May 2019 - Week 1 Edition
The Gold Silver Ratio is Now at a 27-Year High of 86-to-1
Gold dipped to $1,266 and silver to $14.55 on Thursday morning, May 2, but the metals rallied to $1,285 and $14.93 by Tuesday. Meanwhile, the Dow Jones Industrial Average fell 493 points on Tuesday.
With silver now under $15, the gold/silver ratio has reached its highest point in the 21st Century. Since the year 2000, the average ratio of the price of one ounce of gold to one ounce of silver has been 64-to-1. Last week, the ratio surpassed 85-to-1, the highest ratio since the early 1990s, when the ratio reached 90-to-1. We don’t believe in the artificial 16-to-1 ratio under the Bimetallic Standard of the 1890s, or any magical ratio like 64-to-1, but the current 27-year high of 86-to-1 shows how much of a bargain silver is now. Call us now for our special silver offers!
Coin Sales Reflect a Continuing Drive to Acquire “Trophy Coins”
An old adage is that coin collecting is “The Hobby of Kings,” since only kings could afford (or have the power to seize) the top-quality rare coins made of precious metals. Today, that slogan has changed to become “The Collector is King,” with the serious collector of rare coins driving up the price of rare coins.
With over 2,000 billionaires around the world, “The Hobby of Kings,” has now become the hobby of the very rich. In the last year, I have learned of at least five billionaires who are currently competing for high-quality “trophy” coins. These are coins at or near the top of the population (“top of the pop”) report.
Recent sales show some top of the population report Lincoln cents brought prices about double their previous values. For example, a 1913-D cent in PCGS MS-66+ Red sold for $16,800, a 1923-S cent in PCGS MS-65 Red sold for $33,600, a 1924-S cent in PCGS MS-65 Red sold for $36,000 and a 1925-S cent in PCGS MS-65 Red sold for $36,000. No series – not even Lincoln cents – is immune from highly competitive wealthy collectors offering more and more for trophy coins for their registry sets. Long term, this tends to help raise many prices across the board, especially for coins priced above $5,000 and near the top of the pop report. Call us now about what trophy coins might be right for your portfolio!
Central Bank Gold Buying Sets 12-Month Record High
According to Bloomberg, gold purchases by central banks in the first quarter were the highest in six years and the 12-month totals ending March 31, 2019 set a 12-month record high for central bank gold buying.
Net central bank gold purchases totaled 145.5 tons in the first quarter, 68% above the first quarter of 2018 and the highest first quarter since 2013, according to the World Gold Council. Russia remains the largest buyer as they continue to unload their U.S. dollars in favor of gold. Other regular gold buyers included Turkey and Kazakhstan, but last quarter brought some new buyers to the fore. Ecuador added to its gold reserves for the first since 2014. Other buyers included Colombia and Qatar. China increased its gold reserves by 11.2 metric tons in March to a total of 1,885 metric tons (60.62 million Troy ounces).
In 2018, central banks added 651.5 tons to their total reserves, the second-highest total on record, but due to the acceleration of gold demand late in the year, central bank gold buying set a record for 12-month totals (on a rolling four quarter basis) at 715.7 metric tons bought from April 1, 2018 to March 31, 2019.
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