Tin cans filled with $10M in gold coins found buried in California
news.com.au
news.com.au
Because it's currency? Nope. Because it's gold? Nope. Because it's collectable? Yes!
Really highlights how price and value can come unstuck.
For others interested, here's some links:
NPR Article
http://www.npr.org/blogs/money/2011/02/15/131934618/the-isla...
Milton Friedman paper on the island.
http://hoohila.stanford.edu/workingpapers/getWorkingPaper.ph...
I for one had never thought about it this way.
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.
It's not an easy question to answer.
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.
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?
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.
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.
Ah here we go
http://en.wikipedia.org/wiki/Executive_Order_6102
not really related but still gold-coin mind-blowing fact
http://www.npr.org/2011/06/28/137394348/-1-billion-that-nobo...
Edit: the essential story - http://en.wikipedia.org/wiki/1933_double_eagle
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 ...
Was this a common viewpoint when the act went in, or it decades of history since colouring my vision?
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.
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.
http://select.nytimes.com/gst/abstract.html?res=F60712FB3E5D...
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 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.
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.
http://www.usinflationcalculator.com/
It's giving me 72.7% 1913-1929.
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.
The government's gold reserve increased 3x.
> 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.
Erm, yes? They're also called 'soldiers', they volunteer to go into the army and kill people for money.
To clarify: It was forced conscription, not voluntary.
http://en.wikipedia.org/wiki/Conscription_in_the_United_Stat...
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.
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.
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.
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.
http://www.familyfriendjokes.com/joke/father-son-prison-joke
But hey, I'm sure they can spare a mission to retrieve us some gold sooner or later. :P
... I mean why not
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.
IF they are the $20 coins, they probably look similar to these: http://www.apmex.com/product/9119/20-liberty-gold-double-eag...
*I'm not a lawyer.
My, how times have changed.
Imagine if these were aluminum, which was expensive in the 1870s...
(http://www.tms.org/pubs/journals/JOM/9511/Binczewski-9511.ht...)
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.