Intro to Stocks Lesson 9
Alternative Investments

The notorious showman P.T. Barnum is reported as glorying in saying "There's a sucker born every minute".  An incredible range of self styled "investments" rely on the credulity and gullibility of such suckers, not only newborns but even elderly who "want to believe" what the predators playing their "gimmee Gimmee GIMMEE" games are claiming.  Let's begin the discussion of "alternatives" by making sure we understand the underlying realities.
      "Cash" is the most useful form of value because it can be exchanged for anything else that you might need or want.  Criminal thieves have made it increasingly difficult for any American to have much *cash* other than in the form of currency, and even that is subject to various kinds of theft if you were to carry it around with you.  Bank and other financial "accounts" are subject to at whim theft by anyone who knows or finds out the "routing numbers" via the criminal schemes of Electronic Funds Transfer, Automated Clearing House, Point of Sale Terminals, and the "Check21" forgery facilitating system, none of which have any validation from or by the owner of the funds stolen.  It is the danger of that *disclosure* problem which requires me to pay with currency everyone who has an office available nearby to receive payments that I owe to them and to have issued *cashiers checks* by a bank where I have some balances to pay anything that has to go through the mail.  I could never allow direct access to my bank account by ANYONE since the record of that access could (and likely would and has been against an incredible number of other people) be used to vacate my account.  On one occasion, the mere knowledge of *where* I had some funds enabled a felony thief in the bunko industry to create an obviously counterfeit and blatantly forged "check" with their MICR encoding equipment against a small account whose details were published on the now universal online "computer" account records to steal a feloniously large amount from a larger account that I had with the same feloniously facilitative financial intermediary.
      Use of a "credit card" at least provides some protection since you have the opportunity to review everything that has been charged against your account before paying it and to dispute any false or fraudulent charges that have been made.  The popular (with frauds and thieves) "debit cards" are very very dangerous in that they don't allow any *review* process but instantly take the money from the underlying financial account and they amount to transferring *your* ownership of the funds over to a piece of plastic which can be itself stolen and/or *copied* by thieves to vacate the financial account at whim.  Entering any credit card or account number into any "computer" system is extremely dangerous in that *you* have no control over what use the "computer", under control of the likely criminal pogrommers who created its "software", are going to do with those numbers.  Personal checks have been made dangerous because they disclose the *routing numbers* that the least reliable criminally oriented employee of the person or company to which you might issue them via the theft mechanisms created by the Frauderal Reserve Bored detailed earlier (EFT, ACH, POS, or Check21) can use to vacate the account (take all of the money).
      ABOUT COINAGE.  Felony tax evading "religion" gangs are fond of reciting the alleged words of their tortured maimed and murdered sample male Jesus Nazarenas who upon seeing a coin of the ruling Roman Empire is reported as saying "render unto Caesar that which is Caesar's and unto G-d that which is G-d's".  It is a fundamental contradiction for those belligerent blasphemers who regularly claim to *BE* G-d with their subversions of such as Article I of the Amendments to the Constitution of the United States of America (pretending it "exempts" them from all laws while its reality is to prohibit ANY law favoring them) to recite such nonsense.  Blasphemy is any statement which violates Article I of Mosaic Law (commonly called the "Ten Commandments") by "taking the name in vain".  Hence such statements as "G-d bless you" or "G-d bless America" exhibit the *vanity* of supposing the speaker has the authority to *direct* G-d to do anything whatever. The fact is that the image of Caesar on those coins was NOT a declaration that Caesar (the king) owned the coins but that the image represented a declaration of authenticity of the coin itself.  The coins were owned by the possessor unless lost or stolen by such as the felony tax evading "religion" gangs or the "taxing" goofermint authorities.
      Coins were typically made of metals such as gold or silver or bronze with the "denominations" (amount of value represented) aligned with the value of the metal used to "mint" the coins.  There have been other "mediums of exchange" (ways to retain value for purchase of other things without "bartering" for them).  In the South Sea Islands, cowrie shells were often used and in other societies a variety of other things including wampum (trinkets), sheep and cattle were used as mediums of exchange.  Until 1929-1933 the United States mint issued gold coins in denominations of $20, $10, $5, and $2.50 along with some earlier years when $4 and $3 denominations were issued.  Until 1964, the minor coins of the United States ($1, 50c, 25c, and 10c) were minted in high content silver (90% silver alloy, the alloy metal being provided to improve hardness in use as coinage) with some continuation through 1970 of a 40% silver alloy for the larger denominations.  It was the beginnings of the mah durn fraud and theft society that all substantive value was removed from the coinage and replaced with the cheap and easy to print PAPER MONEY and ELECTRONIC "money" and still later "computer money" that characterize current "mediums of exchange".
      Gold's qualities make it one of the most coveted metals in the world. It can be beautifully shaped and sculpted as for example in jewelry.  Gold fillings in dentistry date from 1530 and it has some uses in medicine as for arthritis.  Electronics use ultra small quantities because it conducts electricity and does not tarnish nor corrode.  Ultra thin quantities of gold leaf are used to decorate important buildings of the wealthy, such as for the thieving "religion" gangs.  Space vehicles are fitted with gold-coated polyester film to reflect infrared radiation and stabilize core temperatures.  The visors on astronaut's helmets are coated with a thin layer of gold to filter out the sun's harmful rays.
      Silver is actually more electrically conductive than gold but also substantially more plentiful.  Its malleability, reflectivity, and luster make silver a frequent choice for jewelry although, unlike gold, it does tarnish (oxidize in air).  It is used for silver tableware where appearance is important and as the backing for mirrors since it is the best reflector of visible light known.  It is also used in dental alloys, solder and brazing alloys, electrical contacts and batteries. It is generally not reactive to chemical attack although it does dissolve in nitric acid to make silver nitrate.
      Current base pricing for gold and silver can be seen at any time at
the Barchart web site where the top "futures contract" for each metal shows the minimum amount that one ounce of each is "worth" beyond being pretty in an original coinage form.  It is that base pricing from which all dealers in precocious metals compute the prices at which they are willing to buy or sell (although always in a fraud and theft society there are those who try to buy for considerably less).  To give you some idea of the premiums which dealers charge for gold or silver coins, the most reasonable that I have found is the APMEX site.  As you can quickly see there, the "per coin" premium for silver is radically larger as a percentage of total price than for gold although their *buying* prices are very close to the "spot" (base pricing) prices.
      The frauds and thieves promoting paper "money" and even electronic "money" love to refer to precocious metals as "barbarous relics" of "history" prior to their fraud and theft systems.  The phrase was coined in 1924 by the notorious criminal gang manipulator of market pricing John Maynard Keynes whose criminal purpose "economic theories" have been used in recent years for such purposes as the criminal theft of the entirety of the rightful incomes of elderly interest income dependent retired persons under the Islamic Terrorist Sh'ria practices (forbids the paying of "usury" a/k/a interest to anyone) implemented by the Loonie Tied Studs of Merka Frauderal Reserve Bored on behalf of their member bunkos who continue to gleefully collect it.
      Notice how I use the word "precocious" in referring to *precious* metals gold and silver.  My reason is that the *discussions* of "store of value" (despite ridiculous premiums and wildly fluctuating prices) tend to be exactly that, "developed or matured beyond that which is normal for the age, e.g. a *precocious* child".  Because of the hyperinflated premiums involved in buying and the lower amounts available when selling, one should never get too much of one's resources committed to gold and silver coinage.  But they are a genuine "alternative investment" and holding perhaps as much as 5% of one's total net worth in that form may be worthwhile while disregarding the
"gold bugs" and "silver bugs" who want much larger commitments to being *gulled* (my normal spelling of gold) or subjected to "Hi Ho Silver away".
      Having observed that gold and/or silver *coinage* might be a relevant alternative investment, I need to mention that WHO HAS IT is a vital consideration.  There are a plethora of predators pretending to "we'll hold it for you in our vaults".  Many of them, especially the criminal expropriators of American property in the various geographies of the Untied Queendumb, have issued "paper" gold or silver which are traded in the same way as stocks.  Since the illegal seizure of all "stocks" into the permanent adverse possession of the criminally slopperated "computers" of the fraud and theft industry, such things now have *two* levels of separation of possession from the "owners".  It should be obvious that if *you* haven't got it, YOU HAVEN'T GOT IT and it boils down to a permanent theft of that portion of your total resources, entirely dependent on "political" whimsy as to whether you ever see any value from it.

      I have my own little story about something which really was worth a bunch, an expensive camera (more than a year's worth of my earnings from a newspaper route through the cold and snow near the shores of Lake Michigan) that I bought in Germany during a European Tour in 1955, which was stolen by a similar French thief on the train to the port of Callais.  I have always suspected my camera was stolen by the ghost of the pint sized felony religionist dictator Napoleon whose tomb I surreptitiously photographed in Paris despite warnings about "no photography permitted".  Just another reminder that if you have anything of value, "somebody" is likely to try to steal it from you.  Only your own education is what can't be stolen, that you get to keep and use for the rest of your life.
      Since I have spoken favorably about gold or sillver coinage, it is appropriate to discuss "numismatic value".  "Numismatics" is defined as "the study or collection of coins, medals, paper money, etc." and "numismatist" is defined as "a specialist in or collector of" such things.  The concept of "numismatic value" is that "prettier is worth more" and/or "scarcity is worth more".  Numismatists have created groups, largely based on the interests of *dealers* in such things, to "grade" coins on how pretty they are.  The grading itself ranges from MS-70 (mint state *perfect* largely reserved for undamaged *proof* coins which are especially well struck in the minting process) down to AG-3 ("about good" which is really not *good* at all but barely recognizable as the kind of coin it purports to be).  The *purported* differences in *pricing* for the higher "grades" can run into the tens of thousands of dollars per coin.  But notice that I said *purported* since it always was a standard practice among dealers to "buy as MS-60 sell as MS-65". Some groups of dealers have formed "professional certification" gangs representing their evaluations of "how pretty it is" as being definitive of "what is it worth?"  That doesn't mean you could ever rely on any of them to *pay* anything like the "going price" for such a coin.  Getting into the scarcity values *suggested* by the increased premiums for buying more of specific coins, it is only an indication of inventory holdings of those specific years.  The best dealer that I know of and that I referred to earlier in fact pays only or very slightly more than the spot metal value as if any specific coin was a "random year" coin containing the amount of silver or gold that it contains.  So there is negligible "numismatic value" in paying high premiums for coinage.  For that matter, all such references to "grading" and even "scarcity" are nearly always matters of hype and hooplala rather than genuine value differences.  What I want you to know for sure is that anytime anyone talks at you about "graded" or "scarce" coins, they're engaged in an intent to steal from you more and usually a lot more than the coin is actually worth.  What a coin is actually worth, what you could actually get for it from a willing buyer, is "almost" universally only the value of the metal it contains if it were to be melted down for the metal content.
      Since it is the same goofermints who have abolished any connection between their "currencies" and *anything* of intrinsic value, the treatment of silver and gold for tax purposes gets a bit strange.  If you ever need to sell any of the coinage you might buy, any gains you might have over the tax basis at the time you bought them would be taxed at a special higher "collectibles" tax rate rather than the normal "capital gains" tax rates.  California is a bit unusual in that it does *not* require sales taxes if you taking delivery in that state wanted to buy silver or gold coins, so long as you buy at least $1,000 worth at any one time, at which point they're willing to recognize the coins as being a *monetary* asset.
      Having mentioned gold or silver coinage as an alternative investment, there is a part of my life experience that I want you NOT to share. When I was four years old, I was attending a one room schoolhouse just up the road from the cabin where I was living with family.  We had a little ritual of buying a nice children's book from time to time.  The price of such a book at the store further up the road in 1948 was 20c. My mother had given me four nickels (in my memory they became bright shiny *silver* nickels of the sort that were minted just prior to that year) in anticipation of visiting the store after my half day at the schoolhouse.  I thought the coins were interesting and showed them to a classmate at the school after taking off my coat.  The little school had a "school milk program" and, when the very much bigger than me adult teacher went around to "collect" for that program in which I couldn't participate because I wasn't going to be there when the milk was distributed, the classmate blabbed to the teacher that I had the four nickels and the teacher stole them so that I wasn't able to buy the nice children's book after school.  It was all the money I had in the world at that time.  The moral of this story is "don't be a showoff" but only keep any valuable coins you might have in a safe place, look at them yourself from time to time because they are pretty, but don't let on to "others" that you have them.
      Notice that the cost of the children's book in 1948 of 20c has no relation to what such a book would cost today.  The huge difference is called "inflation" which is a system by which freeloading debt drunks, especially goofermints, reduce what they *owe* over a period of time so that they never have to "repay" as much purchasing power value as what they "borrowed". One of the purposes of "interest" is to cover the depreciation of value that otherwise occurs because of the debt drunks' inflation scheme. Another is to constrain the tendency of freeloading frauds to steal everybody else's savings for worthless or criminal purposes since they are, at least officially, required to *pay back* more than the amounts "borrowed".  A similar situation can be seen in the current base price of gold which was pegged at an international exchange rate of $35/ounce for international settlements in 1948 but has a current base price at 190226 of $1331/ounce.
      Another piece of advice about *handling* coins, if you ever buy any, especially unusually pretty silver coins.  Your fingers have a natural oil which will tarnish and deface the silver if you touch it anywhere but on the edges of the coin.  So if you take one out of the little plastic flip container in which you ordinarily receive them, handle them *only* on the edges. Also, don't ever "clean" the coins with such things as silver polish because such "cleaning" destroys the natural "patina" that older coins develop and, along with the patina, any *numismatic* value that the coins might otherwise have.

      CYBERCRIMES.  It was all based in the Ponzi scheme slopperated by former NASDAQ stock market chairman Bernie Madoff wherein he took other people's resources and issued mere "statements of account" to the "owners".  Other members of the fraud and theft industry decided that was such a brilliant scheme that they prevailed on the feloniously corrupt Securities & Exchange Commission to allow all of them to illegally seize all stocks into their own permanent adverse possession with nothing more than "statements of account" to the "owners" and, for many of them, even those "statements of account" can be viewed only on infinitely hackable "computer" web sites.  That pretense of the permissibility of felony adverse possession led to the creation of such scams as "Bitcoin" and a plethora of other "cryptocurrencies" which not only pretend to existence on criminally slopperated infinitely hackable "computers" but in fact have no reference point in the real world other than their use of illegal seizures from regular BUNKO system accounts to accomplish any initial "purchase".  No such things are alternative investments, only alternative means of facilitating permanent theft of one's resources.
      Carrying on with other things whose existence is exclusively within "computer" pogrommer environments, there are a whole slew of SUDDEN DEATH "futures" and "options" contracts frequently referred to "as if" they were alternative investments.  Their primary defect is that they are all *designed* to expire worthless within a few days or weeks or at most months from the time of "purchase".  They have the additional defect that they depend on the reliability of the "counter party" to *perform* as agreed on the "contract".  Some classic examples of NONperformance are detailed in my article Impacts of Futures Markets  which details why the creation of "index futures" was nothing but a criminal scheme to facilitate manipulation of the cash stock markets.
      GEMSTONES.  While I'm on the subject of things that are hyped and hoop lalaed as being "valuable" I also need to mention the classic swindle of those peddling pieces of compressed carbonaceous rock as if "diamonds are a girl's best friend" when in reality the purchase price is on the order of TEN TIMES THE UNDERLYING VALUE that "might" be obtained if selling. There are a lot of frenemies in the hype and hoop lala busymesses who will gut and loot your resources under *pretense* of selling "something of value" to you.  You may have heard the stories about Kim Kardashian being robbed of "$10 million" of jewelry while visiting France.  The point is that just because something COSTS A LOT doesn't mean that it's worth much of anything.  You need always to ask yourself "what is it GOOD FOR?" not merely what's the price.
      ARTIFACTS.  Promoters of such things regularly tout ownership of paintings, sculpture, handcrafts, antiques, baseball trading cards, comic books, original issue plates or dolls, and so forth as if they were investments.  Unless one responds to junk mail solicitations offering "unique" artifacts, whether buying or selling, one would typically get involved with an auctioneer.  Perhaps the best known is Sotheby's, a British founded
American multinational corporation headquartered in New York City and accessible via Sotheby's web site.  They are one of the world's largest brokers of fine and decorative art, jewelry, real estate, and collectibles.  Yet another is Etsy an e-commerce website focused on handmade or vintage items and supplies, as well as unique factory manufactured items which fall under a wide range of categories including jewelry, bags, clothing, home decor and furniturem toys, art, as well as craft supplies and tools.  Reportedly there is also eBay Inc, an American multinational e-commerce corporation based in San Jose CA that facilitates consumer to consumer and business to consumer sales through its website.  eBay was founded by Pierre Omidyar in the autumn of 1995 and became a notable "success story" of the Internet Mania Swindles.  An avid auction participant may find other auctioneers on the web site of The National Auctioneers Association, founded in 1949, which is an advocacy group representing auctioneers, auction businesses and related companies that seeks to promote the auction method of marketing and the practice of auctioneering in the United States.
      Personally I have never become enamored of any of the forms of clutter which are touted as artifact investments.  So I can only suggest that you had better really really enjoy permanent possession of whatever it is before getting involved.  While prices paid at any aunction may be inflated by overly eager participants, when trying to sell an artifact you may find that what others are willing to pay may not even reach a minimum bid level.  You will also promptly discover, after any such disposition, that the Infernal Re Venue Serve Ice treats gains on any such "investment" at especially higher tax rates than other kinds of capital gains.
      REAL ESTATE.  One of the most widely touted alternative investments is real estate.  The only form of real estate that I have found suitable for investment are the property owning Real Estate Investment Trusts whose analysis is detailed in Lesson 7.  Their holdings are geographically diversified so that no single natural disaster can wipe them out.  Rather than being cash flow negative for owners, properly analyzed shares of beneficial interest are cash flow positive via their regular distributions rather tthan being cash flow negative as is true of other formats.  Even so, many promoters claim that direct ownership of land and/or buildings can be "investments" so those other formats are being discussed in this Lesson.
      Debt drunk and leverage promoting scammers run show and tell presentations such as the "Rich Dad" series suggesting that their "students" go out and squander their cash resources and pledge their credit to "flip" houses.  What they don't mention is that there is typically *physical* labor involved, not anything qualifying as investment.  Calling such commitments an "investment" and calculating a ROI on ultimate sale prices requires treating the value of their own physical labor at ZERO.  Such debt drunks insist on ignoring the reality that the other side of the coin "give me a long enough lever and I can move the world" is that it is a trivial matter for the world to flip the debt drunk at the other end of that lever into outer space without a space suit.
      Beyond the typical requirement for physical labor involved in real estate, there is also the universal negative cash flow beyond original purchase price resulting from the insistence of county offals to collect taxes on what you own (unless you are a felony tax evading "religion" gang in which case they aggressively violate Article I of the US Constitution Amendments by refusing to collect the taxes due, sometimes resulting in the bankruptcies of the goofermints themselves as has occurred with many municipalities in Californicatia).  There are also perennial maintainence, insurance, and repair costs for any buildings on the property.  As a holding requiring continuous inputs of additional funding, it is unrealistic to treat real estate as an alternative *investment*.  Even if you have "renters", the process of maintaining any stable or increasing cash flow, even sufficient to cover the typical "mortgage" payments taxes and insurance, is an additional risk factor.
      One of the most notorious of the real estate "developers" William Zeckendorf Sr was reported as saying "I'd rather be alive at 20% than dead at the prime rate".  In fact he became financially dead in 1965 at the age of 60 as a result of being forced into bankruptcy but his heart kept pumping blood until 1976.  The current most notorious is the debt drunk bankruptcy inflicting Presidunce Trump whose six bankruptcies have mostly injured investors rather than himself and are currently being used to coerce continued rigging of the rightful incomes of elderly interest income dependent retired persons to ludicrous low levels, only a smidge over one third of pre 2001 normal rates and barely sufficient to cover the thefts of purchasing power from coerced and enslaved human lenders via "inflation".  The Surreal Estate Bubble engineered by His British Lordship the criminal mastermind Greedspan by enslaving the resources of savers to radically reduced and ultimately eliminated interest rates out through 2007 was *designed* to create the subsequent financial meltdown in which persons who never could have afforded to *pay* the mortages that were written in their names could no longer "refinance" and use "home equity lines of credit" when market prices were no longer being goosed by the overload of "free money" (for swindlers in the BUNKO industry only).  As part of the winding down of the Surreal Estate Bubble, many of the felons who created it engaged in felonious foreclosures on homes which *never* had any mortgage against them using robosigned documents in states where no actual proof of liability was required by the corrupt "courts".
      My own efforts to purchase forty acres of land for development during the years 2003 through 2007 are detailed in my article Surreal Estate.  In theory a person might be able to purchase raw land and hold strictly for investment purposes, but for the prevalence of wild eyed flipper gamblers playing the game of "I'll buy it for a dollar and sell it to you for two".  I actually did bail out one such wild eyed flipper in 2010, when market prices were no longer skyrocketing, at their original cost so as to acquire the piles of dirt that I'm developing into my Arboretum.  Ultimately I never did get the "forty acres and a mule" to which I was entitled as a result of felonious enslavement in the Civil Wars created by the felony tax evading "religion" gangs under the euphemism "marriage" which is nothing but felony theft divorce racketeering for 57% of the males ever snookered into that fraudocracy.  But I was stubborn enough (guessing that I'm the mule) that I did get a Little House in the Desert to develop into a hoped for retirement home for myself along with about six acres of useable land for growing an Arboretum (parts of which are shown on My Photos Web Site).  What I wound up with is far more of a USE VALUE than an alternative investment.
      Bob Grumbine    :-)##               this concludes my Intro to Stocks lesson series               back to Bob Grumbine's Central Blogging Site