October 2023 - Week 1 Edition

Quarter-Ending Gold Market Survey

We won’t know the official third-quarter gold supply and demand statistics until about November 1, but the first-half of 2023 statistics, released by the World Gold Council on August 1, show a decline in ETF holdings combined with an increase in mine supply, explaining some of the slow growth in gold this year.

However, the strong U.S. dollar has pushed gold prices higher in terms of other currencies, while strong demand in over the counter (OTC) gold markets and other investment demand has kept gold prices from drastically falling.

Also, increased central bank gold buying in the first half of 2023 set a first-half record of 387 metric tons, although it was front-loaded in the first quarter, split evenly between developed and developing nations.

The U.S. dollar his risen so strongly that we have seen increased gold demand in other currencies, especially in Asia. The Chinese yuan has lost nearly 6% to the dollar this year and the Japanese yen has lost 13% vs. a 3.73% average for the Wall Street Journal Dollar Index.

Chinese real estate is in terrible shape and the Shanghai stock exchange listings are down about 8% from their 2023 highs. Because of this, many Chinese are turning to gold with such fervor that gold prices have reached a $100 per ounce premium over bullion spot prices in London or New York, according to Bloomberg.

The Chinese central bank is also buying more gold, although these figures aren’t always reported in full to the IMF. One expert claims China’s recent unreported gold purchases have pushed global central bank holdings to 38,764 metric tons as of June 30, which would finally eclipse the former all-time peak of 38,347 tons in 1965, when nations began going off the gold standard at $35 per ounce. Official holdings dipped below 30,000 tons by the time of the financial crisis of 2008 but many nations have been scrambling to buy gold to replace eroding paper currencies since then.

Concentrating on the second quarter, when the gold price averaged a lofty $1,976/oz, private investment demand grew by 20%, with demand for officially minted gold coins growing 25%. This growing demand is evident in a Gallup Poll taken in April, showing that gold was the second most popular investment asset class, behind only real estate. In 2023, some major big-box retailers are advertising gold sales over the counter, even offering customers “2% back on sales,” savings that are usually erased by mark-ups or credit card fees, but this is good news for us, as these retailers are bringing in new gold customers by the thousands. It’s only a matter of time before these bullion buyers seek a more established gold coin dealer and begin to examine the more rewarding and educational field of historic rare U.S. gold and silver coins.

Gold ETF demand saw net outflows of 21 metric tons in the second quarter, concentrated in June, but that was less than the 47-ton outflow for the same quarter in 2022. Total gold ETF holdings have decreased from 105 million ounces (3,265 metric tons) last November to about 90 million ounces (2,800 tons) now. Gold supply was up 7% year-over-year for the quarter and mine production reached a record high in the first half.

Here’s our monthly rundown of how the metals and markets performed last month and year-to-date. September is known as the worst month of the year for stocks and it turned out bad for most investments, overall. Both stocks and precious metals fell by about 5%. Bond prices also fell as bond yields kept rising.

The U.S. Mint is finally reporting increased Silver American Eagle sales, although gold sales remain flat:

Now Available – For the First Time, San Francisco Pure Silver Proof Morgan & Peace Dollars

For the first time in history, the U.S. Mint is producing pure silver mirrored Proof Morgan Dollar and Peace Dollars bearing the “S” Mint mark, representing the historic San Francisco Mint, the original repository of 1850s California “Gold Rush” nuggets, bars and S-minted gold coins.

These new silver coins will have deeply mirrored fields contrasted by heavily frosted and raised devices projecting a gorgeous cameo effect. Only 400,000 Proof Morgan and 400,000 Proof Peace dollars were minted. Unlike the previous mirrored Proof Morgan dollars issued between 1878 and 1904, these Morgan and Peace Dollar Proofs will have silver fineness of .999, not the .900 silver alloy with 10% copper, like the original coins.  They will contain 0.859 troy ounces of .999 fine silver.

These gorgeous new proof coins are authorized under the 1921 Silver Dollar Coin Anniversary Act signed into law January 5, 2021. That Act celebrated the centennial anniversary of the U.S. Mint’s transition from producing Morgan Dollars to the production of Peace Dollars, celebrating the armistice after WWI, also known as, “The War to End all Wars,” as ratified by the Treaty of Versailles in 1919.

The first new uncirculated Morgan and Peace Dollars were released in 2021. Two of the top numismatic grading services, NGC and PCGS, have seen their MS70 (perfect condition) graded coins increase in value by more than 30 percent since they were first issued.

We have a limited quantity of these beautiful NGC PF70 ULTRA CAMEO Morgan and Peace Dollars in stock, along with coins graded by the new CAC grading service.  If you already own any Morgan or Peace Dollars, you need to compliment your collection with these beautiful sets. See them side by side to note the striking differences and similarities.

I strongly recommend that you call our professional account representatives today to ensure that you are locked in on owning these incredible new proof coins.

Gold hit a 10-month low and silver reached a six-month low as October dawned, mostly on a stronger dollar, as the U.S. Dollar Index (DXY) is up 7% since mid-July, reaching a 10-month high. Rising U.S. Treasury yields (above 4.5%) are pulling global investors into the dollar vs. near-zero yen yields or sub-3% euro yields. The benchmark 10-year Treasuries reached a 16-year high at 4.69% last Thursday. 

Gold and silver are technically “oversold” by weak holders or traders, so the next move should be a rally and push prices upward. That makes it a good time to buy on the dips and get into gold at somewhat depressed prices before prices return to normal or move even higher, which I predict for presidential election year 2024.

Metals Market Report Archive >