November 2020 - Week 3 Edition
World Gold Council Shows Private Investment Gold Demand is Growing in 2020
The latest World Gold Council (WGC) report of third-quarter gold supply and demand showed that total holdings in gold-backed ETFs reached a record high 3,880 metric tons (about 125 million Troy ounces, worth $237 billion at $1,900 per ounce) as of September 30, 2020. That is after adding 272.5 tons (8.76 million Troy ounces worth $16.6 billion) in the third quarter, when gold reached a new high at over $2,070 per ounce.
Demand for physical gold (coins and bars) in the first nine months of 2020 increased 49% over the same period in 2019, reaching 222.1 tons (7.14 million Troy ounces, worth $13.6 billion). That was a record annual pace, with the largest demands coming in America, Europe, China and Turkey, according to the WGC report.
Central bank buying, however, declined in the third quarter – the first quarterly decline since 2010 – due in large part to the need for raising cash to meet budget deficits, primarily in Turkey and Uzbekistan.
Total gold supply fell by 3% in the quarter, despite a 6% growth in gold recycling, which was offset by declining mine production. In the second quarter, gold mine production fell by 10%, year over year, mostly due to COVID-19 closures. In the third quarter, mine production was down 3.4%, year-over-year.
Gold Swings Up and Down Based on the Latest COVID-19 News (or Rumors)
Gold rebounded early Monday, November 16, to nearly $1,900 per ounce ($1,897.20) as the U.S. dollar weakened. The move marked a recovery from its sudden $100 drop a week before, when Pfizer announced a COVID-19 vaccine and raised hopes for a sudden end to the pandemic.
In reality, the wide distribution of the Pfizer vaccine is months away, and would be available to only a small percentage of the population before then, with two or three applications and strict protocols (like storage at about -70 degrees Celsius, which many facilities are not prepared to provide).
Since then, gold has risen or fallen – sometimes in short, rapid and sharp moves – based on vaccine news from various companies. In the meantime, COVID-19 cases, hospitalizations and deaths are all on the rise, causing new statewide shutdowns. If investors would take a longer view, we have already over-spent over $3 trillion in 2020 and will continue to run up trillion-dollar annual deficits in the foreseeable future. No matter how rapidly various vaccines are developed, when an effective vaccine is finally available allowing us all go back to work safely, the long-delayed inflation from this new money will finally begin to rise. At that point, gold and silver will rise compared to the shrinking value of these diluted paper dollars!
Holiday Coin Gift Giving Ideas
I am often asked for some of my best ideas for coin-related holiday gifts. With the holiday season increasingly muted by travel restrictions and limits on family gatherings to 10 or fewer in many states, some are altering their holiday plans, but we can still plan our Christmas gift giving by mail or in person.
My best answer for most family members would be bullion coins – like holiday silver rounds or 2020 dated silver American Eagles and Royal Canadian Mint silver coins. This year’s regular 2020 gold and silver American Eagle coins will be in special demand, because the reverse design will be changed next year. There are also ancient coins with important Biblical themes available, from us, including the widow’s mite.
When I first started helping my local coin dealer in my hometown in the early 1970s, the holiday-oriented Franklin Mint silver and copper rounds in greeting cards and the holiday-themed silver bars (no longer made) were popular. Today, we sell popular silver rounds with holiday themes at low prices. Let us know if you are looking for a special numismatic gift for that special numismatist in your life. Inquire about gifts ranging from holiday silver rounds to popular 2020 major mint coins or ancient Biblical coins like the widow’s mite.
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