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Author Topic: Performance of the Real IRA  (Read 1524 times)

Silver

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Performance of the Real IRA
« on: May 17, 2015, 07:28:38 am »

Back in the days of Wolfesblog, I proposed the idea of a REAL IRA, where you invest the same amount in gold coins every year that you could under IRA contribution limits.

Wolfesblog entries:
Open a REAL IRA and
Performance of the REAL IRA

I've updated it for 2015.

For the first time since I started this in 2000, the S&P 500 option (investing every year in the S&P 500 index on April 15) has a balance greater than the gold coin option.  It's not a big difference, $110k vs $104k, but there it is.

OTOH, the drop in gold since its peak in 2011 means you bought more coins.
         
   Contribution   # purchased
4/15/00   $2,000    6
4/15/01   $2,000    7
4/15/02   $3,000    9
4/15/03   $3,000    8
4/15/04   $3,000    7
4/15/05   $4,000    8
4/15/06   $4,000    6
4/15/07   $4,000    5
4/15/08   $5,000    5
4/15/09   $5,000    5
4/15/10   $5,000    4
4/15/11   $5,000    3
4/15/12   $5,000    2
4/15/13   $5,000    3
4/15/14   $5,500    4
4/15/15   $5,500    4


If you had been following this savings plan for the past 15 years, you would now have 86 lovely gold coins. 

You would also have $5000 cash left, because I assume you buy only as many 1 oz gold coins as the yearly limit allows, and keep any remainder.

Gold Coin IRAs? Discusses the smart way to convert your 401(k) or IRA to precious metals.  Hint: taking the money out and paying a huge tax penalty is NOT the smart way. 

Peace,

Silver
« Last Edit: May 17, 2015, 07:51:15 am by Silver »
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DiabloLoco

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Re: Performance of the Real IRA
« Reply #1 on: May 17, 2015, 10:42:06 am »

Depending on the coins purchased, you would have a numismatic (coin collector) value added as well. Especially if those gold coins were professionally graded. That would push the figure far above and beyond the S&P total, even after factoring in the cost of the coin grading service. :mellow:
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DiabloLoco

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Re: Performance of the Real IRA
« Reply #2 on: May 17, 2015, 04:18:57 pm »

I just did some research. I am posting the results under the assumption that the buyer had purchased one ounce gold eagles graded by PCGS in MS70 in the year that they were released. It costs a little more to do so (maybe 10% over spot at the most when purchased), but is well worth it in the long run. All prices that I am listing are the current numismatic value as listed on the PCGS website.

Silver- I don't mean to step on your toes. I just thought that this added tidbit of information would perhaps entice more of those "on the fence" to join us in our exodus from the global banking cabal. :threvil:


purchase date   investment   total coins   current value
   4/15/00           $2,000            6             $19500
   4/15/01           $2,000            7             $63000
   4/15/02           $3,000            9             $45000
   4/15/03           $3,000            8             $18400
   4/15/04           $3,000            7             $16100
   4/15/05           $4,000            8             $18400
   4/15/06           $4,000            6             $13800
   4/15/07           $4,000            5             $11500
   4/15/08           $5,000            5             $11500
   4/15/09           $5,000            5             $11500
   4/15/10           $5,000            4             $9200
   4/15/11           $5,000            3             $6900
   4/15/12           $5,000            2             $4600
   4/15/13           $5,000            3             $5850
   4/15/14           $5,500            4             $7800
   4/15/15           $5,500            4             $8000

Total investment= $67000
Grand total of numismatic (coin collector) value= $271050 *as of today 5/17/15*


The beauty of this, is that even if the coin collector market collapses, you still have the intrinsic value of the gold. Win-win! :mellow:

Another benefit of this method, is that you can actually hold the coins. It wouldn't have to be a "government sanctioned" IRA. Your hard-earned money would be completely in your control, beyond any government reporting or greedy bankers. Also, having the coin in a PCGS graded slab provides built-in provenance. There is no denying that the coin is pure gold. The downside, is that you alone would be responsible for the security of your investment. Some people can't handle that responsibility.
« Last Edit: May 17, 2015, 09:09:11 pm by DiabloLoco »
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Silver

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Re: Performance of the Real IRA
« Reply #3 on: May 18, 2015, 06:33:14 am »

DL,  thanks for the interesting addition.

You certainly aren't stepping on my toes.  I always welcome discussion and questioning of anything I write.

Can you extend your table to show how much one would have paid for graded coins in each year?

I think the number of coins might need to be adjusted, to stay below the contribution limits I imposed on the Real IRA.

Of course, everyone is free (for now) to buy as many as they want.  But if we're going to make a fair comparison, we need to use the same assumptions.

I'm surprised that graded coins purchased this year would be worth $2000 each, but that's what I take from your table.  How much was a graded 2015 coin selling for in April? Has it really gone up in a month?

Peace,

Silver
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DiabloLoco

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Re: Performance of the Real IRA
« Reply #4 on: May 18, 2015, 03:35:41 pm »


Can you extend your table to show how much one would have paid for graded coins in each year?

If I have time later tonight, I will take a look.

Quote
I'm surprised that graded coins purchased this year would be worth $2000 each, but that's what I take from your table.  How much was a graded 2015 coin selling for in April? Has it really gone up in a month?


Well.....Not really. That is the "book" value, not the "market" value. A quick glance at the sold listings on ebay for a 2015 Eagle graded ms70 from PCGS revealed that the "market" value is actually around $1600 (coin sold April 28th). I could get one right now for around $1400 though. Even though the "book" value I listed was $271000, the "market" value is probably closer to $200000. Still a lot more than $104000! :threvil:
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DiabloLoco

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Re: Performance of the Real IRA
« Reply #5 on: May 20, 2015, 08:12:07 pm »


Can you extend your table to show how much one would have paid for graded coins in each year?

I really don't have the data for what was paid for each coin vs. what a PCGS graded coin was going for at each given time, so I really can't add to the table. I can only say that to the best of my knowledge, a PCGS 1 ounce gold eagle ($50 face value) graded MS70 purchased in the year of issue, generally sells for 10%-15% over what an ungraded (raw) coin sells for. BUT....As displayed on the table in the years 2001 and 2002, the upside can be TREMENDOUS for certain years/mint marks.
« Last Edit: May 20, 2015, 08:17:32 pm by DiabloLoco »
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Silver

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Re: Performance of the Real IRA
« Reply #6 on: May 25, 2015, 12:10:52 pm »

DL, as it happens I bought some slabbed PCGS gold eagles back when gold was below $800.  MS69, 2004.

According to PSGS.com those coins might fetch $1370.  Meanwhile, Goldmasters will pay $1220 for uncirculated, $1290 for proof.  They don't AKAIK pay a premium for slabbed coins.

Your table lists $16,100 for 7 coins, $2300 each.  That's the claimed price premium for proof coins.  PCGS grading has very little to do with it.  It cuts no ice with people who will actually buy the coin, like Goldmasters.

I think the claim of a $1000 premium is PCGS marketing hype, nothing more. Show me people willing to pay a premium for MS69 slabs. 

I've corresponded with several unfortunates who fell for the collectible coin scam.  It hurt every one of them.

Gold is gold. The idea of the REAL IRA is to encourage saving, not speculation.

Collecting is a fine hobby but a very questionable investment.  I don't believe this a sound strategy.  I don't recommend it except to sophisticated people who have money they can afford to lose.  That's not the target audience for the REAL IRA; it is for people who want to protect their wealth and save.

Peace,

Silver
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DiabloLoco

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Re: Performance of the Real IRA
« Reply #7 on: May 25, 2015, 05:58:55 pm »

Show me people willing to pay a premium for MS69 slabs. 


I can't. They don't exist. That's why I listed prices for MS70, and not MS69. Gold coins are not circulated, so they all have a very high grade (modern gold coins). However, not very many of them are graded as being the utmost highest quality, which is MS70. Those are the coins that are coveted by collectors. If you wish, I can post examples for MS70 gold coins fetching a high premium, but not MS69.

Sidenote- For the US Mint American Eagle series, smaller coins (1/10 oz, 1/4 oz, 1/2 oz) fetch MUCH higher premiums than the 1 oz coins.
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