The Michael Fuljenz Metals Market Report: July 2012, Week 3 Edition
Gold fell (along with stocks) for most of last week, then both staged a Friday rally. Stocks rose Friday on the surprisingly strong second-quarter earnings of JP Morgan Chase, despite their $5.8 billion loss in May over derivatives trading. Gold rose Friday on news of more central bank rate-cutting and monetary easing in the wake of slow growth rates around the world. Also, news of Turkey's gold-for-oil trades pushed gold up, since this could be a precedent for nations to use gold to avoid cash transactions through banks.
- Gold 52 weeks ago (July 15, 2011): $1587.00
- Gold's average price during 2012: $1646.93
- Gold's London Low for 2012: $1537 on May 16
- Gold's London High for 2012: $1788 on February 29
Last Week In Metals: Gold rose $7 (+0.4%), silver rose $0.24 (+0.9%), platinum fell $13 (-0.9%) and stocks were flat.
The Coin That Will Become "The Face of Numismatics."
One important coin from the early 20th century could someday become "the Face of Numismatics" in the 21st century. It's a coin so valuable and so beautiful that in the future you'll probably see it on almost every national news story about rare coins, and you'll see replicas advertised on TV. What's the coin? In a future Metals Market Report I'll tell you about it, and why I and many other numismatic experts believe someday it will be widely considered the most important and valuable coin an individual can own -- and how it will affect you and your gold coin investments. (Hint: I'm currently working on a feature article related to this special coin. It's expected to be published in a national magazine by the end of the year.)
Election-Year Realities: Deficits are Soaring
In an election year, truth in advertising is rare, as each candidate bends the truth to get his point across. Democrats have circulated a chart showing how government deficits rose far faster under President Bush than under President Obama. That doesn't seem possible, since Obama ran up $1.4 trillion deficits each of the last three years vs. deficits averaging one-third that much ($450 million) under Bush. But if you look at the numbers in detail, the Democrats blame all of the 2009 deficit on George Bush, since that budget was passed under the last months of his eight-years in office. But in reality, 2009 was 95% Obama's year, and it was Obama who added the $787 billion stimulus package in 2009, not Bush, and it was Obama's idea to add "cash for clunkers" to the already-bloated 2009 budget.
Here is a similar table of facts, assembled by Republicans, showing President Obama's dismal economic record, using January 20, 2009 - his inaugural date - as the starting point for various economic indicators.
| Category | Jan 2009 | Mid-2012 | Change |
|---|---|---|---|
| Gold Price (ounce) | $850 | $1590 | +87% |
| Gas Price (gallon) | $1.85 | $3.39 | +83% |
| Food Stamp Recipients | 32 million | 46 million | +45% |
| Federal Debt | $10.6 Trillion | $15.2 Trillion | +43% |
| Debt Per Person | $34,731 | $48,699 | +40% |
| College Tuition (year) | $6,591 | $8,244 | +25% |
| Americans in Poverty | 39.8 million | 46.2 million | +16% |
| Unemployed Persons | 12.0 million | 13.2 million | +10% |
| Median Home Value | $169,700 | $147,800 | -13% |
As damaging as this table seems, the plain truth is that BOTH Bush and Obama have over-spent by massive amounts over the past 12 years, at rates unprecedented in U.S. history. There is no "good guy" in this historical struggle, even though there is always some hope that the new guy won't repeat the mistakes of the past. The fact that gold started rising strongly in 2001 - and it has risen for 12 straight years now - is indicative of the fact that both political Parties have failed to control runaway federal spending. Gold should continue to rise as long as both Parties blame the other instead of taking responsibility for change.
Turkey's Gold-for-Oil Scheme Defeats Sanctions, Enriches Iran and Lifts Gold
In an attempt to keep Iran from joining the "nuclear club," most nations have joined the U.S. in its call for oil trading sanctions against Iran, but Turkey - which borders Iran on its far eastern corner - has not only kept buying Iran's oil, but Turkey has shipped an equivalent value in gold bullion to cash-starved Iran.
From March to May of 2012, Turkey traded 60 tons ($3 billion) in gold, an 800% increase over 2011, in exchange for Iran's oil. Half of that total came in May, when Iran became Turkey's largest export market, with almost all of that trade being gold. Gold helps Iran more than cash could, since Iran is cut off from cash trading, and gold is much stronger than Iran's currency. Prices are rising over 20% per year in Iran.
The Obama Administration granted Turkey a temporary waiver but that "free pass" is very controversial. Michael Rubin, a former Pentagon advisor on Iran and Iraq, said "The idea that Turkey needs a waiver for more time to disconnect itself from the Iran oil trade is ludicrous." But while the U.S. allows this gold-for-oil trade, the U.S. Navy is building up its forces in the Persian Gulf. This gives gold another boost, as a crisis hedge in response to rising tensions in the Middle East, pointing to some kind of showdown soon.
Gold Coin Survives Controversy. Drives Investor & Collector Demand.
It was authorized by the Act of April 2, 1792. In 1908, this gold coin sparked controversy and spread fear across our nation. So loudly was the coin condemned, people were scared to save them in their collections for fear of germs spreading from the coin's innovative recessed design.
Over a century later, that unfounded fear has resulted in the Indian Head quarter eagle ($2.50) becoming a series with relatively few examples surviving in higher grades. Their rarity, along with a historic list of unprecedented "firsts," is driving investors and collectors worldwide to add them to their portfolios and collections:
- First $2.50 design to have the motto "In God We Trust"
- First U.S. coin struck with a fascinating incuse design
- First U.S. coin design that used a true Native American model
- First U.S. coin design by Bela Lyon Pratt, pupil of the famous designer Augustus Saint-Gaudens
- One of the most popular and historic coins of the 20th Century
This week I saw increased dealer advertising for Indian gold coins and higher bids posted on certified coin dealer exchanges for $2.50 Indians in mint state.
A complete set of these coins (1908-1929) only has 15 coins. If you are an investor or collector working on this set I advise you to buy now as prices for many of these coins are beginning to rise and dealer inventories are shrinking.
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