July 2020 - Week 2 Edition
Gold Topped All Other Investments in the First Half of 2020
On Tuesday, June 30, Gold for August delivery – the most actively-traded gold futures contract – closed at $1,800.50, the first-time gold traded above $1,800 since September of 2011. The spot price that day was $1,793, delivering an 18.35% first-half gain for gold, eclipsing all other major investments assets.
Although silver was flat for the first half, it was a tale of two quarters. Silver led all metals in the second quarter with a 31.52% gain vs +16.0% for platinum and +13.24% for Gold – but it was the best quarter for gold since 2016. This is especially impressive since the second quarter (April through June) is a seasonally weak time for gold, which has its strongest season from September to December.
U.S. Mint Coin Shortage Continues
The U.S. Mint continues to reduce its production and sales of Silver American Eagles and smaller-denomination Gold American Eagles. There were no sales of $5 (one-tenth ounce) Gold Eagles during the April-June quarter and limited sales of other fractional-ounce Gold Eagles. In June, 42,500 of 44,000 ounces of all Gold Eagles sold (96.6%) were full one-ounce Gold American Eagles, making the premiums on smaller-denomination eagles higher. Production of everything but one-ounce gold is down. Silver American Eagle production and sales are also down, but premiums were up due to the pandemic, since fewer Mint employees were consistently available, and the Mint sometimes closed.
American Eagle bullion coins are usually struck at the West Point Mint, but the Philadelphia Mint was called on to help with production and produced 240,000 Silver Eagles in April. Historically, these will likely be called “Pandemic Eagles,” and, when certified, have already commanded a premium.
June closed the first half of the year strongly with 44,000 ounces of Gold American Eagles sold during the month vs. only 4,500 ounces sold in June 2019, an increase of 878%! For the first six months of 2020, sales of Gold American Eagles reached 379,000 Troy ounces, up 249% from the 108,500 ounces sold last year during the same period. Sales would have been higher if the West Point Mint had not suffered multiple COVID-19-related interruptions.
Premiums on Silver Eagles are still high because the demand is so much higher than the Mint can supply. Despite production interruptions since March, sales of American Silver Eagle sales are up 25.7% for the year, so far – to 12,596,500, or 25% more than the 10,022,000 coins sold in the first six months in 2019.
The Mint sold 7,500 American Buffalo one-ounce gold coins in June 2020, 150% above the 3,000 coins sold in June 2019. This lifted their year-to-date sales total to 126,000 ounces, 165% above the 2019 levels.
A year ago, some short-sighted dealers were melting many valuable gold coins, like more common-date MS-60 to MS-63 $20 Liberty and Saints, since they were selling at a small premium over melt value. Now, even some newly minted bullion coins are selling at significant premiums, since the Mint can’t make enough to meet demand. For this reason and others, the premiums for common and slightly better-date $20 Liberty and Saints graded MS-62 to MS-64 are rising significantly.
Whenever gold prices are rising, as they are now, many coin dealers will place more bullion ads, and those ads usually bring in more new customers than normal. After those new customers buy bullion coins, within six to 24 months, a good percentage will graduate into buying rare coins, often pushing up the prices of rare coins. That is why you need to call our professional account representatives today!
A Fourth of July Conversation to Remember
In this time of destroying historical statues honoring our nation’s forefathers without reading a book about their lives and their difficult challenges, it might be worthwhile to, at least, watch a movie of the musical 1776, with music by Sherman Edwards, a history major and one-time American History teacher who put himself through college by playing piano. He later wrote pop songs and then came up with this idea of putting history into music.
In one scene, John Adams, Dr. Benjamin Franklin and Thomas Jefferson want to include a section in the Declaration of Independence rightfully condemning slavery, but North and South Carolina refuse to ratify the Declaration unless that section is removed. The vote for Independence must be unanimous to pass. What would YOU do?
Here’s how author Peter Stone wrote Ben Franklin’s counsel for compromise, based on historical records:
Edward Rutledge of South Carolina: Remove it, or South Carolina will bury, now and forever, your dream of independence.
Dr. Benjamin Franklin of Pennsylvania: John, I beg you, consider what you're doing.
John Adams of Massachusetts: Mark me Franklin, if we give in on this issue, posterity will never forgive us.
Dr. Benjamin Franklin: That's probably true, but we won’t hear a thing. We will be long gone. Besides, what will posterity think we were? Demigods? We're men, no more, no less. Trying to get a nation started against greater odds than a more generous God would have allowed. First things first John, independent America. If we don't secure that, what difference will the rest make?
John Adams: Jefferson, say something.
Thomas Jefferson of Virginia: What else is there to do?
John Adams: Well man, you're the one who wrote it.
Thomas Jefferson: I wrote all of it, Mr. Adams.
(Jefferson crosses out the passage. Adams angrily takes the document to Rutledge.)
John Adams: There it is Rutledge, you have your slavery, little good may it do you. Now vote, damn you!
Edward Rutledge: Mr. President, the fair colony of South Carolina, says Yea.
And so, thankfully, we are a nation today – a nation that also finally ended slavery, at the cost of 620,000 lives in battle.
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