November 2021 - Week 3 Edition
Gold and Silver Jump on Inflation Reality
Gold reached $1,875 early Tuesday, November 16 following the dramatic new inflation figures released last Tuesday and Wednesday. Gold rose by nearly $100 per ounce in eight trading days, from the $1,763.45 London setting on November 3 to $1,863.80 on November 15 (+5.7%). Silver rose 6.9% in the same time span, from $23.58 to $25.21.
Inflation Reached 31-Year Highs in October, Kicking Gold into Overdrive
What kicked gold into overdrive this past week was the fact that the Labor Department announced on Tuesday that its Producer Price Index (PPI) rose 0.6% in October and is now running at an 8.6% annual rate. Gasoline prices alone surged 6-plus percent in just one month. Then, on Wednesday, the Labor Department announced the Consumer Price Index (CPI) for October rose even faster, by 0.9% (an 11% annual rate).
Over the past 12 months, the CPI is up 6.2%, the highest gain in 31 years. The core CPI, excluding food and energy, rose 0.6% in October and is up 4.6% in the past 12 months. Energy soared 4.8% in October, led by a 12.3% increase in heating oil, natural gas was up 6.6% and winter is coming. In the past 12 months, energy services are up by 59.1%, including a 49.5% gain in gasoline at the pump.
Inflation is also a global phenomenon now, and it is much higher in China and Europe than it is the U.S. China’s National Bureau of Statistics announced this past week that China’s Producer Price Index (PPI) rose by a record 13.5% in October vs. a year earlier, reaching a 26-year high. Europe’s energy prices have been up four- to five-fold due to their over-emphasis on wind and solar power over fossil fuels.
As usual, the mainstream media is coming out with rosy articles about gold after the first $100 gains are in the books (see Barron’s Commodities Corner, “Why surging U.S. inflation has gold bulls looking for record highs”). The time to buy gold, of course, is when nobody likes it, and the price is much lower. Call your account representative now before you miss out.
On the other side of their trend-following habit, the press will often write about the end of gold as an investment when gold is at or near its lows, which is actually the best time to buy. In December 1997, for instance, when gold reached a low of $283, The Financial Times posted an article titled “The Death of Gold,” saying at one point that “gold is a goner.” Less than 14 years later, gold topped $1,900 per ounce, up almost 580%.
Good News! Morgan and Peace Dollars Will be Back in 2022
The U.S. Mint announced its 2022 numismatic product line will include new Morgan and Peace dollars, thus ensuring the start of a new series, making the 2021 Morgan and Peace dollars the first year of an ongoing series. This, in all likelihood, will increase their value in coming years, if history is any guide.
The Mint’s chief of sales and marketing, Matthew Holben, made this announcement during a Microsoft Teams video conference on Tuesday, November 9. Holben also said the Mint plans to produce Morgan and Peace dollars in future years in different finishes and at multiple Mint facilities as an annual product.
The 2021 issues were delayed and limited in supply. Like most production facilities in America, there is a worker shortage, partially due to COVID-19, but also due to millions of workers deciding to stay home or seek alternative employment, for whatever reason. Each month is setting new records for quitting jobs (4.43 million people quit in September) and a record 11.2 million jobs are vacant as of November 5th in a strange new world with so many still receiving jobless benefits.
As you know, we have been tracking detailed monthly sales at the U.S. Mint for the past few years, but seldom have we covered the long-term picture. Now we learn, according to the World Gold Council (WGC), that gold bullion sales by the U.S. Mint are on track for the best year since 1999. So far, sales have reached 1,143,000 ounces through mid-November, the most since 2010, and there are still 43-plus days to go in the year. At this rate, gold sales are on track to be the best sales year in over two decades.
Wall Street Journal Praises Gold
This week, GOLD made the front page of the Wall Street Journal (WSJ) but you read about it here first in this past week’s Metals Market Report. It is not often gold receives such prime placement in the pages of any newspaper, much less, the WSJ. But this week, not only did the WSJ give gold high praise, it attributed its recent rises to inflation.
“Inflation Anxiety Drives Gold Near Highest Level in Months” read the WSJ headline. Then, the article went on to detail gold’s recent increases and its promise going forward. This is all very good for the gold and rare coin market as it drives more new customers to these areas. Just remember you read it here first, so call your account representative now for more gold and rare coin news before its reported nationally.
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