Although the Dow Jones is near record levels and inflation appears in check, Corley Senyard is putting some investment dollars into a hy-perinflation hedge of the 1970s.
Senyard is buying rare coins. And he's not alone.Blanchard & Co., a major retailer of gold and silver bullion and rare coins based in New Orleans, had record sales in March and April following the fall of the dollar earlier this year.
The company sold $14 million in coins and bullion in March, followed by another $13 million in April. During the previous 18 months, sales averaged $5 million to $6 million per month, said company head Donald Doyle.
In the late 1970s and early 1980s, bullion and coins with gold and silver content were widely touted as a safety net against double-digit inflation rates.
Many coin and bullion buyers see another inflation spike coming, Doyle said. People would rather own gold, silver, platinum and rare coins than dollar-denominated assets, he said.
Senyard, a Baton Rouge engineer, and his son made enough money from rare coins, gold and silver in the late 1970s to start their own business.
"To us, it's a matter of time until (the metals market) does another trick and does what it did in 1978 and 1979," Senyard said. "There's a limited number of coins available. For me, it's the place to be."
Demand had been building slightly for several months before the Mexican peso fell. Since then, sales have soared, Doyle said.
"The peso collapse reminded people that there are a lot of countries with a lot of debt whose currencies could experience outright devaluation," he said.
Another major coin and bullion dealer, Jefferson Financial, would not give out specific sales figures, but said purchases had at least doubled during the same two months cited by Blanchard.
"It's really a flight to safety because of the fall of the dollar," said Jefferson president Brien Lundin.
Most precious metals experts contacted by The Associated Press would not delve into investments regarded by some analysts as economic paranoia.
Speaking generally about precious metals, analyst Ian McDonald of Credit Suisse in New York said many cautious investors are asking the question: "Where do we put our money?"
"A currency is no more than a promise of a politician, while things like gold are tangible assets," he said. "They certainly want to be in an asset that will maintain its value."
McDonald said both gold and silver are in a tight supply-and-demand situation that could trigger price increases, although he expected price growth to be slow for both.
Arlan Dahl, a buyer from the Minneapolis area, said gold coins are not only a good hedge, but give an investor a bit of privacy from the government.