The Michael Fuljenz Metals Market Report: April 2013, Week 5 Edition

Gold and silver are up over 10% from their lows of two weeks ago. On Monday morning, April 29, gold reached an opening high of $1,477.80, silver hit $24.61 and platinum was up $45 to $1529. The longer time goes on and gold stays above the mid-April low of $1321, the more we can conclude that the mid-April sell-off was a staged “bear raid” in the futures market, which was defeated by increased buying of the physical metals in America and overseas. Market manipulators can have their way with the metals in the short-term, but the long-term fundamental case for rising gold prices will usually win out in the end.

Mike Fuljenz Meets U.S. Speaker of the House John Boehner

I was honored to meet with Speaker of the House John Boehner and Congressmen Randy Weber and Pete Olson of Texas in Galveston on Sunday, April 28, 2013. My wife of 33 years was kind enough to allow us to attend this meeting on her birthday. She’s a keeper! We discussed many vital subjects of the day, including the 100-year supply of energy in this country – if the green left and the oil & gas right can get together on this issue. Speaker Boehner also said that we produce electricity 30% to 50% less expensively than our competitors worldwide. Some European businesses are relocating to the U.S. for this reason.

Here are some other points the Speaker made last Sunday:

• We need to quit overspending. For 55 of the last 60 years, the U.S. has spent more than it has taken in. We need to reverse this damaging pattern.
• We need to make our tax code more competitive and clear. It is ridiculously expensive to comply with our complex tax code, and America now has the highest corporate income tax rates in the world.
• We need to do a better job educating our children. The Speaker was visibly emotional when addressing the education of the gifted as well as those in need.
• We need to fix the combative, burdensome regulatory regime in Washington today. Regulations must be fairly and efficiently enforced.

I also discussed some of America’s ill-conceived gun laws and the Senate’s internet sales tax (S-742), which is filled with vagueness and unintended consequences like foreign entities not being taxed on out-of-country sales. I was pleased to hear Speaker Boehner tell me “not to worry” about such bills, since he believes the House will not do much with such gun control and internet tax bills if they come out of the Senate.

All in all, it was a very enlightening afternoon. The Speaker was truly appreciated by those in attendance.

How Will Rare Gold Coins Fare If America Has Another Gold Recall?

I am often asked how rare gold coins might fare in a new depression, or even another gold recall. History provides us with an interesting guide. In 1933, President Franklin D. Roosevelt signed Executive Order 6102, forbidding the “hoarding of gold coins and bullion,” but rare gold coins were legal to keep. The timing of FDR’s gold grab is interesting. It came near the deepest point of the 1930s Depression, right after the Democratic party had swept both Houses of Congress and the Presidency in the 1932 elections.

If the Democrats sweep both houses of Congress in the 2014 mid-term elections, could this happen again? Louis E. Eliasberg, the “King of Gold Coins,” said of those days: “I realized the only way I could legally acquire gold was by becoming a numismatist, so in 1934, to the extent of my means, I started buying gold coins.” Other people did likewise, and rare coins rose overall in value during the Great Depression years.

Although the past doesn’t always repeat itself exactly, I do believe that any unlikely future gold recall would have to exclude collectible precious metal items of significant value. It would be unlikely that the government would demand we turn in our wedding rings and watches along with rare coins, flatware or precious metal sculptures. In this case, the demand and prices for collectible gold coins would probably increase due to the previously described “Eliasberg effect” as people search out bullion alternatives, like rare gold coins.

The Latest News on Silver and Platinum

The Silver Institute issued its annual World Silver Survey last week. They reported a 21% increase in investment demand for silver in 2012 vs. 2011, even though the average price declined from $35.12 in 2011 to $31.15 in 2012. Total investment demand last year was 160 million ounces, up from 132 million ounces in 2011 and only 5.4 million ounces in 2004, before the first silver-based exchanged-traded fund (ETF), iShares Silver Trust (SLV) was launched. Silver coin and medal demand rose to 92.7 million ounces last year, with Chinese silver coin minting rising 47% from 2011. In the paper silver market, about one-third of 2012 investment silver demand (55 million of 160 million ounces) came from silver ETFs.

Platinum is up the most this week due to wage talks for miners in South Africa, the leading platinum producing nation – by a long-shot: South Africa produces 75% of the world’s primary supplies of newly-mined platinum. Wage talks begin this week, on May 1, a day still known as “International Workers’ Day,” based on the old Marxist May Day mystique. In fact, markets are closed three days this week in both China and Russia, the world’s two largest “formerly-communist” nations. In South Africa, labor activists will hold out for substantial (double-digit) wage increases, at a time when the platinum miners are already strapped with narrow profit margins, so the platinum mines may soon be closed due to strikes.

NGC President Rick Montgomery Meets With Michael Fuljenz and Our Team

Rick Montgomery, President of Numismatic Guaranty Corporation, met with our account representatives in Beaumont, Texas on April 10, 2013. NGC is one of the world's largest numismatic certification companies.

During his visit, Montgomery discussed the importance of third-party authentication and grading of coins and how it benefits our customers by providing increased consumer confidence and liquidity in the numismatic marketplace.

He explained the processes NGC uses to evaluate coins for authenticity and grade, and the security involved in the NGC protective holders that house their certified coins.

Rick and I worked closely together in the 1980's as graders at ANACS (then the American Numismatic Association Certification Service), and we taught grading and counterfeit detection classes together for collectors, dealers and even Secret Service and FBI agents.

This was Montgomery's third visit to Beaumont.

Rick is one of the foremost rare coin authenticators and graders in the country, and we were honored to have him visit. We sell a lot of NGC-certified coins and respect their products.

Metals Market Report Archive >