September 2020 - Week 2 Edition
Gold and Silver Rising
Gold rose $35, from $1,908 to $1,943, in four hours of trading Tuesday (10 am to 2 pm EST) and silver rose from $25.80 to $27.00, while stocks lost ground. Even though the U.S. dollar has risen in the last week, there has been a clear move out of stocks and into gold since last Thursday. The most active December gold futures contract rose from $1,911.70 to $1,942.60 on Tuesday after declining 2.1% last week. The Dollar Index reached its annual low on August 31, down 10.7% from its peak, set March 20. Meanwhile, the major U.S. stock market indexes have suffered their worst 3-day losses in three months.
The U.S. Mint’s Gold Eagle Sales Have Risen 383% in 2020 vs. 2019 (and +1,459% in Summer Months)
During the first eight months of 2020, the U.S. Mint sold 589,500 Troy ounces of Gold American Eagles vs. only 122,000 ounces for the same eight months in 2019, a 383% increase. This was despite periodic work shutdowns this year due to Coronavirus and a complete cessation of production of the popular $5 tenth-ounce Gold American Eagles for a three-month period. Production of $5 gold Eagles finally resumed in July, with 35,000 of the smaller coins sold in July and another 30,000 sold in August.
During the summer months of July and August 2020, the total of Gold American Eagle ounces sold reached 210,500, up 1,459% vs. just 13,500 ounces sold in July and August of 2019.
For the first eight months of 2020, the U.S. Mint sold 16,294,000 one-ounce Silver American Eagles, a 32.8% increase over the 12,269,000 ounces sold in the same eight months of 2019, despite several work stoppages in the popular silver Eagle series. Premiums to dealers also rose sharply on most gold and Silver American Eagle coins, partly due to rising demand and partly due to periodic supply shortages.
Comparison Performances of Precious Metals vs. Stocks During the First Eight Months of 2020
On Monday, August 31, gold rallied while the dollar weakened to its lowest level in two years as U.S. coronavirus cases topped six million. (Investors have often bought gold as a hedge against economic uncertainty, such as times when the coronavirus pandemic has worsened, or when the economy has flattened after beginning to rise.) For the month of August, gold reached its peak on August 6 and then remained above $1,900 in late August, while silver kept rising.
Silver has soared phenomenally, rising from barely $12 in mid-March to $28.24 on August 31. Silver rose 14% in August while gold traded net flat for the month. Stocks also rose during August, but stocks were a “mixed bag,” as a very few glamourous big-name big-cap (worth over $1 trillion each) tech stocks accounted for much of the rise in the NASDAQ and S&P 500 indexes, while the small-stock Russell 2000 index declined in 2020. Last week, the makeup of the 30 Dow Jones Industrials was re-arranged once again, with three new stocks replacing three old stocks, while “gold is always gold” throughout history.
USA Today Quotes Me (and Our Customers) in a Positive Gold Article
On September 1, USA Today published in their Money Section an extensive and positive article on gold (“Gold Gleams in Hard Times”). Even though they only quoted me once (officially), they paraphrased a lot of material I gave them, and what I told them about the qualities of gold. They also quoted some interviews from our satisfied customers, which we helped arrange for them. You will probably recognize many of these statements because you heard them here first in the weekly Metals Report – months ago.
For instance, USA Today brought the attention of its readers to a Bank of America report first issued in April headlined, “The Fed Can’t Print Gold” (like it prints dollars.) In that report, BofA raised its 18-month target price for gold to $3,000. Of course, we brought that report to your attention back in May.
In the end of the article, they quoted me. In my quote, I named some of attributes of gold. “It’s an inert metal. It doesn’t rust. It doesn’t corrode. It’s got a lot of uses, and it’s something people have always desired long before Christ.”
This article by Brent Schrotenboer was well-written and this kind of positive widespread coverage in a major media outlet brings forth many new ads and new customers, who will tend to buy bullion products first and then graduate into rare coins within the next 2-3 years.
This is an important time to load up on RARE coins, since it takes time for “bullion fever” to translate into the numismatic market. This is not a time to sell rare coins but to accumulate more. This is the kind of market we have been waiting for. We have been hearing from several former clients who have come back into the market after a long time on the sidelines. Some are even driving in or flying in to see us to see what kind of rare coins are available. (Please call to set up a time, if you plan to do that.) The bullion market is already taking off. I sense that the rare coin market will take off next. Now is the time to prepare and act.
Beaumont Survives Hurricane Laura – But Lake Charles Was Hit Hard
As I indicated in my previous week’s Metals Report, our company came through Hurricane Laura reasonably unscathed. We endured one day of rolling electrical backouts but most of us were either at work or were helping others in need, and we were all back at work in full force the next Monday. That wasn’t the case for my friends and family in Lake Charles, Louisiana, my original hometown. Hurricane Laura, the strongest hurricane ever to hit Louisiana, went right over Lake Charles with the highest winds on the eastern wall of Laura’s eye hitting the city directly. The peaceful eye never even gave them a moment of relief.
After the hurricane passed through, I carried some essential supplies (food, fresh water, large trash bags, coolers with plenty of ice and other essentials) to family and friends in Lake Charles, giving new definition to the term “personal shopper.” President Donald Trump also flew into Lake Charles that weekend and was greeted warmly at stops in Louisiana and in Texas. That was well covered in the local news, but not so much in the national press.
The Fed’s Goal is Now Clearly to Inflate the Dollar
In the last week of August every year, the Federal Reserve Bank of Kansas City hosts a central bankers’ convention in Jackson Hole, Wyoming, near the Grand Teton mountain range. This year, due to the coronavirus pandemic, the meeting was held “virtually” via Zoom. In his keynote address last Thursday, Fed Chairman Jerome Powell clearly stated the Fed’s primary goal for the foreseeable future will be to fight unemployment and let inflation run however high it will run. He even said the Fed will now allow inflation to overshoot their previous 2% target. This is in directly opposite of what the Fed faced 40 years ago, in 1980, when inflation was public enemy #1. Fed chair Paul Volcker faced inflation, unemployment and interest rates ALL in the double-digits, providing the basis for gold’s initial run up to $850 in early 1980.
With all these new trillions of dollars added to the financial system this year, the Fed will get their wish, as this new cash is virtually guaranteed to deliver the highest inflation since the early 1980s next year.
Another result of this new wave of unbacked “fiat” money is a suddenly weakened U.S. dollar after years of a strong dollar (vs. the euro and other major currencies). The U.S. Dollar Index is now down over 10% in the last five months. After peaking at 102.8 in mid-March, the Dollar Index traded at 92.1 on Monday August 31, down 10.4%. If the dollar keeps falling, that will supercharge the rise of gold in dollar terms.
Important Disclosure Notification: All statements, opinions, pricing, and ideas herein are believed to be reliable, truthful and accurate to the best of the Publisher's knowledge at this time. They are not guaranteed in any way by anybody and are subject to change over time. The Publisher disclaims and is not liable for any claims or losses which may be incurred by third parties while relying on information published herein. Individuals should not look at this publication as giving finance or investment advice or information for their individual suitability. All readers are advised to independently verify all representations made herein or by its representatives for your individual suitability before making your investment or collecting decisions. Arbitration: This company strives to handle customer complaint issues directly with customer in an expeditious manner. In the event an amicable resolution cannot be reached, you agree to accept binding arbitration. Any dispute, controversy, claim or disagreement arising out of or relating to transactions between you and this company shall be resolved by binding arbitration pursuant to the Federal Arbitration Act and conducted in Beaumont, Jefferson County, Texas. It is understood that the parties waive any right to a jury trial. Judgment upon the award rendered by the Arbitrator may be entered in any court having jurisdiction thereof. Reproduction or quotation of this newsletter is prohibited without written permission of the Publisher.
Metals Market Report Archive