11/30/23 Report - Selling or Keeping Silver, Gold or Diamond Finds: Some Things to Consider. Comparing Escudo Prices Over Time.

 

Written by the Treasureguide for the exclusive use of the Treasure Beaches Re;port.

Detectorists often talk in terms of the value of their finds.  It might not seem like it, but that is actually a complicated topic.  First of all, there is the valid view that something is only worth what somebody will pay for it.  Secondly, the value is usually spoken of in terms of dollars or some other currency, and currencies fluctuate too.

The above chart shows that there has been a correlation between the price of gold and silver.  The correlation isn't perfect, but it is pretty good.  Gold, over the time presented by the chart, is now near a high, while silver has been considerably higher a couple of times in the past.  

When I began metal detecting I planned on keeping my finds as a type of retirement or emergency fund and figured I could sell things in the future if there was a need.  I don't think it was a bad strategy, but back then I figured that old things would continue to appreciate as they got older, and gold and silver was probably a good investment for the long term.  I didn't know as much back then about how prices of materials and items fluctuate.

It turns out that events as well as fashion or cultural trends can really affect prices.  Things become popular and lose popularity and markets change.   Historical events can change prices for certain items and markets can be manipulated.  There is a lot that can affect the value of a collectible or material as an investment.

The big spike in silver prices back around 1980 was caused by the Hunt brothers who were convicted of manipulating the silver market.  I remember that well.  See Silver-Market Manipulator Nelson Bunker Hunt Dies At 88; Two Traders Look Back (kitco.com)

Just yesterday I was talking to the owner of one of St. Lucie's biggest jewelry stores and he told me the same thing another jeweler told me a few weeks ago.  They both said how diamond prices have dropped dramatically due to the increasing availability and popularity of lab grown diamonds.  The one fellow told me he had his diamond jewelry all 50 to 70 percent off.

Below is an interesting chart.

First of all, De Beers has long been very dominant in the diamond market.  They control the market in diamonds.  Diamonds aren't as rare as they seem.  The chart shows what happened when they decided to sell more.  You can also see the record diamond prices in 2011.  Now there are the lab produced diamonds, which are difficult to distinguish from natural diamonds.

While demand for diamonds and luxury goods at large has softened since the pandemic, the diamonds used in lower-priced bridal rings have seen a sharp drop in prices.

Diamond giant De Beers, for example, has had to slash prices by more than 40% in a category called "select marketables," or rough diamonds between 2 and 4 carats that can be furnished in bridal rings that are high quality but not perfect, Bloomberg reported...  ( Diamond Markets Are Tumbling Because Americans Love Lab-Grown Stones (businessinsider.com))

As I've suggested, there are a lot of things that can affect the value of a find and values can fluctuate a lot.  Historical events, political actions, cultural and fashion trends, and various forms of manipulation can affect prices.  You can't just figure that an item will continue to appreciate.  There probably will be significant peaks and valleys and the price of some things will can just drop off.  One thing affecting diamond prices is desire to not support "blood diamonds" or exploitation of the peoples involved in mining or producing products.  Although no one seems to mind the exploitation of populations in countries that produce many of our other more cheaply produced products.  Outrage is selectively manipulated too. 

And I've barely mentioned the continually changing price of the dollar which can distort perceptions of price changes.  The dollar today is not worth nearly what it was at one time.  When I was a child I bought candy bars for three cents.

$1 in 1800 is equivalent in purchasing power to about $24.42 today, an increase of $23.42 over 223 years. The dollar had an average inflation rate of 1.44% per year between 1800 and today, producing a cumulative price increase of 2,341.83%.

This means that today's prices are 24.42 times as high as average prices since 1800, according to the Bureau of Labor Statistics consumer price index. A dollar today only buys 4.095% of what it could buy back then.  (According to the CPI Inflation Calculator)

If you are trying to decide if you should sell or keep your gold, silver and/or diamond finds there are many things to consider, and you still can't know what will happen in the future to affect the value of your finds.  You can't count on the value of silver or gold remaining constant or increasing at a constant rate.  Prices can change rapidly and dramatically.  It is difficult or impossible to determine how prices will trend in the long term.

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I once showed prices of a group of Bogota 2 escudos sold at auction in 1977 and compared that to another group sold at auction in 2016.  Below is an excerpt from that post.

I previously looked at prices of Mexican eight-escudos sold in the 1977 Bowers and Ruddy Auction.  I wanted to compare those prices with prices for Mexican 8-escudos in recent auctions.   I decided to compare prices of Bogota 2-escudos sold in 1977 with a nice sample of similar Mexico 2-escudos sold in the recent Sedwick Coins auction.

I found that there were 80 Bogota 2-escudos sold in the 1977 auction and nineteen 2-escudos sold in 2016 auction.  That is a pretty good number for comparison.

Above you see the realized prices charted for the Mexican 2-escudo sold in the 1977 auction.  The vast majority sold for around 135 dollars.  That, of course, was in 1977 dollars, which had about four times the purchasing power of 2016 U. S. dollars.  So adjusted for inflation, that typical prices would be four times 135, or $540.

To be more precise, the average realized price in 1977 dollars was $138.75.  The range was huge, due in large part to the one that sold for several times the average price.

Above is a chart showing the winning bids for the 19 Mexican 2-escudos sold in the 2016 auction.  The average selling price of these 19 Bogota 2-escudos was $1960.95.  Compared to the inflation adjusted average selling price of about $540 for the 1977 escudos , the average price of the escudos sold in 2016 was about 3 and a half times the prices realized in 1977.  That is over a period of about forty years.

Here is that link.

The Treasure Beaches Report Direct From Florida's Treasure Coast.: 6/9/16 Report - Looking At Some Bogota 2-escudos. Hillary, Bernie and Donald.

I did a post or two on inflation and the changing value of the dollar..  You can look that up if you are interested.

One other thing that stands out in both of those charts is that there are a few escudos that bring much higher prices than the average.  That is not surprising since there are simply some coins that are much nicer or stand out from the average for some reason.

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Disney Is Rotting From the Head Down (msn.com)

The best way to kill capitalism is to put anti-capitalists in high company positions.

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Good hunting,

TreasureGuide@comcast.net