Metals Market Report Archive
Metals Market Report 07-21-2015

The Mike Fuljenz Metals Market Report

July 2015 – Week 3 Edition

 

Gold fell to $1101 on Monday, July 20, based on overnight selling in Asia. In essence, many investors are responding to the “good news” coming out of the Greek compromise, the Chinese market rally and the arms deal with Iran, but any one of those dangerous situations could backfire at any time.  Gold hasn’t dipped below $1100 since late March of 2010.  Physical demand for gold remains strong in the U.S., Asia and Europe, but leveraged professionals remain the “tail that wags the dog,” pushing gold further down.  However, gold is still up so far in 2015 in terms of the euro and in Canadian or Australian dollar terms.

Physical Gold and Silver Buying is Getting Stronger

Long-term, gold is destined to come back in price since many mines are closing.  An analyst at Lombardi Financial said that U.S. gold mine production declined 8% in 2014 vs. 2013, and 2015 gold production is running “much lower than the 2014 figures.”  Most mines can’t make any profits at $1200 gold, much less $1100, so with shrinking supplies and flat or rising demand, gold should eventually recover.

Meanwhile, there is a tremendous groundswell of physical buying.  We have noticed some delays on delivery of bullion products from the U.S. Mint and other mints due to soaring demand, which often causes the premium over spot prices to rise.  The U.S. Mint said last week that there was a 253% rise in demand for American Gold Eagle coins in June vs. May.  Also, in the first half of July, the U.S. Mint said it sold 71,000 ounces of Gold Eagles, which is just short of the phenomenal 76,000 ounces sold in June.

The same trend is happening in silver coins. The Mint ran out of American Silver Eagles in early July, just like they did in late 2014.  The Mint sent out a press release saying that “the significant increase in demand for American Eagle Silver Bullion Coins depleted our current inventories.”

Previous to that, the Mint had instituted an “allocation” policy that rationed the sales of Eagles earlier this year, due to soaring demand. In June, American Silver Eagle sales surpassed 4.8 million ounces, more than doubling May’s total. In the first week of July, 2.6 million more ounces were sold, putting July on a 10-million+ sales path vs. just two million in July of 2014, so those who say that the precious metals market is dead are wrong!

The Value of Money

There’s a new “must see” in Washington, DC for anyone interested in coins, currency or the history of money.  The Smithsonian’s National Museum of American History has a new Gallery of Numismatics, and my wife, Karen, and I were invited guests at the recent inaugural exhibition of its remarkable display, “The Value of Money.”

The museum’s space designated for coin exhibits now has been enlarged from 300 square feet to an impressive 1,000 square feet.  You enter the exhibit area through a replica of a huge – and heavy!! – vault door.  Inside, there are more than 400 eye-opening objects from the National Numismatic Collection on display. Among the many highlights are a 1933 Double Eagle; a personal check signed in 1813 by President James Madison; and a Series 1934 $100,000 denomination note.  Among the items showing the long history of money are an ancient silver Decadrachm from Syracuse Sicily dating back to 465 B.C. and a Ming Dynasty note from 14th century China.

During a reception at the exhibition I had the opportunity to talk with U.S. Treasurer Rosie Rios.  Her “autograph” is in your pocket, purse or wallet; her facsimile signature has appeared on our paper money since 2010.  I also met with long-time friend and former Louisiana Congressman Jimmy Hayes.  He’s a coin collector and an important friend to the numismatic hobby and profession when he was in the U.S. House and now as a consultant and lobbyist.  There also were meetings with Smithsonian executives and with Kathy McFadden, Executive Director of ICTA, the Industry Council For Tangible Assets.  ICTA is a crucially important organization that fights daily nationwide to protect your best interests in the buying and selling of rare coins and precious metals. I’ve been on ICTA’s Board of Directors for more than 20 years. 

It was a memorable day of money and movers ‘n’ shakers in Washington!

 

 

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