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.
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.
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?
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?
No, it's a very easy question to answer. How many cups of coffee would a gram of gold buy me?
Yesterday morning, the London gold fix was 803.117 GBP/oz; if i took my gram of gold to my local baristas and traded it, i would get 6.59 flat whites. Yesterday morning, the gold fix was at 798.532 GBP/oz; my gram would have got me 6.55 flat whites.
Whereas if i'd gone in this morning with 4.30 GBP in ready money, i would have got 1.00 flat whites. And if i'd gone in yesterday with 4.30 GBP, i would have got 1.00 flat whites.
You can do this analysis against benchmarks other than flat whites: cappucinos, espressos, and even things that aren't coffee. You will always find that the buying power of a unit of currency remains constant from day to day, while the buying power of a unit of gold does not. It's gold that fluctuates.
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.
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.
There's a legal factor you're not considering. USG has confiscated bullion gold in the past, but not coin collections. Therefore, for goldbugs, these coins are worth more than their bullion content of $1.75 million, and obviously much more than the $27,000 face value price.
Doesn't the US Treasury have a history of going around and seizing gold coins?
I forget exactly why but I think it was because they were all recalled when we went off gold standard?
I vaguely remember people finding these in deposit boxes, sharing it with the news and then magically losing it all when the treasury shows up to seize them.
Edit 2: Quick aside: I know the guy who found the 10 additional coins in his vault (Roy Langbord). Super nice guy. I remember when a mutual friend called me up one day and said "So Roy just found 10 1933 $20 gold coins in his vault. Are those worth anything?" ... Gulp ...
Wow that's so messed up. The Gold Reserve Act, too. It seems extremely "un-American" for the government to force people to sell their gold to the treasury. OTOH, so do a lot of things in hindsight, like the Vietnam draft. (Can you imagine US citizens today being forced to fight overseas?)
Was this a common viewpoint when the act went in, or it decades of history since colouring my vision?
It was popular at the time but it was widely assumed that the gold standard would be restored soon.
In the months prior a large percentage of country's banks had failed, and immediately beforehand all of the major financial exchanges had frozen, every federal reserve branch and almost every state had suspended banking operations. Withdrawing and hoarding gold were considered to contribute to the destabilization.
Here's an example editorial from the era:
> There will be no sympathy with the position in which these hoarders of gold were placed. They were perfectly aware that they were helping to aggravate an already difficult situation and they, by action taken with a view to their person profit or advantage, were creating the very situation which they professed to fear. Hoarders of gold on such a scale must have been mostly men of considerable means, not subject to the blind fright of the small currency-hoarder and not drive to money-hoarding, as has happened in many parts of the country, through absolute breakdown of normal bank facilities or the fear of it.
The trouble was that the exchange rate of dollars for gold was kept fixed, while the Fed had been inflating the currency since 1914. By 1930, the dollar had inflated by 85% or so, meaning that you could roughly double your money by trading dollars for gold.
This was why there was a giant run on the banks to trade for gold.
Similar sharp corrections happen every time an exchange rate gets fixed by law between two otherwise unrelated specie.
> The trouble was that the exchange rate of dollars for gold was kept fixed, while the Fed had been inflating the currency since 1914.
The Federal Reserve's gold reserve requirements and the gold price of the dollar were set by Congress.
> By 1930, the dollar had inflated by 85% or so
This is not the normal meaning of the word inflation. (Nor do I know where your 85% number comes from).
> meaning that you could roughly double your money by trading dollars for gold.
That's not what that means. If that were true then the gold standard would have failed the minute that gold was worth 1% more than its dollar equivalent.
> 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 standard would have failed the minute that gold was worth 1% more than its dollar equivalent.
I too find this surprising, but it happens again and again whenever one currency is artificially pegged to another - nothing happens for years, and then a wrenching correction.
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:
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.
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.
> The Fed kept a fixed exchange rate for gold, while inflating the currency supply.
"inflating" the current supply of what? dollars? As noted the reserve ratio did not decrease. As there were more dollars there was more gold backing it.
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.
It's only the 1933 Double Eagles that get seized, and only because the government's position is those coins were never legally issued, meaning private possession of one could only have come about via theft from the Mint, which makes the coins stolen government property.
I think the previous poster was referring to executive order 6102 (April 5, 1933), which seized gold within the United States, and criminalized the possession of the specie.[1]
The number of exceptions in that order, and the fact that squads of government officials did not go door-to-door looking for unexempted hoards of coins, suggest that perhaps that order had more to do with PR than actual seizures.
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 apocalypse? This is the interesting part of this story, IMO. In any event, this might be one stash among several. If someone had that kind of coin lying around, my guess is that he didn't bury it all in one place.
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 wanted to store it. So he buried it. Years later, before moving house, he went looking and dug over the backyard but couldn't remember where he'd buried the jars of money. Somewhere in suburban Adelaide, there is likely to be a stash of money under dirt.
Hard to believe now, but in 1933 the possession of gold by Americans was banned by Executive Order 6102. After the confiscation the price of gold jumped and people got duped.
I would start looking at the records for some bank robber who got shot and nobody ever found the money.
Stashing your economies inside a house, in a safe, I can understand... but in cans, under a tree? This is the kind of thing someone on a getaway would do. The coins are fresh out of the mint too, so it's likely the entire stash came from one place.
In the article it says they're stashed in chronological order and almost all immediately that they were put into circulation, ruling out a "big heist".
Yes, the fact that nobody ever successfully came back for this is fascinating. They either buried it such that the marker was soon lost and or buried it in a big hurry, never meant for it to be found (in their time) for whatever reason, or died before they could recover it.
I'm not sure in 1849 there were a lot of banks that one would trust that kind of funds with in gold rush areas in CA. I'd imagine banks were much less robust than they are now, and even now I believe that 750k is > the FDIC insurance limits.
There was no FDIC in 1849, so fair enough point. No deposits were insured. :)
But people generally didn't realize how problematic that was except in financial panics and runs on banks. To wit, there was a big panic in 1873, not long after these coins were ostensibly buried. But that was well after these coins were minted, which makes their near-mint, quasi-uncirculated condition a bit hard to reconcile. I suppose it's possible the burier had them in tin cans (or some other receptacle) for decades, and buried them in the 1870s.
At any rate, banks were around and thriving during the Gold Rush, and San Francisco was in many ways the most progressive financial hub in the US, rivaling NYC. To whatever extent someone had $27,000 in those days, he probably would have banked it. Unless he'd come into it very recently, or under suspicious circumstances, or had just withdrawn it prior to burying it. It's certainly possible this person was a bank robber, though the more likely explanation is an unbanked or bank-panicked individual.
"In space, a single platinum-rich 500 meter wide asteroid contains about 174 times the yearly world output of platinum, and 1.5 times the known world-reserves of platinum group metals (ruthenium, rhodium, palladium, osmium, iridium, and platinum)." -- Planetary Resources, http://www.planetaryresources.com/asteroids/composition/ (take with as many grains of salt as you feel like)
But hey, I'm sure they can spare a mission to retrieve us some gold sooner or later. :P
With that much/many valuable metals there, there would have to be plenty of gold, too. I have no doubt that gold will be mined and retrieved, because it has industrial value. Not to mention its incredible economic value, and because gold.
$27,000 face value in $10 and $20 gold coins, each gold coin having 0.9675 ounces of gold in them ($10 coins would have had exactly half that amount of gold).
So that is about 1350 $20 gold coins or their equivalent, thus 1300 ounces of gold. At current spot prices of $1340 per ounce, about $1.75 million USD.
I read story a while back about a plumber who found a box filled with thousands of dollars...behind a wall after he knocked a hole in it. The owner of the house offered him 10% as a finder's fee, but he demanded more and ultimately sued her. The story of the law suit led to the children of the previous home owners filing their own law suit claiming they were entitled to the money...and they won everything. The woman and the plumber received nothing.
Depends where. This is treasure trove, (the discovery, or trover of treasure cache, deliberately hidden goods that can be classified as treasure, especially gold/silver) and the laws around that are a bit of a mess in a lot of places (particularly in the US, where most states opted to receive common law and there are several contradictory precedents).
Depends on where you live. Oftentimes, mineral rights belong to the landowner. They can be sold or leased. I doubt that buried coinage/treasure would be considered a mineral.*
Overall, a buried cache of rare coins is much more likely to be regarded as the property of the landholder than the mineral rights. In some land deeds, the mineral and oil rights are simply excluded.
Why would you ever go public with this sort of discovery? Seems like it will just create one hell of a headache for the couple who discovered the coins.
They are being pretty cagey about who they are and where they were found. My guess, is that they went "partially" public in order to generate interest in selling these coins at auction, or via some other way to increase how much they can sell them for.
I like how they talk about how RARE mint coins from before 1880 are, and how there are several one of a kind finds, and many from before 1880... And then they show a coin from 1886
For anyone else who thought to check, no the photos do not appear to contain any GPS coordinates in the EXIF data, so they have the treasure hunting grounds all to themselves.
Rather than forgotten, I would guess the owner died. Their arrangement in the cans suggest they were being saved over a period of time, which makes me think it was someone's personal savings and he simply died with no one knowing about the stash.
Is that sarcastic? Because in many states, having "enough" paper money is reason enough for the police to take it and harass you. Even without charging you with a crime, mere possession of cash is enough.
I was referring to "paper money" in the abstract sense, i.e., currency not tied to a commodity with a limited supply (such as gold). You're right, of course, that mere possession of sufficient quantities of literal paper money is even today de facto illegal—a situation I join you in deploring.
The dirt in england is awash with buried hoards, where people buried their currency and valuables to hide them from the government. The list is fascinating.
Because it's currency? Nope. Because it's gold? Nope. Because it's collectable? Yes!
Really highlights how price and value can come unstuck.