Metals Market Report Archive

The Mike Fuljenz Metals Market Report

March 2015, Week 3 Edition


Gold fell to $1150 on March 11 before recovering slightly by week’s end.  The main culprit is the U.S. dollar, which is up 15% so far this year to the euro, and up a total of 25% since last July.  Amazing as it seems to Americans, gold is up 11% so far this year in terms of the euro, but it is down 4% in U.S. dollar terms.  Investors are convinced that the Federal Reserve will raise interest rates soon, boosting the dollar further, so they are flooding into the dollar now, in advance of any future move.  But what if the Federal Reserve fails to raise rates?  The dollar could take a tumble, boosting the gold price in U.S. dollar terms.

Silver is Hotter than Gold in India – Due to Gold Import Restrictions

Governments seldom realize that their actions produce “unintended consequences.”  The Indian government’s plan to tax gold imports was seen as a way to raise tax money and solve their “balance of payments” deficit.  As it turns out, gold taxes raised a little money and helped their trade balance, but two other outcomes were more powerful and more profound – gold smuggling and a switch to silver.

In 2014, India’s silver imports reached a record high 6,842 metric tons (220 million ounces), or 18% more than all silver imports in 2013, according to GFMS Thomson Reuters. Lower silver prices make silver more attractive than gold, as many poorer Indian families use silver in place of gold for their savings and festival celebrations.  Sudheesh Nambiath, a senior analyst at GFMS Thomson Reuters, said that this surge in silver demand is due to “higher investment demand and to risk-free returns in the cash-futures arbitrage. Silver jewelry and article fabricators re-stocked in high volumes as the price had declined sharply.” Monal Thakkar, director of Ahmedabad-based Amrapali Group, said: “Half of the incremental demand for silver is investment-driven. Silverware and gifting of silver articles have also become trendy.”

St. Patrick’s Day is a “Red-letter” Day in the Long-term Battle between Gold & Greenbacks:

In addition to the dramatic rise to $1,000 gold and $20.92 silver on March 17, 2008, the day the dollar hit its all-time low, there are other important battles between gold and Greenbacks on this date in history:

  • On March 17, 1862, the U.S. Treasury abandoned the gold standard by sanctioning the first two issues of Greenbacks, which were not tied to any promise of redemption in gold.  As the nation entered its second year of a suddenly-long and costly Civil War, governments of both North and South found it necessary to replace their scarce gold with cheap paper money.  By war’s end, the Union printed $450 million in greenbacks. The natural result was runaway inflation by war’s end.
  • On March 17, 1968, during another costly war, the link between gold and greenbacks was once again severed. In early 1968, LBJ’s “guns and butter” policies led to a hemorrhage of U.S. gold at $35 per ounce. On Sunday, March 17, the seven nations of the London Gold Pool agreed on a two-tiered gold price. This was the first step toward an abandonment of gold and the free-floating of currencies in the 1970s, leading to a long and costly bout of inflation that lasted until 1982.
  • In addition, on March 14, 1900, President William McKinley signed the Gold Standard Act, which established gold as the sole basis for redeeming paper currency. The act set the value of gold at $20.67 an ounce, providing for the basis of classic U.S. Gold Coins from 1900 to 1933.

Old Indian Book and New Type III Double Eagle Book Desired by Dealers

My new book on Type III Double Eagles, to be released by April 2015, should increase demand for coins in this series. In 2000 my first edition about this popular series received the Numismatic Literary Guild Investment Book of the Year Award further boosting interest in double eagles. There will be some gorgeous photographs and innovative tools in this new edition that should greatly help collectors, investors and dealers who participate in this popular series. At a recent California convention some major dealers asked me for boxes of these books as soon as possible. Demand for my previous book, Indian Gold Coins of the 20th Century, is also increasing. A good sign for the Indian gold coin market. 



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