Recession and the SPFMI

A multitude of articles out there in cyber-space are dedicated to figuring out whether or not the U.S. economy is now in recession. A recession, generally speaking, is when an economy is contracting instead of expanding—expansion, by the way, is crucial when using fiat money like Federal Reserve Notes, because when your money is based on debt that can’t be repaid, nasty things happen.

I understand that my definition of a recession is not nearly complicated enough for economists and other finance professionals; it’s entirely too concise, and arrives at the point much too easily. If you require something a little more vague, here’s a heap of contradicting definitions from google.

Seeing as how I am not a professional economist, I am not even going to attempt to argue this point with charts, graphs, and historical data. This is not to say that I can’t whip up some mean charts, graphs, and data, because while I may not be an economist, I am a beast of a programmer, and frankly my spreadsheets rock. I am instead going to prove my point using a new-fangled proprietary analysis algorithm that I like to call:

The Successful Person’s Family Misery Index (The SPFMI)

The SPFMI is based on the following, highly scientific, premise:

The Players:

• Group A: In every family, there are a few responsible, self-sufficient people. These people work hard, spend wisely, and generally have their affairs in order. When they encounter a problem, they do what they need to do and take care of business without so much as a whimper. They’re also known as “The Grown-Ups,” regardless of age.
• Group B: Every family also has many people that seem to always have better things to do with their time than keep their lives in order. They also seem to have no problem reminding the members of Group A that it is somehow their responsibility to deal with all of their personal and financial problems. They’re known by many names, but this is a family blog, so I’ll leave them out.

The Math:
The predation upon Group A by Group B increases or decreases in direct correlation with the relative strength of the economy.

Or, to put it in layman’s terms:
The more the economy heads south, the more all of the relatives you haven’t heard from since Thanksgiving are going to call to complain and hit you up for money.

There is probably some sort of formula in which the amount of time you spend on the phone listening to other people’s problems is multiplied by the number of checks you write (divided by feelings of guilt, of course), but I haven’t quite cracked it yet. I can tell you that according to my SPFMI, we are definitely in a recession, and it’s looking like it’s going to get a lot worse before it gets any better!

U.S. Mint Bald Eagle Commemorative Coins

Welcome to post #1 of the blog!

Those of you who, like me, are active coin collectors (*ahem* numismatists) are probably already aware of these coins, so this is for those among you looking for a cheap and easy investment that as far as new-issue coins go is pretty much a no-brainer. Here’s the lowdown:

The U.S. Mint, in addition to producing coins for general circulation, also produces several specialty products for collectors. Most people are aware of the uncirculated and proof sets produced every year, and most investors are aware of the gold, silver, and platinum eagle bullion programs. Many people do not know, however, about the gold, silver, and clad (base-metal) commemoratives that the U.S. Mint produces.

Most of these commemoratives really are just for collectors. For example, last year the Mint offered two: One celebrated the 400th anniversary of Jamestown, and the other celebrated the desegregation of Little Rock Central High School in 1957. While both of these are historically worthy events and the commemorative coins are beautiful, they’re not something that the average Joe on the street is going to stand in a long line to buy. Commemoratives are usually collected by a subset of the coin-collecting community, and demand is usually brisk enough to maintain nice values for most of them, but these values are rarely high enough to attract investors.

Every few years, though, the Mint produces a limited-edition commemorative with broad appeal, and when this happens they fly out the door, and the value of the coin rises quickly and tends to stay there.

A good case in point is the 2001 silver Buffalo Dollar. Basically it just looks like a giant buffalo nickel, but it was produced in limited numbers (500,000 – nothing for a coin), and the design was well-received by both commemorative and conventional collectors. The original sale price of the coin was $37, a far cry from the $100 to $1000 that the coin commands now, depending on condition (most average in the mid-$200 range). 

This year, the mint is offering Bald Eagle commemorative coins in gold, silver, and clad versions. You can buy them struck as either proof or uncirculated versions, with the silver coins running about $40 and the gold coins, which I believe contain a quarter ounce of gold, for about $320. The clad coin, which I’m not too big on, is $9. There was a three coin set available for $369, but it’s already sold out– which is no small feat considering that they just starting shipping in mid-February!

 The silver coin is limited to 500,000 units, and the gold to 100,000. This includes both proof and uncirculated versions. I’ve already seen the three-coin set advertised by a reseller for $1000, graded in PR70 and MS70 (the highest possible condition grade). There is no doubt in my mind that the gold and silver singles will appreciate greatly, and I would be surprised if the mint’s inventory lasts more than a few weeks.  

 So, for an investment as small as $40 or so, you can get your hands on something that will occupy about 2 square inches in a drawer somewhere and return a nice profit when it comes time to sell. What are you waiting for? Purchase them at the U.S. Mint’s website.

Oh, and by the way, if you take the time to have the coins graded by a reputable coin grading firm (PCGS, NGC, ICG, or ANACS), your profits will far exceed the cost of the grading.