The Michael Fuljenz Metals Market Report: February 2013, Week 4 Edition
Sell Out
In the last month we sold out of our current inventory of more advertised products (Indian, Bison and certified Silver Eagle coins) than at any time in the history of our company. A rare 1794 silver dollar sold for a record $10 million dollars. The coin and physical precious metal market is strengthening. Pay attention!
Follow Me: We Can Be Like Greece
Last week's Barron's featured a picture of President Obama under this headline: "Follow Me: We Can be Like Greece," with a subhead, "If we follow President Obama's plan, the U.S. in 25 years will be in worse shape than Greece is today." The government's worst problem involves entitlements, most notably Social Security and Medicare, plus interest on our huge and growing national debt. The percentage of our population over age 65 (needing Social Security and Medicare) will grow from 15% now to over 20% by 2029. According to the Urban Institute, the average American working couple pays $114,000 in Medicare taxes during their working lifetimes, but in retirement then run up an average payout of $355,000 in Medicare benefits - over three times what they put in - and that $355,000 figure should keep rising as medical costs escalate. In addition, interest rates on our rising national debt could eventually approach $1 trillion so that by 2029, entitlements and interest on the debt could absorb 100% of federal tax revenues. Why would anyone not own some gold?
The Mainstream Press Hails the "End of the Gold Bull Market"
Barron's asks, "Has the Anti-Gold Rush Begun?" Articles in The Wall Street Journal last week echoed that sentiment: "Outbreak of Optimism Means a Fearful Time for Gold Bulls" and "Gold Leads a Retreat Amid Rash of Selling." Their reasoning is that the Fed might end quantitative easing (QE) as a reflection of a return to good times. In particular, they say that gold's sell-off was triggered by the Fed's statement that "several participants" of the Fed's Open Market Committee "emphasized that the Committee should be prepared to vary the pace of asset purchases, either in response to changes in the economic outlook or as its evaluation of the efficacy and costs of such purchases evolved." However, many in the press over-reacted to these views, since there were several other quotes which defended the Fed's quantitative easing plans.
Many in the press like to look for scary needles while ignoring the bulk of the evidence in the haystack! At the Fed, the "Doves" (who favor accommodation) still outnumber the "Hawks" (who favor cutting back easy money policies) by a significant margin. Looking ahead, President Obama is only appointing "Doves," people who will support a continued easy-money policy. As a case in point, the FOMC minutes said that only "one member dissented from the Committee's policy decision, expressing concern that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations." One dissent out of 12 voting members hardly constitutes a threat to the Fed's long-term easy-money policy policies.
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