April 2024 - Week 3 Edition

My Top 10 Reasons Why Gold Will Break $2,500 in 2024 – Updated!

Two weeks ago, I shared how Steve Forbes and I discussed the future price of gold during our October meeting. The outcome of that collaboration was both of us agreed gold would reach $2,300 an ounce in 2024 and possibly $2, 500 by the end of the year. Steve went on to say gold could go “even higher if the wrong guys win the election.” At that time, gold was trading at $1,973, so I would say we are “halfway to $2,500” but in the first half of April, gold rose 9 of 11 trading days, from $2,215 to $2,365 (+$150). Four months into the year, Gold is up nearly $400 from when Steve and I made our predictions, with only about $135 to go in the next eight-plus months. We’re 75% there – or, on third base.

Therefore, my list needs a little updating. My first prediction – that the Fed might raise rates sooner and by bigger margins – will probably not come true, since the Consumer Price Index (CPI) came in at a hotter-than-expected +3.8% over the past 12 months (double the Fed’s target rate of 2%) last week.  However, as I have long said, higher rates are no real impediment to the rise in gold prices throughout history.

My other nine reasons are stronger than ever: #2-Central bank buying, #3-Election year surges; #4-Inflation returning; #5-Gold buying in India and China; #6-Wall Street promoting gold; #7-The debt spiral increasing; #8-Entitlements skyrocketing; #9-Wars pushing energy prices up and #10-Gold fever erupting as more gold articles appear in more media outlets, which generates more gold bullion customers and sales.

If I might add a new reason to buy gold – to replace the interest rate cuts – it would be the rise in sales tax exemptions for buying gold as a cash alternative and an inflation hedge. This past week, thanks to the efforts of the National Coin and Bullion Association, of which I serve on its board of directors, Kentucky became the 44^th of 50 states to grant a complete or partial sales tax exemption to the sales of coins and precious metal bullion. The new law will take effect August 1, 2024. Kentucky’s Democratic governor Andy Bashear vetoed the bill – arguing those who own gold can afford to pay taxes but protection against inflation is a right for all Americans. Thankfully, his denial failed to punish investors as the Kentucky Legislature overrode his veto.

Media Coverage of Costco is Shallow and One-Sided

In my point #10 above – the power of “gold buying fever” in America – there have been several articles in numerous media outlets over the past two weeks about skyrocketing gold coin and bar sales at big box stores and outlet retailers. Unfortunately, these articles have not presented a complete picture of this one-way retail sales market, something that could be a downside for people trying to sell their gold without knowing where to get the best return on their investment.

In the past week or two, there have been extensive articles in The New York Times and The Wall Street Journal about the surge of gold sales at Costco, as well as interviews with “financial experts” on CBS, ABC and other media but nobody has called our office or any other leading coin dealer that I know of and reported on what the real experts in our field have to say about the limitations of the Costco market model.

For instance, will Costco buy back your gold? The answer is NO. Will they replace your bullion coin or bar with the same product if you don’t like the one you originally purchased upon receiving it? We will.

Why have so few reporters asked those questions or wondered why there isn’t a two-way market in gold for purchases from Costco and similar retailers, as there is with a reputable gold coin dealer?

Additionally, Wells Fargo estimated that gold purchases from Costco have, so far, increased gold bullion sales from between $100 million and $200 million. This is despite the fact that Costco has been sold out of gold bullion at many of its locations across the country.

Don’t get me wrong. It is a net positive to have more gold buyers in America and Costco is helping in the expansion of that pool.  History has shown us that the rise in gold bullion buyers will result in about one in six becoming rare coin buyers. Costco will help stock the pool of coin buyers but most first-time buyers will desire a two-way market and they will find out there are only a few places to sell locally and most of them won’t provide the best return. Most likely, when these new Costco gold buyers attempt to sell their gold, they won’t know where to get the best deal. Many will be left seeking out pawn shops, local coin shops or even ads for “gold buyers” in hotel rooms offering as little as 50% or less of the value for rare coins, or a huge spot price reduction of 10% to 20%, or more, per ounce of gold, which could equate to a loss of as much as $400 per ounce, or more.

We buy back gold at a little bit below spot gold prices and even a little bit above spot at times, depending on the product. In fact, we buy back millions of dollars per month in products from our customers, as do other PCGS and NGC authorized dealers, but I feel very few dealers have our total list of credentials.

For instance, I have been involved with consumer protection in rare coins and precious metals for decades. I helped write the Consumer Alert on buying gold for the Attorney General of Texas and was selected as the 2021 Dealer of the Year by the American Numismatic Association (ANA) and I taught coin grading and counterfeit detection seminars for the ANA for more than 20 years. In addition, my books, media appearances and newsletters about gold and rare coins have won “Best of the Year” awards from the Numismatic Literary Guild [NLG] or the Press Club of Southeast Texas, or both. Typically, our prices are as good or, most often, better than other dealers.

So, give Costco a pass and don’t fall for a mass advertising campaign. Instead, call us today to safely and easily buy or sell gold bullion and rare gold coins.

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