The Michael Fuljenz Metals Market Report: July 2012, Week 1 Edition
Last Week In Metals: Gold rose $25 (+1.6%), silver rose $0.54 (+2.0%), platinum rose $13 (+0.9%) and the Dow rose 1.9%.
On Friday, the last market day of June, all markets soared. Gold rose $40 in London, while the stock market also rose (+205 Dow points), all based on the supposed "solution" to the European debt crisis, based on discussions of a new proposal for a "banking supervisor" to pour forth emergency loans to all current and future troubled banks in Europe. That sounds more like a very big Band-Aid than a solution, but the markets in metals and stocks soared on the last day of June, giving the first half of 2012 a boost. In the meantime, the U.S. Federal Reserve is talking about printing more money. The leader of the "dove" contingent, Chicago Federal Reserve President Charles Evans, said last week that the Fed would likely have to take "further steps" to boost economic growth. His comments seem to comprise the groundwork for announcing a third round of quantitative easing, by which the Fed would print even more money.
Mike Fuljenz Goes to Washington to Support the Collectible Coin Protection Act
I am urging coin collectors and investors nationwide to promptly contact their Congressional representatives in support of the recently introduced Collectible Coin Protection Act (HR5977).
I was among a half dozen of the country's numismatic leaders who met in Washington, DC on June 28, 2012 with Congressional leaders and staff members to discuss the importance of the proposed legislation to protect the public.
The bill was introduced on June 20, 2012 by co-sponsors Rep. Lamar Smith (R-Texas), Chairman of the U.S. House Judiciary Committee, and Rep. Fred Upton (D-Michigan), Chairman of the U.S. House Energy and Commerce Committee. (It has bipartisan support). HR5977 will strengthen the 39-year old Hobby Protection Act, a law that helps combat counterfeits. We need to bring that law into the 21st century because of new issues that were not even contemplated decades ago.
I urge every rare coin and bullion coin collector or investor to contact their Congressional representatives and ask them to co-sign and vote for the Collectible Coin Protection Act, HR5977. It will go a long way in combating counterfeits in the marketplace, and could save buyers money and heartbreak.
To find the name and contact information for your local member of the United States Congress, visit www.House.gov and click on "Representatives."
Our customers can take comfort in the fact that I am a former authenticator, grader and educational seminar instructor for the Congressionally-chartered American Numismatic Association and, unlike many other coin companies, the coins you buy from us are looked at by a recognized expert.
Eight Signs That Gold Coin Demand Is Growing
- I am seeing higher bids for many scarce $2.50 and $5 Indians in better mint state grades.
- Large dealers are receiving more large orders this month than in any month in 2012.
- Large dealers are reporting more large orders coming from buyers they haven't heard from in years.
- National radio network ads for rare gold coins are increasing, especially for $10 Indians.
- Dealers are reporting several large orders for $10 Indians, totaling in the millions.
- Newspaper and magazine ads for Indian gold coins are increasing.
- The numismatic premiums over gold "melt" value are expanding for most common pre-1933 gold coins, like the 1904 $20 Liberties.
- My 2010 Numismatic Literary Guild Best Investment Book of the Year, "Indian Gold Coins of the 20th Century," has been selling well enough that I need to reprint the book. The new edition will be out as soon as possible. New books, or reprints of recent award-winning books, typically spur new demand for the coins in question.
Why Do I Discuss Metals in a Coin Company Newsletter?
Gold prices affect the rare coin market both directly (for bullion coins) and indirectly (for numismatic coins). The impact is more immediate and significant if gold is a major component of the gold coin's market value. For example, a common circulated $20 Liberty gold coin will be more affected than a gem uncirculated $3 gold piece. The more rare and desirable a coin is, typically the less effect modest gold moves will have on its price. However, rising gold prices often result in more customers for coin dealers and rising prices. In bull markets I often quote an old oil filter commercial "Pay me now or you will probably pay me more later."
Conversely, declining gold prices over time can reduce advertisement response by new customers and may be a factor in later rare coin price declines. Customers may tend to buy more coins when gold rises than when it falls. The economy can also play a part in whether customers buy as often and spend as much on rare coins. There are no absolutes or guarantees here, just valuable lessons, and opportunities, from history to consider.
Gold is Still Rising (especially in Europe) as we Enter the Second Half of 2012
It's important to remember that the U.S. dollar has been unusually strong over the last year, masking gold's rise in other currencies. The U.S. dollar has risen by 15% to the euro in the last 12 months. Over those 12 months, the euro has fallen from $1.45 to $1.26, meaning that gold is up far more in euro terms than in the U.S. dollar recently. Europeans have seen their gold investments rise 24% in the last year, while the U.S. investment media talks about gold's "decline." In the U.S. gold has risen about 8% since July 1, 2011.
Late-Breaking News: India Demand Should Pick Up in the Second Half of 2012
Forbes Online reported late Sunday night that "India is likely to import around 20% more gold bullion in the second half of 2012 than it did in the first half." They quoted Bombay Bullion Association President Prithviraj Kothari, who said "Imports in the second half of the calendar year will be around 300 tons, higher than what we have imported in first half, which was 250 tons." Stay tuned for more details.
Louis E. Eliasberg, The King of Gold Coins
Louis E. Eliasberg Sr. came to be known as "The King of Coins" after he accomplished a feat many thought to be impossible: Over a period of less than two decades, from 1934 to 1950, Eliasberg assembled the only complete collection of U.S. coins - the only one that contained regular-issue coins of every denomination from every date they were issued and every mint that made them in those years. He was the ultimate set builder. News of this achievement not only electrified fellow hobbyists, but also impressed the entire nation. It was considered so significant that Life magazine, then required reading for millions of Americans, featured Eliasberg and his coins in a lavish photo layout.
Eliasberg wasn't even a hobbyist when he started buying coins: He did so as a way to circumvent the Gold Surrender Order of 1933, which required U.S. citizens to turn in their gold coins, but exempted collectible coins. "I realized the only way I could legally acquire gold was by becoming a numismatist," he explained years later. "So in 1934, to the extent of my means, I started buying gold coins."
During the decade and a half it took him to complete his collection, Eliasberg spent less than $400,000. When the collection was sold, at a series of auctions between 1982 and 2005, it realized a grand total of roughly $55 million - more than 100 times what he had paid.
This is Your "Eliasberg Moment"
Eliasberg specialized in rare numismatic coins because gold bullion was off limits, by order of the President in 1934. As we enter another economic slowdown in 2012, today's investment world feels a lot like the 1930s, when Louis Eliasberg started his collection. With today's market feeling so much like the 1930s all over again, wise investors might once again have fun collecting coin sets that could yield impressive gains in the course of their lifetime.
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