the next generation. Alternatively, you could park $10 million into a hedge fund and swap spreadsheets around the fireside chat - debating which manager was best defending the onslaught of the fed and its money printing? Which one is less - shall we say - vulgar?

Re: Tin cans filled with $10M in gold coins found buried in California

#88

Post by tellarin »

brc wrote: post #42
hackinthebochs wrote: post #34

Earlier quoted context omitted.

I remember seeing a documentary that made the connection between the evolution of money and the human race's tendency to find inherent value in "collectibles". Stones, shells, jewelry, etc, were all the basis for a currency in various times, and its only because of our shared appreciation for collectibles that this worked.

Well, currency is defined by divisibility, durability, scarcity and difficulty of forging. Humans desire a medium of exchange to better facilitate trade. The desire to trade creates the requirement for currency. The desire to collect manifests in many different forms - but the use of currency is separate (though probably related) to that.

Collectibles are also related to durability, scarcity and difficulty of forging. So I guess it's more related to currency than most would realize.

I for one had never thought about it this way.

Re: Tin cans filled with $10M in gold coins found buried in California

#89

Post by digitalengineer »

WalterBright wrote: post #69
iandanforth wrote: post #58

Earlier quoted context omitted.

Indeed, but here it's something that has two well understood prices. One, currency, which doesn't change over time, and two, gold, which fluctuates but generally increases over time. And despite being composed of these other things it has a third almost-totally-unconnected price related to artificial scarcity! I think that is super neat. It may also signal that humans are totally insane, but no matter.

When the price of gold fluctuates, you have to be careful inferring meaning - is it the value of gold fluctuating, or the value of the currency fluctuating? It's not an easy question to answer.

Of course one could also argue it's not the price of gold that fluctuates, it's the dollar/euro/yen gold is measured in that does.
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