Wednesday, November 20, 2024

Selling the Silver

I've just finished a little experiment. I gave my friend a 1oz silver coin to sell on eBay. Just to see what ballpark price you could get without making too much effort. It was a 2024 silver coin from the Royal Mint, with a Morgan le Fay design. Quite nice aesthetically. (Fortunately I have a spare, so I'm not completely severed from the shiny beauty.)



The current spot price of silver is around £24 an ounce.
However, to buy the same coin retail from the Royal Mint it would cost about £40 (this is in the UK, where 20% VAT is applied - without VAT we're looking at around £34).

Anyway, my friend sold the coin for £31 (to a UK buyer) - pretty much slap bang in the middle, and what I would've expected. Obviously, if someone is in the market to buy a coin they're going to be happy to save £10 if they can do so. Providing they feel they can trust the seller.

I think the postage & packaging for the Royal Mint order costs around £4, for this delivery it was around £3. So that was a much of a muchness.

To me, £31 feels like a fair price. The buyer saves a bit of money, the seller gets a sale above the spot price. Naturally, this brings me back to how I disposed of my gold - where I received well under spot price. It stands to reason that it would be similar selling gold on eBay. That there are individual buyers out there looking to get a discount on the retail price, so are happy to pay something in between the spot and the retail. Though, of course, with more expensive purchases trust becomes more of an issue. It's one thing accepting a little bit of risk when buying a £30 silver coin, it's a bit different when it comes to buying a £2000 gold one.

Also, as a final aside, and just to give the full picture: over the six days or so the item was listed on eBay there were two offers. This one for £31 and another person offering £26. So there wasn't a huge flurry of interest. Perhaps we got lucky, perhaps we were unlucky and could've received more offers. As ever, one swallow does not a summer make. Added to this, the way you present things on sites like eBay obviously plays a part too. All in all, getting a sale above spot price was pretty quick and easy though.

Sunday, November 10, 2024

Why Gold (and Silver) Standards Don't Work: Part III - Human Meddling

A few posts back I noted that, originally, "standards" were just official exchange rates. Here I want to quickly elaborate upon why the real world market gets skewed when humans try to fix these rates.


Let's create a simple example. It's the ancient world and copper is one hundred times more abundant than silver. Making the real world market value of an ounce of copper equal to 1/100th of an ounce of silver.

(I'm just using simple numbers here to make things easier. Also, of course, prices aren't just a reflection of relative scarcity. Usefulness and desirability play a part. If a new invention comes along that requires lots of copper, the market value of copper might go up in relation to silver regardless of abundance.)

Anyway, in this simple example, one ounce of silver is worth about one hundred ounces of copper. Naturally, however, this real world value fluctuates.

So, to simplify the complex world (just as I'm doing here with this simple example), a state - let's say an ancient empire - might set an official rate for the purpose of tax collection or issuing coinage.

They then decree: "One ounce of silver is equal to one hundred ounces of copper."

Now, as long as the real world values don't stray too much from this official statement, things work okay. But once the real world market moves too far things start to break down.

Let's say more copper mines are discovered and more copper floods the market. Lowering the value of copper. Perhaps shifting the real world value from an ounce of silver being equal to approximately one hundred ounces of copper to one ounce of silver equalling approximately one hundred and twenty ounces.

This would then mean that the official decree - the official exchange rate - would need changing to reflect this changing reality. However, doing this is often difficult and unappealing, as it might mean having to change the entire system of coinage.

For example, let's say when the ratio was 1/100, copper coins were minted with this value stated on the actual face of the coins. A one ounce copper coin being labelled as being worth 1/100th an ounce of silver. (Similar to how one hundred pennies are stated to equal a pound, or one hundred cents equal to a dollar).

Originally, when the real world ratio of copper to silver was approximately 1/100, this reflected reality. However, as the value of copper goes down this stops being the case. Now the real world value is 1/120, but the coins are still pegged or labelled as 1/100.

When this happens the copper coins cease to be traded as pieces of actual copper and effectively just become tokens (or IOUs) that happen to be made out of copper. Each coin promising the holder 1/100th an ounce of silver, regardless of the physical value.

So, the state - our ancient empire - is officially stating that one hundred one ounce copper coins can be exchanged for one ounce of silver. Even though, in reality - on the open market - one ounce of silver is actually worth one hundred and twenty ounces of copper. So the state is trying to force a false reality onto the world.

And, as the state has the power to issue currency and force people to pay tax in that currency, people are forced to accept it.

(For the record, this isn't necessarily out of malice, or even greed. It's largely just a consequence of humans trying to impose order on a complicated world. Take the current UK government capping bus fares at £2, for example. Then having to increase this cap to £3. Sooner or later reality catches up, and someone has to pay the real world cost.) 

It's once rates become fixed in this way (i.e. become decoupled from actual reality) that the "standard" becomes a standard as we would think of one today. Where everything is pegged to that one commodity (be it gold or silver), and all coins (or paper notes) made of anything else, just become tokens promising payment in that one commodity.

Meaning you end up with situations where the actual value of the metals in the coins bears little resemblance to the face value. Where everything gets skewed by the "standard." Including the commodity used as the standard itself.

So, money started to break down long before the modern era of fiat currencies and digital/paper dollars. It's been a slow eclipse over centuries. Perhaps millennia.

Tuesday, November 5, 2024

Update: Not So Golden

In my last post I said I'd sold my gold for circa £300 profit. That was somewhat premature, and my hoped for approximate £300 dwindled to an approximate £100. Yet another lesson in trying to play with the bigger boys.

I ditched my gold via Cash4Gold, which straight up looks like a mistake as I type it. I naively assumed they'd offer me something in the ballpark of the spot price; thinking they make their profit selling back at retail. I suspected I would get more selling on eBay (though I've never tried it - perhaps that would be a nice little experiment), but wanted to forgo the effort, so just went with the top of the search engine easiest option. I'm too lazy. A grand don't come for free as they say.

Anyway, the guy originally offered me around £650 - this is for an amount of gold worth closer to £1100 at the current spot price. I refused it. He then offered £824, with the old, "C'mon, what were you expecting, I have to make a profit!" Reluctantly, I accepted. You have to wonder what these guys are giving the little old ladies and single mothers selling their unwanted jewellery.

Again, if I wasn't so lazy, I could've just went to a local pawn broker to see what the standard offer would be. So I only have myself to blame for my country-bumpkin, farm-boy-in-the-city style naivety lol. The journey from buying to selling has been a good education though. When you start buying you quickly realise you're paying a big retail premium over the spot price. That's excluding postage (and VAT if you're buying silver in the UK). Then when you sell you realise you're selling back at a big discount.

I'm sure you can actually sell for a fair price if you put more effort in than me, but again there are practical costs and issues. Sending expensive items through the post. Having the certainty that the person receiving the item has actually received it - it could get stolen, or they could receive it and say they haven't, then refuse to pay. Meaning you'd have to pay to post it in a way that requires a signature, and pay to insure it. Added to this you have the time and effort it takes to list something for sale and deal with the enquiries. In the end I've made about £100 profit - largely, if not wholly, through luck. I could've made that by doing an extra shift at work.

So, all in all, I'd have to say my experiment in buying precious metals hasn't really worked out. Even with such a mega increase in the gold price.

Would I buy gold again?

I think if I ever buy gold with a view to making profit (or just outstripping inflation) I'll probably buy paper gold, dare I say it.* That's speaking as a pleb who's trying to make/save enough money to pay for a deposit on a house at some point, not as a wealthy person trying to protect that wealth.

If I do buy more physical metal I think it'll be silver, and I wouldn't be buying it with a view to making profit or even breaking even. I'll more be buying it as a nice little gift to myself - a gift that has the added luxury of retaining value and acting as a safety net if you ever do need money.

/////////////////

*This also adds an interesting addendum to the last post about gold standards. The difference between the paper (or digital) representation of gold and the gold itself. The physical gold needs to be stored/transported/secured/audited/insured. Which add extra real world costs. Meaning the two things can't ever truly be the same. Though one may stand in lieu of the other.


(Incidentally, I'm using Dezgo to generate these images. The one above was generated from a prompt asking for a 'richly coloured Dante Gabriel Rossetti painting showing lots of gold coins.' I quite like it, odd though it is.

Monday, November 4, 2024

I'm Off The Gold Standard

I've just sold my gold.

Back in 2021 I bought some gold to ward off inflation. Like a crucifix to ward off vampires. Though I felt somewhat vampiric myself being so materialistic and self-interested. I didn't buy an amazing amount. About half an ounce in total, and it cost me about £750 altogether, premium and postage included. I'm now selling it for the spot price, so I should make about £300 profit approx.

I don't know if it's wise to sell now, but it feels like a good time to take the money and run. Reinvest it elsewhere.

The Gold Standard

It's got me thinking about gold standards again though. I've been watching all the various goldbugs on YouTube. The opinions are always interesting - they certainly make good criticisms of the fiat system. However, I think they don't quite get it when it comes to gold standards.

I've stated before that gold standards don't work.


Warm Silver Porridge: Not too hot, not too cold - just right!

To get a better sense of this, it's useful to look at why historically silver was used as a "standard."

Silver is a natural intermediary between copper and gold. So it's natural to use it as a measure.

Let's imagine you live in earlier times - in the age of metals - and you have five ounces of silver saved in a bank, and an IOU from the bank saying they owe you that five ounces of silver. In theory, you could redeem that money in copper or gold instead. However, it wouldn't be as practical.

Say, at the time, one ounce of silver was worth fifty ounces of copper, and one ounce of gold was worth fifteen ounces of silver.

To redeem the equivalent of that five ounces of silver in copper would mean having to carry a big, heavy bag of two hundred and fifty ounces of copper out of the bank. Likewise, redeeming it in gold would mean having to take out a tiny 1/3 fraction of a one ounce gold coin. Which would be harder to break down if you wanted to split it further. So, five silver coins is much easier. Like Goldilocks (or rather, Silverlocks) - not too big, not too small.


It's like paying a bus fare. Using a £50 note to pay a £3 bus fare isn't practical. The bus driver would be quite annoyed. Similarly, paying it with three hundred 1p coins would be annoying and impractical too. So things in the middle - £1 coins, 50p pieces, £5 notes - are more appropriate to the task.

If banks or states used copper as a standard it wouldn't be very practical for wealthy people saving/borrowing/trading/paying tax in large amounts. On the flip side, a gold standard wouldn't be very practical for poorer and more regular people with their much smaller amounts. Some that may never have even seen a gold coin in real life before. So silver is the happy medium.

It's Only Natural

Historically there were silver "standards" not because people chose to have silver standards, but because that was just the most natural way to do things.

On top of this, it also wasn't a "standard" as we would think of a "gold standard" now. They weren't issuing paper currency backed specifically by silver (though banks might issue written IOUs). The "standard" was just the official measure. Gold, silver and copper coins were all equally valid and used for trade. The standard just stated what the official conversion rates were.

So, to give a simple example, let's say all citizens have to pay one silver coin in tax. However, there are poorer people that don't have access to silver, so have to pay in copper. The state then says how many copper coins equals one silver coin so people know what to pay. Of course, in the real world, the value of copper in relation to silver is changing all the time. So the official rate is there just to make tax collection simpler. It could be they set the rate as one ounce of silver being equivalent to forty ounces of copper. That being a close approximation to the real market value at the time. However, this wouldn't be a good approximation forever, as values fluctuate. Therefore, sometime later, the official rate might be changed to better reflect the changing real world market values. Maybe changing to 41 to 1 instead, and so on.

So, again, these official rates were approximations of a real world market where people used metal coins - of all different metals - that had actual physical value relating to their scarcity. That floated around relative to each other, and kept each other in check. If gold became too scarce people would use silver, and vice versa. Like in the simple example above, where you could pay your taxes in copper if you didn't have silver.

As I've mentioned elsewhere, in the real world market place anything can be a currency. It's only the demand that tax be paid in a specific currency that moves things away from this more natural state of affairs. You could make that argument that the poorer people with copper coins in that simple example earlier could have just converted them to silver to pay their tax (i.e. buy one silver coin with their forty copper coins). However, if people had to get the actual silver, that demand would push the value of silver up further. So the real world silver price would get skewed by the demand this special status creates.

Likewise, if you have a gold standard where everything must be paid in gold, you end up with an unnatural economy.

Saturday, October 26, 2024

Magica de Spell vs Scrooge McDuck

Maybe a good moment to do an update.

What have I been doing?

I'm currently just about to enter the third week of three weeks' holiday. As I've been off work, I've been working on my fictional novel(s) - plural, it's two books. Yes, this is the novel that I began long, long ago, sometime in between the Brexit vote and the Corona pandemic. It's the never-ending story of the story. I've actually done a lot in the last two weeks, so I'm ahead of schedule. It's coming along nicely, though when the end date will be is anyone's guess.

I've also been saving. A few years back I started posting on here about my foray into buying stocks on eToro. Stupidly I was buying Russian stocks back then. Those, minus the Polymetal ones, are still sitting in my account - like cryogenically frozen heads that are destined never to be reanimated. The Russian stocks aside though, I've done alright. I've saved and saved and saved. Opened ISAs. Been quite sensible. So that's became a little hobby of mine. I'm worried I'm getting a little too invested though, no pun intended. A few months ago I ordered a Tesco Club Card and a Sainsbury's Nectar Card in the hope of saving more money. So I'm beginning to feel like Scrooge McDuck.

I do have to continually remind myself though that I'm in my early 40s and still living at home with my parents. So I really do need to get my act together. I spent the entirety of my 20s and 30s idealistically eschewing money in all its forms, so I need to get my hands dirty and have one foot in the dark side now. The pragmatism that comes with age. Very belatedly in my case. A few posts back I was being all lovesick. I actually thought I'd grown out of getting smitten. So getting caught by one of the poisoned arrows from Cupid's quiver upset my applecart a little. It's amazing how much more 'living at home with your parents' stings the pride when there's a woman on the scene. Suddenly competitive urges kick back into gear. The pattern of my life has tended to be that women act as catalysts. I don't get my own way, but I get the lightning jolt of inspiration. So I suspect the pattern will continue here. It's a positive experience, whatever the outcome. Perhaps it's my cryogenically frozen body that's been reanimated.

Politics UK

A little less of me..

I've stepped back from politics a fair bit. I still follow things, but in a much more passive way. I'm detached ..or you could say distracted. The big thing at the moment is the coming budget. I've never known a budget get talked about so much. The amount of foreshadowing has been incredible. It's also fitting that I mentioned Scrooge McDuck earlier, as Rachel Reeves always reminds me of Magica de Spell. It's not that I think she's especially villainous - in truth, I think she's a 'safe pair of hands' vehicle for whoever's actually running the Labour Party. It's more that I think she genuinely looks like her - I think it's the raven hair. That might just be me though, and my strange cartoon-world brain.

(Rachel Reeves)

Obviously, I'm on the other side of the fence to Labour. I preferred the Liz Truss economics. In hindsight it was quite fitting that the mainstream compared her to a lettuce, as her policies felt light, like a salad. Whereas now we have the heavy syrup of the state, glooping over everything. With my new found love of money I'll be paying attention to the details of the budget. Lamenting the intrusions. However, I can't help but have a touch of sympathy. I get what Keir Starmer was saying when he was trying to articulate the difference between people who rely on money made through work and people who rely on money made through money. Having spent the last few years playing the stock market - albeit in my tiny way - I know only too well that I'm making profit sat on my arse doing nothing. That I'm just taking advantage of inflation and the upward flow Ponzi scheme we live in. And that if I had millions in the bank, not thousands, it would be very easy to make a living just buying the S&P 500.

The £12 p/h I make doing my normal job is much more hard-earned than the £12 dividend I may get from holding stock in Aviva or the National Grid. So, though I think the lurch towards more anti-business statism will be bad, I'm not especially annoyed by it. I did say after Labour won the election that I was going to show some goodwill towards them. So far, overall, I've been true to this, and I've just been happy to let them have their go at running the country. We'll see where we are in 12 months' time.

Politics USA

Of course, the big thing at the moment in the US is the election.

(..I've just took some Linda McCartney sausage rolls out the oven. This fact, and what I've just written above about Labour, reminds me that I'm still quite left wing after all.)

Today the Trump/Joe Rogan interview dropped. I listened to the first half in the early hours of this morning, before falling back to sleep. I like Trump, and I hope (and expect) that he'll win. What struck me most about the interview however was Trump's age. I was listening rather than watching, and the juxtaposition of Rogan's zesty voice against Trump's more hushed and raspy voice was noticeable. To be fair to Trump he's been campaigning non-stop. It's truly incredible, and actually quite inspiring, to see a 78 year old man have so much energy and clarity. Still, you can't escape the age factor.

I was thinking maybe this would be a good thing. We'll have a mellower Trump. People fear (some people hope) that he'll be more aggressive in office this time round. But he looks more mellow, and I expect that he'll delegate more. It's hard to make predictions, but I feel hopeful. My expectations aren't high, but I'm hoping things will get a little less crazy and a little more competent.

Sunday, September 29, 2024

State Education: A Modern Cargo Cult

I'm back. Setting the world to rights. The GREAT WORK continues..

A few weeks back I was having a conversation with a friend about education. My argument was: sending people to school doesn't make a blind bit of difference in regards how well-educated they are.

He wasn't buying it.

I was stating my case a bit extremely (as I'll no doubt do in the following paragraphs), but essentially I was giving my true opinion. I've made the argument before. That mass literacy is a consequence of the printing press. Not a consequence of the introduction of formal education. I've likened it to mobile phones. Most people in today's society are mobile phone literate, yet no one is having formal lessons in how to use a mobile phone.

People have access to the technology. They want/need to use mobile phones for various reasons. So they learn to the standard required for whatever it is that they want to do. Naturally some people are smarter and more able than others. Likewise, some will be more/less interested in using a mobile phone than others. So there's a natural variation in ability/mobile phone literacy.

I would make the observation that it would be similar with reading and writing. If school was completely abolished tomorrow, people would still learn how to read and write. As they'd just take it upon themselves to do it. As they do with mobile phones. Again, they have access to the technology (books, laptop keyboards, pens, paper, all the written words that surround them from birth, on shop fronts and t-shirts, and so forth). And they would naturally want/need to read, to enjoy all those things, and engage with the world that surrounds them. Again, with some people naturally being more able than others, and some needing more informal help than others. Just as an old person may need a family relative to help them out with their smartphone now and then. I think it's even possible that without formal education getting in the way, society would be even more literate as a whole.

Now this is a hard thing for a person to grasp. My friend definitely wasn't swallowing it. However, it betrays a real lack of faith in human capacity on the part of people who can't grasp it.

Do you really think people wouldn't want to learn how to read a letter or type a text? That they'd happily go through life not knowing how to text a friend, or a member of the opposite sex?

They take it upon themselves to learn how to send one, why wouldn't they take it upon themselves to learn how to read one?

Do you really think people wouldn't want to know how to read the latest news headline, or the names on the shirts of their favourites footballers - or their own name even? And do you really think parents wouldn't want their children to know how to read and write; and that, in the absence of school, they'd simply not bother trying to help them learn?

In fact, even now schools still place responsibility for reading and writing squarely on the parents. "You need to read to little Billy more at home," etc. Parents, in turn, often sit back, thinking, "I send them to school, I do my bit. The teachers know better than me, so I'll leave it to them." A fatal mistake. As the correlation between homelife and success in school is all too apparent. (Or to a parent perhaps you could say.) The kids with pro-active parents doing well; the kids with feckless parents faring badly - and the kids from feckless parents generally remaining feckless themselves, in spite of ten years of schooling.

If you consider what the average person leaves school with you'll see that it's just the basic stuff they would've needed anyway in everyday life. They are able to read and write well enough to read a magazine or send a text. They can do maths well enough to pay for their shopping, or to tell the time. And little more.

For example, people often spend five years learning French. Yet can't actually speak French to any real degree when they leave school. Why is this? It's because they have no need/want to learn it. It's not useful for everyday life, so people don't make the effort to take it on board. Meaning it's all pretty much a pointless going-through-the-motions exercise. I would bet good money that things would be little different were there no formal school at all. That people would still reach adulthood with the same basic levels of maths and English needed in everyday life. As it's everyday life that drives people to learn these things, not school.

Again though, this will be hard to swallow for almost all people. As we're so ingrained with this idea that general literacy is a gift of the education system.

I would say, try this thought experiment:

Imagine you live in a world where everyone has an hour of 'mobile phone lessons' each week, from the moment they enter the school system. Then imagine someone like me coming along and saying, "Y'know, all this is pointless. You could scrap all these lessons and people would still be just as mobile phone literate as they are now."

What would you think?

Would your reaction be, "No, but how would anyone know how to send a text or install an app if we didn't have lessons teaching them!" ?

It Really Is Like Religion

Take praying. Praying is good, and doing it - and encouraging others to do it - is good. However, society/states see this goodness and then try to force everyone to do it. For example, Muslims have to pray five times a day. I would argue that you can't really force people to pray though. Sure, you can force people to turn up at a church or mosque. You can force them to get on their knees and do some of the performative acts associated with praying. But, you can't force their mind (or perhaps soul) to contemplate God. That's something that a person can only do themselves, through choice and desire. It's internal to the person.


It's similar with education. You can force someone into a classroom. You can force them to sit at a desk in front of an open book. But you can't force the mind inside that person to seek that knowledge. Yes, some of the people in the classroom may be choosing to learn whilst they're there, just as some of the people in the church may be choosing to pray. But those people - who are choosing - would be doing it anyway. So they don't need to be forced.

Everyone else is just doing a performative act. It's a counterproductive charade of true learning. A cargo cult false imitation, of what genuine learning (or prayer) actually is. People are so enamoured with the cargo cult charade though that they cannot disassociate actual learning from the appearance of learning. Hence, when someone like me steps up and says, "This is all pointless." The cry comes back, "So you think people should just stop learning?! That it would be better if no one learned anything!"

As if I'm arguing against learning (or praying) itself.

"If we didn't force people, no one would do it!"

Yet none of those people are actually doing it. They're just going through the motions. It's a silly dress-up cargo cult. That educates people in actuality about as much as a straw aeroplane flies.

Saturday, September 28, 2024

Fools' Harbour

You could take a pair of scales; put a woman on one side and the whole world on the other, and they'd perfectly balance out. I think this is how God calibrated the mind of Man.


It really is awesome the power a woman can have on a man. I've said before that true love is the devil, and the devil is the human heart. When a woman captures your gaze, and the fever takes hold, everything else in the world - in its entirety - can't lift the captivation. The spell, charm, trance, attraction. Food loses its taste. Fascinations with the world fade. World affairs seem nothing. World War could break out, and it wouldn't cure the sickness. Woman is a spectacular creature.

I feel my own life has been an ebb and flow of love sickness. I'd like to write these posts completely openly, like some failed Casanova. Pouring out all the awkward moments and delusions. The meaningful looks and glances. Like some font of catharsis and record. But it's all too personal. Naturally it intrudes on other people and their lives too.

It's painful how meekness and goodness can be loathed by a woman's eyes. Their disappointment in your weakness. The soul's battle between pleasing a woman and being a good Christian. The pull of the woman versus the pull of the world.

It's inspirational, for sure. The artist, wallowing in obsession, aching to match or echo the beauty that plagues him. The push - the hard kick to the stomach - to be strong and good. To become a Man. To become a King. Embodying both greatness and goodness. TO BECOME WORTHY.

The princess, anointing you, as you make your lonely way to slay the dragon. The desert girl, whose gentle eyes, like water, sustain you on your long journey. The moody blonde, demanding victory with her swan-like beauty.