Liquidity is the ability to easily or quickly convert an asset to cash or some other means of exchange without losing any value. Banks are also, of course, facing some liquidity issues in some aspects. Derivatives, for example, are “assets” that today are considered mostly illiquid. That can have an effect on solvency. If debt obligations cannot be met because they do not have enough liquidity, then the dominoes can fall on each other. But solvency is what the world is concerned about. The Greek and European debt crisis is all about solvency and the chicken will come home to roost in the United States eventually. Look at this interesting information for validation:

Bloomberg
This story from Bloomberg just hit the wires this morning. Bank of America is shifting derivatives in its Merrill investment banking unit to its depository arm, which has access to the Fed discount window and is protected by the FDIC.
This means that the investment bank’s European derivatives exposure is now backstopped by U.S. taxpayers. Bank of America didn’t get regulatory approval to do this, they just did it at the request of frightened counterparties. Now the Fed and the FDIC are fighting as to whether this was sound. The Fed wants to “give relief” to the bank holding company, which is under heavy pressure.This is a direct transfer of risk to the taxpayer done by the bank without approval by regulators and without public input. You will also read below that JP Morgan is apparently doing the same thing with $79 trillion of notional derivatives guaranteed by the FDIC and Federal Reserve.
What this means for you is that when Europe finally implodes and banks fail, U.S. taxpayers will hold the bag for trillions in CDS insurance contracts sold by Bank of America and JP Morgan. Even worse, the total exposure is unknown because Wall Street successfully lobbied during Dodd-Frank passage so that no central exchange would exist keeping track of net derivative exposure.
This is a recipe for Armageddon. Bernanke is absolutely insane. No wonder Geithner has been hopping all over Europe begging and cajoling leaders to put together a massive bailout of troubled banks. His worst nightmare is Eurozone bank defaults leading to the collapse of the large U.S. banks who have been happily selling default insurance on European banks since the crisis began.
By the way, if you took 79 trillion dollars and divided it up between 307 million people (the population of the U.S.) you could give every man, woman and child in America $257,329.00 (over a quarter of a million dollars each).

What do we mean by that statement? We mean this is the last great opportunity to step into the physical precious metals markets at a discount. We will soon be laughing at these prices and the physical market is supporting that by beginning to separate itself from the spot price. We have seen premiums on physical silver increase by over 3% as buying has continued, accompanied by very little selling. Those that understand the fundamentals that drive the metals and the reasons for owning the same are using this opportunity to add to positions. Do the same. $30.00 silver and $1600.00 gold are absolutely prices we should all be taking advantage of before Phase 3 of this bull market begins.

Announcer: If you are an investor worried about government spending and inflation, you need to consider hedging with precious metals. The expert in the business is Larry Allen with International Collectors Associates.
Larry Allen: I was here when gold hit previous high in ’80 of $875. Gold currently is trading in the $1240 range so it kind of leads some people to say, “Well, we’ve never been this high. Those sheer numbers, that’s correct.
But if you really dissect it and you start thinking about, “What did that car cost me in 1980, or that house cost me?” It was a fourth or a third of what they cost today. So if you factor for inflation, it would not be unusual to see gold $2,000 – $3,000 even currently. Our projection is that we will see those type of numbers over the next couple of years.
Announcer: Call Larry Allen today at (866) 211-8971 and ask for their complimentary information package or log on to mygoldportfolio.com. That’s International Collectors Associates (866) 211-8971.
Richard: Larry heads up the Precious Metals Group in International Collectors Association. Larry, are you there?
Larry: I am. Hey Richard, how are you?
Richard: I’m excellent. What a great day this is here.
Larry: Well, good.
Richard: How’s the weather there?
Larry: We’re in Durango, Colorado – a little corner of Colorado – and it’s beautiful. In fact, many of your listeners probably end up skiing out here or coming our way.
Richard: So International Collectors Associates is a precious metals company that’s been in business over 30 years, right Larry?
Larry: That is correct. A gentleman named Don McAlvany started this firm in 1972. It’s still owned and still run by the same family. We are a precious metals firm. We handle the gold, silver, platinum, palladium; any of the precious metals. We do also collectible coins, gold and silver IRAs. We also have a program for offshore storage with Switzerland.
So, been in the industry a long time. I’ve been with Don personally since 1980, so pretty well-versed in the precious metals area.
Richard: That’s great. So you guys have got some real longevity there. You’re not one of those dealers that just popped up in the last five years because gold started skyrocketing.
Larry: Yeah. Richard, it seems like everybody and his brother is a gold dealer these days. But we’re one of the old stalwarts. We’ve seen it through a lot of market cycles. So yeah, we’re not going anywhere; planning on being here a long time as well.
Richard: That’s great. Can you tell us some more about the benefits of dealing with International Collectors Associates?
Larry: One of the things – or a number of things – that we’ve always done that, hopefully, separates us from just a coin dealer, if you will, is we have produced an economic, geopolitic type of newsletter for years, almost going back to the inception of the company.
Richard: The McAlvany Intelligence Advisor?
Larry: Exactly. And Don is renowned. He speaks all over, not only nationally, but abroad. And then we also do produce every year a DVD on those topics as well. That’s something that we do provide. We have a care package we can talk about maybe towards the end of it that any of your listeners can call for that have samples of these things.
But beyond that, we also have a podcast weekly with interviews with recognized financial figures as well as our feeling and our take on the market.
So we’re competitive on our pricing and we are an A+ rated firm with Better Business. We believe that we do a very excellent job on the service in providing whatever type of precious metals interest somebody has.
We feel that we bring a lot more to the table than just that because we do monitor it. We have a few strategies. There are opportunities between the different metals in what they call strategy trading or compounding ounces. So we do a lot of stuff rather than just sell metals, gold coins and that’s the end of it.
Richard: So you’ve got a real expert there – Don McAlvany.
Larry: Indeed. He’s been in this industry for prior – even to ’72 to the inception of the firm. He was the National Sales Manager for years prior to that with International Investors, the world’s largest gold mining share fund. So yeah, his background goes pretty deep in this area.
Richard: That is awesome. What a tremendous resource you represent.
Larry: Well, we would hope to think so and we’d sure enjoy coordinating and marrying up with your interests. Hopefully, we can provide some good things for your listeners as well.
Richard: Well, we are all concerned about inflation, the way the government is spending money.
Larry: In the 30 years, I’ve been doing this, gold and silver have always been kind of an inflation hedge. These days with where we’re going with this administration and fiscal policies, and then you look at the trouble that the euro is in with all these foreign currencies, today I’m seeing more and more investors and businesses park assets in gold and silver for protection of the decline of the value of their currency. So it’s kind of becoming a currency hedge as well.
Richard: That’s tremendous. So not only does it have intrinsic value, but it can help you hedge inflation.
Larry: Indeed. A lot of people will look at it from the speculative standpoint that we have some great appreciation over the next couple of years or beyond, and I believe we do. But also, I think it’s just one of those to help you sleep at night as you watch the erosion of your spending power of your dollar for sure.
Richard: And the euro. The euro was highly celebrated just a year ago, and now people are saying it might drop below the value of a dollar.
Larry: Exactly. You have very fiscally responsible Germany [5:31 inaudible] Italy, Spain, and Greece which did hit the wall, if you will. So I know that there’s got to be consternation within the group of countries the represent the EU. Kind of like one keeps a very tight checkbook and the other one likes to write them, if you will.
Richard: Yeah. One’s a little bit more socialistic than the other I think.
Larry: Yeah. That probably comes into the equation as well.
Richard: You bet. And now, you do also work with self-directed IRAs. Is that correct?
Larry: That is correct. You can put physical gold in your IRA in a qualified capacity, and it’s actually very easy to do.
Richard: Well Larry, tell us more about the Swiss storage programs because I think some of our listeners are international and they would be interested in that.
Larry: Sure. We, for years, had done some placements overseas in Switzerland. Probably three to four years ago we constructed an actual program because we wanted it easy for an investor. You can invest as little as $10,000. It is held in a secured depository in Zurich, Switzerland.
Richard: You mean not in an American bank, Larry? [laughs]
Larry: No. Well, true. No, we chose, maybe wisely, not to go that direction.
Richard: Well Larry, what else would you like to say to wrap it up?
Larry: Well, I would just encourage folks, if they’d like to get our care package of information, we’d be happy to provide it.
Richard: You bet. What number should they call, or how do they get in touch with you?
Larry: Our toll-free number here is (866) 211-8971. My name is Larry Allen. Website is www.mygoldportfolio.com. We do have a complimentary packet of information that we’d be happy to send to you.
Richard: And again, that number is 866…
Larry: 211-8971.
Richard: 211-8971.
Larry: Correct.
Richard: That is great. This is a direction that a lot of people need to take not, of course, with the majority of their assets, but we’re recommending that at least 10% be put into hedging. We don’t mean hedge funds [laughs] because we’ve seen what happened to those in the last five years.
Larry: Indeed.
Richard: Something that is a hard asset, that has intrinsic value like precious metals. So Larry, you’ve been of great assistance today. We really appreciate you coming on the show. Again, Larry Allen with International Collectors Associates, and you can reach him at (866) 211-8971

Gold had another strong quarter, finishing up 4.4%. It is acting like a currency which is not surprising considering the lack of trust and stability in any of the world currencies. We could expect there to be a US dollar rally with so many issues with the Euro and global inflation. Our weak dollar policy, however, is resulting in inflation and lack of buyers of US Treasuries. Gold should remain somewhat stable, albeit quiet, for the next month or two as we prepare for some clear direction on the US debt issue. It is, however, the currency of choice right now at any price.

Silver did not mirror gold’s performance this quarter but that is only because of a rule change. Speculators were the target of the ComEx margin requirements change which created profit taking, selling and a 30% drop in the spot price, resulting in a down quarter of -8%. The gold:silver ratio also climbed as a result – from 32:1 to 46:1. We expect that ratio to tighten back down again and see silver stabilize and begin to climb as the summer progresses. Events like that test one’s resolve with owning an asset. Jim Sinclair summarized his feelings on the issue of gold quite succinctly:

1. The type of inflation being discounted by gold requires business activity to be putrid.
2. This type of inflation is hyperinflation, which is a currency event, not an economic demand phenomenon.
3. Rather than a singular currency loss of confidence igniting hyperinflation, it will be all Western currencies moving against each other with intolerable business volatility.
4. All Western governments will practice QE to infinity, as we return to credit market problems.
5. Gold is NOT a commodity.
6. Gold is a currency
7. Gold is the currency of choice.
8. Gold is going to becoming the reserve asset of choice by central banks.
9. Ownership of gold means you are your own central bank.

In summary, we think this is an excellent time to take an increased position in the physical metals. One should not be selling. First, however, we need to have the necessary conversation about the overall portfolio approach.  Specifically, our Perspective Triangle needs to be explained and walked through.  Call us at your convenience to set up a small block of time in which to do exactly that.  In the meantime, keep listening to The Weekly Commentary and educate yourself by listening to both the mainstream and alternative media outlets.

Regards,

Tory and Larry

At this time in the market for semi-numismatic coins, we feel it is imperative that you be more knowledgeable as to what a collectable coin is. Because we guarantee to buy back these coins at the same grade, we, as a dealer, consider several factors that our coins must have in order to guarantee our own liquidity. Liquidity is to collectible coins what location is to real estate.

Therefore, we use these criteria, to help us determine what types of coins will be desirable and easily liquidated. In considering any type of collectible coin, you should do the same.

I. Was the coin minted prior to 1934? – After 1934, the U.S. and the rest of the world, discontinued to mint coins as legal tender. Any coins minted after 1934, were minted for bullion reserve purposes, and are not considered legal tender coins.

II. Is the coin uncirculated, and how can you tell? Consider this question… Would you expect an uncirculated, 100 year old coin, to be dull with tiny scratches or bright and shiny? If you answered dull, you are right. In it’s original condition, an old coin tends to be dull or hazy, and may have a few tiny scratches. If the coin is bright and shiny, and you see no scratches, typically this indicates that someone has buffed or cleaned the coin. A shiny coin attracts customers looking for the wrong thing. Eye appeal is important, but a true uncirculated coin, should be purchased in it’s original condition – not an altered one.

III. In the future, will a dealer pay you a premium for the coin? Almost all old coins carry collectible premiums, however, there are several coins currently being promoted as collectibles. It doesn’t always mean a dealer at some future time will be willing to pay a collectible premium for the coin. If you follow these guidelines, they will protect you from buying an illegitimate coin. You should carefully consider all of these points. You should not disregard a single one when choosing a coin.

IV. Has the coin ever been re-struck ? In some instances, coins were reproduced by a country reusing an old design cast to make the coin. For instance, the Swiss and French 20 francs were reproduced in the mid 1940’s using old die casts, bearing an older date. Anyone wondering what happened to the gold stolen by the Nazi’s may want to consider this. Austrian Ducats, bearing the date 1915, are currently being reproduced, are offered as old coins, and are selling for a premium. This creates a problem for the coin as a collectible, because at this point, no one knows the true population of the coins made with that date, nor how to tell the old from the new. To better understand this problem, imagine Chevrolet reproducing 10 million more exact replicas of the 57 Chevy. Then try to imagine convincing someone they were really built in 1957, once the news got out.

V. Is the coin protected from confiscation? A precedence was set by our country when Franklin D. Roosevelt instituted Executive Orders recalling gold bullion in exchange for paper currency. This effectively pulled real money out of the hands of the public, and put a currency that could be easily reproduced into circulation. The only gold people were allowed to own was in jewelry and collectible coins. In our country, if martial law is declared, and executive orders are enforced, they will also institute exchange controls. At that moment, our borders will be closed to prevent any wealth from leaving the country, any foreign paper currency you own will be called in and made illegal, and any bullion you have in your possession will also be called in and made illegal.

Collectible coins are far less likely to be confiscated, because of the government’s inability to determine collectible value. Even if this were to change, and governments go after collectibles at some point, you will have bought more time, with collectibles, to be legal for as long as possible. When Stalin and Hitler confiscated gold, they did not confiscate collectible coins. But eventually, they declared certain segments of their populations to be spiritually or politically incorrect, and seized everything from those people. A sobering thought for Christians and politically incorrect traditionalists in America .

VI. Is the coin non-dealer reportable and privateHaving dealt with this issue earlier, we would like to reiterate two concerns. First, for dealers to take advantage of any exceptions, real or imagined, to 1099 Dealer Reporting requirements, they risk an IRS audit of their client’s transactions to verify compliance. We are not willing to use the exceptions for that reason. We would rather “chew our arm off” than to fill out 1099 forms.

However, we will report the liquidation of even a single gold coin to avoid an IRS fishing expedition. A wise man once observed, “Do you know what happens if you let a camel stick his nose under your tent flap? Pretty soon, you have a camel in your tent.” Second, protecting your privacy today insures your legal ownership from confiscation in the future.

VII. Does the coin have a low mintage? It is not necessary for a coin to be “rare” strictly by population, but for a coin to have collector appeal, it must have some scarcity or rarity. Although the majority of old U.S. coins have significant populations, what makes them rare is the condition they survived in. However, if a coin has a low mintage population, this too, can play a significant role in its rarity value.

VIII. Is the coin under-valued or over-valued? In other words, does the coin have genuine upside potential, or is it over-priced at this time. This could be important in determining if a coin is currently over promoted by dealers.

For instance, during the Y2K scare, many dealers promoted cheap double eagles as a barter coin that was protected from confiscation. These circulated coins were only $80 to $100 above their gold value and seemed like a good buy compared with uncirculated double eagles. After Y2K, many discovered these coins were only worth their melt value.

In 1998, ICA began recommending old, uncirculated, European coins with sizes and premiums similar to modern fractional bullion coins. This helped our clients avoid big losses with the barter portion of their portfolio.

IX. Is the coin over-graded? All too often coin dealers are unwilling to take responsibility for the accuracy of the grading of a coin. Therefore, they typically will only guarantee the coin according to the current grading service standards. This actually poses a problem, especially if the standards change in the coin grading services. In the face of strong market demand, coin grading standards can loosen up in order to supply more coins into the market.

So, what happens to the standards when the opposite takes place, and suddenly there is no demand, or even a market sell-of? Here at ICA , we guarantee to buy back your coin at the same grade we sold it to you. This insures that no matter what the current standards are at the time, we know that the coins we sell you now will stand up to any standard being used in the future.

X. Is the dealer reputable and well capitalized? There are over 5000 coin dealers currently in existence in the United States . Of those there are only a hand full of reputable, established dealers in this industry having the knowledge to truly give their clients the best service. ICA has a 28 year history of buying and selling precious metals. ICA is one of the largest dealers in the country. This insures our ability to provide a two-way market, and give you the proper perspective.

All too often most people are not given enough of the right information to make a good decision. ICA believes that the integrity, information, and coins we provide to our clients has been, and will continue to be, at the highest standard by which the rest of the industry will be measured against. Like Grandpa McCoy was fond of saying “ It ain’t bragging when you done done it”

We, Tory Aggeler and Larry Allen, are precious metals brokers / investment advisors for an industry leading firm. McAlvany’s ICA has a Better Business Bureau rating of A+ and has operated since 1972.  > Read More.