May 2021 - Week 3 Edition
Gold Hits Three-Month High
Gold rose to a three-month high on Monday, May 17, shooting up from $1,845 to $1,866 between 9:00 am and noon, Eastern time. Gold continued meandering higher, reaching a four-month high of $1,875 Tuesday as the U.S. Dollar Index (DXY) fell 1% over the last week (and almost 4% in the last month).
We are also seeing COVID cases rising in Asia, most notably in India. Singapore has announced it was closing most schools this week and Taiwan imposed new restrictions on gatherings. The rise in global COVID cases is one of many uncertainties currently playing out, all of which tend to support rising prices for gold, silver and expertly selected rare gold coins.
Global Uncertainty is Rising -- This Uncertainty (Like “Carter 2.0”) is Good for Gold
The first four months of the Biden Administration feel eerily similar to the four full YEARS of the Carter Presidency as foreign powers sense the new weakness in Washington. So, they are flexing their muscles overseas, while the spendthrift Congress is creating record deficits and high inflation at home. This may be bad for America but it is good for gold and rare coins!
This is all very reminiscent of the Jimmy Carter era (1976-80), when gold enjoyed its fast and greatest bull market rise, from just over $100 per ounce in September 1976 to $850 in January 1980 as a prominent rare coin index rose a record 1195%. It was a time of “stagflation” (high unemployment plus inflation), an expanding Soviet empire overseas (this time, it could be China), weak and indecisive leadership at home, and a spendthrift Democratic Congress.
Gold and rare coins tend to rise rapidly with such a mixture of uncertainty, indecision and presidential weakness. Please contact our professional account representatives today to find out what exciting new purchases are currently in inventory. You’ll be glad you did!
Last Week’s Inflation Numbers Were as High as We Predicted - But They “Surprised” the Fed!
Last week, we advised you to anticipate high inflation numbers, even though the Federal Reserve was “surprised” to see the numbers so high. We cited a dozen major commodities with 35% or greater price increases in just the first four months of 2021, so the Fed must have been watching another planet…
Last Wednesday, the Department of Labor reported the Consumer Price Index (CPI) rose by 0.8% (a nearly 10% annual rate) in April, the largest monthly increase in 13 years and four times higher than the economists’ consensus expectation of a 0.2% rise. Even excluding food and energy, the “core” CPI rose 0.9%. In the past 12 months, gasoline prices have risen 49.6% and used car and truck prices have risen 21%.
Then, on Thursday, we learned that the Producer Price Index (PPI) rose 0.6% in April, which was double the economists’ consensus expectation of a 0.3% increase. The core PPI, excluding food, energy and trade services, rose by 0.7%. In the past 12 months, the PPI has risen 6.2% (the largest increase since 2010).
So, what was the Fed’s response? Chairman Jerome Powell was strangely silent, but Fed Vice Chairman Richard Clarida said he was “surprised” at the CPI number, saying, “this number was well above what I and outside forecasters expected.” He disparaged the number, saying, “Honestly, we need to recognize that there’s a fair amount of noise right now, and it will be prudent and appropriate to gather more evidence.” Perhaps the Fed will wake up to reality and get out of their biased bubble and see next month’s number…or just go shopping and eating all over our great country!
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