I\u2019m a coin collector, in a small way. British issues of the late 18th and early 19th centuries, mostly: Pistrucci, the Wyons — apogee of the engraver\u2019s art.<\/p>\n
To determine the market value of such coins, advanced collectors keep up to date on current auctions, stuff like that. But as a starting point, the standard pricing guide is the hefty softcover catalog still generally known as the \u201cKrause,\u201d after original author Chester L. Krause.<\/p>\n
My \u201c19th century\u201d Krause is a Fifth Edition, published in 2004 — which means it was prepared for press five years ago.<\/p>\n
I always advise those using such a catalog to consult the box on the copyright page, where the publishers reveal the bullion values for gold and silver which prevailed when the catalog was compiled. Expressed in dollars, the prices of gold and silver coins must be adjusted to account for shifts in bullion prices over time.<\/p>\n
I happened to be reading that box over the weekend. The numbers were quite revealing. Coin values in my 2004 Krause were based on then-prevailing bullion prices of $400 per ounce for gold; $6.50 per ounce for silver.<\/p>\n
Despite bullion prices having tumbled considerably in recent weeks, gold is currently running $800 an ounce; silver $13 an ounce. That\u2019s what a gambler or stock investor would call \u201ca perfect double.\u201d<\/p>\n
Is that because half the world\u2019s gold and silver mines suddenly shut down, or because demand for gold and silver has suddenly skyrocketed?<\/p>\n
No. Supply and demand haven\u2019t shifted much, if at all. In fact, the value of gold and silver haven\u2019t shifted much in the past five years, either. An ounce of gold or silver will still buy you about as much stuff as it would in 2003 or 2004.<\/p>\n
What\u2019s happened is that the value of the Federal Reserve so-called \u201cdollar\u201d notes in which these metals are denominated has fallen neatly in half.<\/p>\n
It\u2019s called inflation. The government tries to pretend that figuring out the rate of inflation is an arcane and complicated business, involving the measurement of price increases for peanut butter and bananas, for gasoline and heating oil and apartment rents and personal computers, after which the differentials for each of the items in this \u201cmarket basket\u201d has to be assigned a certain \u201cweight,\u201d et complicated cetera.<\/p>\n
This mumbo jumbo is nonsense. Rising prices don\u2019t cause inflation; they\u2019re a time-delayed symptom of inflation. Any economist can tell you that inflation is the rate of increase in the money supply. The Federal Reserve and the Treasury Department and the Bureau of Engraving and Printing know down to the zinc cent how many new dollars rolled off the presses — or were created as new digital blips in their computers — since 2004.<\/p>\n
And, I submit, they\u2019re lying about it — or allowing others to do so for them.<\/p>\n
The Department of Labor reported last week that the current 12-month rate of inflation is 5.6 percent — highest rate recorded since 1991.<\/p>\n
America\u2019s newspapers and TV networks reported that as gospel.<\/p>\n