November 2015 – Week 4 Edition

Gold fell to a multi-year low of $1070 last Wednesday before recovering later in the week.  The decline can be blamed on the release of the minutes of the last meeting of the Federal Open Market Committee (FOMC), in which they all but promised a small rate increase of 0.25% in their mid-December meeting.  This should have no impact on the price of gold, since the Fed will not likely raise rates further in 2016, an election year, but traders act on impulse and “old wives’ tales” about what gold “should” do instead of studying history and finding out that gold has often risen during times when the Fed has raised rates.

Overstock.com Plans to Pay its Employees in Gold (and Food)

The popular Website “Overstock.com” helps shoppers find bargains from overstocked inventory.  They have recently created a stockpile in gold and silver – about $10 million in gold and silver, according to one report – but that’s not because they want to sell gold to their customers – although that would be a good idea, considering the Mint’s low quantities of some popular bullion coins.  Instead, the company plans to pay its employees in gold if America enters into another serious banking catastrophe, such as the 1930s banking crisis, or in times of financial uncertainty, such as the world suffered as recently as 2008.

The chairman of Overstock.com said that there could be a future crisis that “could last for two days or two weeks or who knows how long, and we wanted to be in a position where we could continue to operate during any such crisis.” Of course they want to own the real thing – gold itself, not paper ETFs, which could be nearly as worthless as any other fiat paper currency in a time of crisis.  On a practical level, Overstock.com has also stockpiled three months’ worth of canned food to pay their employees in food.

Johnson is also a candidate for governor of Utah, which will give him a platform for promoting gold as history’s primary form of money and a practical alternative means of exchange in times of crisis.

American Gold Eagles Sell Out…Again

Physical demand for gold bullion coins is so overwhelming that the U.S. Mint has run out of two (of four) denominations of the 2015 American Gold Eagle series in two consecutive weeks. The 2015 $5 Gold Eagle (1/10^th ounce) coin sold out last week, and the Mint says that no more of the coins will be made. In the previous week, the Mint ordered the last shipment of its 2015 1/4-ounce coins.  Demand keeps rising. Gold coin sales at the Mint last week reached the highest level in the last three months.  Sales of the $5 tenth-ounce coin reached 980,000 for the year, which is a 73.5% increase over the sales for all of 2014.

Year-to-date, the demand figures for all denominations are well ahead of demand for the entirety of 2014:

(Source: http://www.usmint.gov/about_the_mint/index.cfm?action=PreciousMetals&type=bullion.)

The total for ALL gold Eagles in 2014 was 524,500 Troy ounces vs. 785,000 ounces in 2015 (through November 20). The lesson for gold investors is to get your supply early to avoid shortages later on. 

Civil War Gold Survives: At Historic U.S. Mint

On the battlefield, the British-made Whitworth rifle was a favorite weapon of Yankee and Confederate sharpshooters during the Civil War.  On the home front, hard money – especially gold coinage – would have enjoyed similar popularity with civilians … if they could have gotten it.  Coins of all kinds virtually vanished from view in both the North and the South because of widespread hoarding during the war.

The Union and Confederacy both issued paper money to keep the wheels of commerce turning and pay their large armies, but almost no one trusted it.   Many remembered hearing the phrase “not worth a Continental” to describe the colonies’ nearly worthless currency during the American Revolution. 

Gold coins were minted during the Civil War, but few found their way into people’s pockets and purses until hostilities ended.  Some turned out to be quite scarce and all are prized today as valuable collectibles.

Recently, we acquired an original collection of popular double eagles - $20 gold pieces - issued during the War Between the States.  Heightening their historical significance all had been stored for many years at the old San Francisco Mint, one of the few major buildings to survive that city’s calamitous earthquake in 1906.  That building, now a museum, is affectionately known as “The Granite Lady” because it withstood the quake and the fires that followed.

This collection contains original double eagles dated between 1862 and 1865, many bearing the coveted “S” mint mark, showing they were made at the San Francisco Mint.  We immediately had them submitted to the respected Professional Coin Grading Service, and Numismatic Guaranty Corporation, which certified their authenticity and grade and sealed them in protective holders displaying their Granite Lady pedigree.  Call us for current price and availability.

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