April 2021 - Week 4 Edition
Significant Increase in New Coin Customers for First Quarter of 2021
The coin market – both bullion and numismatic – is heating up. Premiums remain high for gold and silver bullion coins and the mints can’t keep up with demand. We routinely shop around the world to find the mints that can meet this demand for gold and silver bullion coins at reasonable premiums over spot prices. Recently, for instance, the Austrian Philharmonic gold coin has delivered a better deal than the American Gold Eagle, although that might change after the U.S. Mint rolls out its two separate Eagle designs later this year and more U.S. Mint workers consistently return to their posts after the pandemic ends. We look forward to fulfilling the high and rising demand for the American Eagle coins!
One way to monitor coin market activity is to count the number of new customers coming on board. In the first three months of 2021, we have seen a significant increase of new customers. I don’t know the exact numbers for other dealers, but they tell me their numbers are also up. This growth comes in spite of the fact that gold and silver bullion prices fell in the first quarter of 2021. Precious metals prices grew strongly in 2020 and they are up strongly again in the first half of April, so most customers know that precious metals are good vehicles for long-term growth and portfolio protection whenever stocks may become overvalued.
With more new customers entering the market, the rare coin market is now performing well, especially popular are coins with a low population report and with affordable prices. We refer to these special coins as having better capitalizations and they are included in our popular 20/20 program. As I have said before, the billionaire investors are pushing up the prices of six-figure coins, but the more modestly priced rare coins are just starting to make their move, so now is the time to take your position in specific rarities. Call your representative today to inquire about the best opportunities. I highly recommend adding to your portfolios immediately! I also implore you to ask how to easily roll over your IRA or 401k to a Gold IRA. In these volatile times, you will be glad you did!
Rapid Inflation Surge Pushes the U.S. Dollar Lower & Gold Higher
As we indicated in last week’s Metals Market Report, gold rose on the previous Friday due to a robust increase in the Producer Price Index (PPI), released on Friday, April 9. We advised you to watch for more inflation increases when the Consumer Price Index (CPI) was to be released on Tuesday, April 13. That came true last Tuesday, when the Labor Department announced the CPI rose 0.6% (a 7.2% annual rate) in March. Gasoline prices surged 9.1%, accounting for about half of the gains. In the past 12 months, gasoline prices rose 22.5%.
Gold reacted immediately, rising from $1,728 on the Tuesday morning London fix to $1,748 on the p.m. fix. The U.S. Dollar index immediately fell 0.3% in the first hour and fell 1.2% by the end of the week.
The budget deficit is also pushing the dollar down and inflation up. Unprecedented over-spending by the Biden Administration included a $1.9 trillion “stimulus” package in February and now a $2.2 trillion “infrastructure” bill working its way through Congress. The Biden team is also planning massive new spending programs including free college for all, college debt forgiveness, a Green New Deal, reparations for past racial injustice and other pork projects. For March alone, the federal deficit reached $660 billion, with $927 billion in outlays and only $268 billion in income. April won’t be much better, since the IRS tax deadline has been postponed into May, so we won’t see the normal inflow of tax revenues filed April 15.
The federal budget deficit reached a record $4.1 trillion over the past 12 months, with outlays growing 65% (up $3 trillion) while tax receipts were flat. Federal outlays dedicated to income redistribution rose from 68.4% at the end of 2019 to 77.8% at the end of 2020 with only 22.2% going to everything else.
With deficits this high, new taxes can’t begin to cover the shortfall, so the Fed and the U.S. Treasury will need to print massive new amounts of new dollars to “monetize” the debt. This will continue to devalue the dollar, leading to higher inflation and higher gold prices over the next few years, even if the Biden administration suddenly comes to its senses and stops over-spending now. Too much damage has already been done.
Gold Rose $30 Last Week
Gold rose $30 last week, from about $1,740 to $1,770. Then, on early Monday morning, April 19, gold rose another $20 to a 7-week high of $1,790 during European trading but then it corrected back to $1,770 by 9:00 am Eastern time. Gold’s recent rally is based on a falling dollar and falling U.S. Treasury rates. During the first quarter, 10-year Treasury rates rose from 1.0% to 1.75%, but in April these rates have retreated to 1.6%. For the month of April (through April 16), gold is up $83.40 (+5%) and silver is up $2.14 (+9%).
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