Metals Market Report 02-17-2015

The Mike Fuljenz Metals Market Report

February 2015, Week 3 Edition

Gold had a flat week, but gold is still up more than stocks so far in 2015. News of the possible Greek exit (‘Grexit’) from the Eurozone continue to lift gold and depress the euro. On Monday, when the U.S. gold and stock markets were closed, gold rose in most global markets. With the euro trading at $1.13 to the dollar (down from $1.37 at the start of 2014), gold is up 10% so far this year in terms of the euro.

Two Noted American Authors Bash Gold

It may be a sign of the times, but two best-selling authors not noted for their expertise in gold have bashed the yellow metal needlessly. This gratuitous slap at gold may be a sign that gold is about to stage a rally.

Last year, best-selling author Harry Dent said that gold will fall to $250 to $700. Specifically, he said “around $700 per ounce is a certainty in gold by 2015 to 2016, and $250 is a possibility well down the line by 2020-2023.” He bases his prediction on his assumption that “deflation” will prevail over the next decade or so – ignoring the fact that gold performs well in historical deflations, including the 1880s and 1930s in America and during the current deflation in Europe. (Gold is up sharply in euro terms.)

He blames “gold bugs,” as a group for “not understanding the financial and debt crisis,” when it is the gold bugs who primarily saw the 2008 financial crisis in advance and warn about its resumption today.

Harry Dent is not noted for his market timing prowess. You might even say that his predictions are the Kiss of Death to major trends. In 1998 and 1999 he wrote “The Roaring 2000s” and “The Roaring 2000s Investor” right on the brink of the peak of the 1990s bull market and the beginning of a “lost decade” in stocks from 2000 to 2009. Then, after the big crash of 2008, he wrote “The Great Depression Ahead” in 2009 and “The Great Crash Ahead” in 2011, right before stocks made their biggest moves since the 1990s.

The other best-selling author to take a swipe at gold is Joe Queenan. In the February 7-8 weekend edition of The Wall Street Journal, he wrote a piece called “My Gold Rush – Away from the Stuff,” in which he wrote “Gold is the world’s stupidest metal. It has been disappointing people or getting them killed since the dawn of history. Gold is always experiencing stratospheric rises and then collapsing overnight…”

Actually, the same could be said of oil, copper, the euro and the U.S. stock market, as well. Gold mining shares have been especially erratic. (Queenan would have made far more sense – and sounded funnier – if he had lampooned gold mining shares instead of gold.) All markets go up and down in big waves, but gold has been more stable than most other major investments in the last year and over the last several decades. Recently, we did a study comparing the gold market to inflation and the stock market over the last 10 to 100 years. We found that gold beat inflation in every major time frame, while gold and stocks each performed well, sometimes one beating the other, but both being part of a well-balanced portfolio.

This is par for the course for Queenan, who positions himself as a cynic about nearly everything. His book titles include “Malcontents: The Best Bitter, Cynical and Satirical Writing in the World.” In one book, he positions himself as a “Hatchet Man Critic.” He is famous for belittling almost everything that some people hold sacred, so it’s no surprise that he turned his attention to bashing “gold bugs” this time.

New Type III Double Eagle Book Desired by Dealers

My new book on Type III Double Eagles, to be released by April 2015, should increase demand for coins in this series. In 2000 my first edition about this popular series received the Numismatic Literary Guild Investment Book of the Year Award further boosting interest in double eagles. There will be some gorgeous photographs and innovative tools in this new edition that should greatly help collectors, investors and dealers who participate in this popular series. At a recent California convention some major dealers asked me for boxes of these books as soon as possible.

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