October 2023 - Week 2 Edition

Gold and Silver Recover on the Sudden Outbreak of War in Israel

Just a week before the outbreak of war in Israel, President Joe Biden’s National Security Advisor, Jake Sullivan, said at the Atlantic Festival on September 29 that the Biden Administration had accomplished a string of new achievements in the Middle East. He added, the region was now “quieter today than it has been in two decades.” Sadly, he was massively incorrect and out of touch as Hamas had other plans, attacking Israel on the Jewish Sabbath, October 7, in a mirror image of the multinational Arab attack on Yom Kippur 50 years ago, on Saturday, October 6, 1973.

The Biden team should know that bragging like this is almost an invitation of disaster to a group of proud nations with a centuries-long list of grievances. They remember the stinging defeats in 1948, 1956, 1967, 1973, 1991, 2003 and too many other years to count. A scorpion does not hesitate to sting. A leopard does not change its spots. The Biden administration has empowered Iran in hopes that it would join the civilized group of nations, but they chose to renew their support of Hamas and Hezbollah against Israel.

Gold jumped $15 immediately on news of the sudden, surprise attack on Israel and then gold, silver and crude oil prices just kept rising over the weekend. The December Gold futures contract rose from a low of $1,809.40 on Friday morning to $1,888.60 on Wednesday. That is an increase of 4.4%. December silver rose from $20.925 Friday morning to $22.275 on Wednesday, up 6.5% in the wake of the war news. November crude oil rose from $81.50 Friday to a high of $87.24 on Monday, up 7%, before settling back mid-week.

Inflation Should Resume Rising Due to Wars on Several Fronts

As happened 50 years ago, when war in the Middle East disrupted oil production began a decade of high inflation in America, we could see a repeat of systemic inflation this time around, especially as we are also facing grain shortages due to the Ukraine war and high electrical vehicle prices due to the Biden “Green Energy” mandate. Mix that with a shortage of crude oil reserves due to the Biden Administration’s depletion of the Strategic Petroleum Reserve and there will be an economic toll. It’s seems like President Biden is doing all that he can do to avoid being re-elected, first by driving up the price of gas, then making cars and food more expensive, while insulting half of all voters for being un-American, even fascist, and zoning out during times of great national crisis. Perhaps we should thank him for his incompetence in hopes he won’t return to the Presidency.

The Producer Price Index (PPI) for September was released on Wednesday morning with a surprisingly large 0.5% (6% annual rate) overall increase, vs. 0.3% expected, and a “core” rate of 0.3%, excluding food and energy, vs. 0.2% expected. The greatest gains came from “final demand goods,” which surged 0.9% (an 11% annual rate). Gasoline jumped 5.4% in September (an 88% annual rate), and food prices rose 0.9% (11% annual rate), comprising the volatile measures subtracted from the core rate. Inflation hasn’t gone away and it’s likely to get worse before it gets better.

On Thursday, the Consumer Price Index (CPI) will come out. The CPI is usually higher than the PPI. The October releases may be higher, reflecting a surge in prices following the October 6 outbreak of war.

In the 50 years since the Yom Kippur War of 1973, the CPI has risen over six-fold (+579%) and gold has risen about three times that fast, escalating from barely $100 to over $1,800.  The CPI more than doubled in the first decade after the OPEC oil embargo of 1973, up 123% at the time. Deflation prevailed for most of the 1920s and during the Great Depression in the 1930s, and low inflation prevailed during the 1950s, but the inflation rate has risen significantly in each of the past 90 years, most rapidly from 1963 to 1993, with a net 373% price rise:

The inflation rate during the first two decades of the 21^st Century was fairly low, averaging just under 2.2%. It was fairly close to the Fed’s target rate of 2% but the COVID pandemic caused a floodgate of liquidity to be loosed, which was understandable for a month or two. However, the Federal Reserve, U.S. Treasury, Congress and President Biden kept the printing presses rolling for far too long, unnecessarily creating stubbornly high inflation during 2021 and 2022, forcing the Fed to raise interest rates at the fastest rate in history. The Fed cluelessly went way overboard in both directions – first, too much liquidity for too long, and then too much interest rate discipline, too late, at the other end of their great experiment.

Contact “Team Mike” for the Best Coin Buying Experience

Now that gold is America’s second favorite investment asset class, according to a recent Gallup Poll, second only to real estate, more gold retail outlets are popping up, even in “box stores” and malls, but do they have the knowledge of the gold market, much less any experience in rare coins? Very Unlikely. Are they willing or able to buy back coins, grade their value or have the expertise to detect counterfeits? Even more unlikely. Has anyone on their staff written books on rare coins, worked with law enforcement to detect counterfeits or protect consumers from fraud or theft? Do they attend, much less speak at, major coin shows and conferences? Once again, from what I have witnessed, the answer is, “No!” Do they even know how to handle coins without damaging them? I hope so, but I am not going to be the guinea pig to find out.

When I cite my many industry awards, I only do to add credibility to our entire company. When I say “contact your representative” for the latest coin buying opportunities, I also mean to acknowledge that there is a full team behind my research, including our vault operations, shipping and quality control team.

It would be great if you could meet as many “Team Mike” members as possible when dealing with our company because they are all experienced in their individual roles. We are not just one or two people, but an entire dedicated team, working together for a long time and all pulling in the same direction. Even though I have been here a long time and intend to continue for a long time to come, Team Mike is in excellent hands in all departments, with a growing list of trained numismatists, account executives, buying agents, a marketing team and support staff – all with your best interests at heart every step of the way.

In future editions of this metals report, I hope to introduce you to several other Team Mike members.

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