January 2023 - Week 4 Edition

Gold Continues Strong Run Into 2023

Gold has now risen five weeks in a row and 11 out of 13 weeks since the week ending October 20, 2022. At the same time, the U.S. Dollar Index (DXY) has fallen over 10%, from 114 at the end of September to 102 this week, helping boost most commodities. Silver has not risen as regularly or consistently as gold but it is up more on an aggregate basis in the last three months (October 20 to January 20), rising 25% vs. 17% for gold. However, in the same three months, crude oil prices are down 4.4%, due in large part to the Biden Administration’s siphoning off up to one million barrels per day from our Strategic Petroleum Reserve.

Selected Certified Rare Coins Are Doing Even Better Than Gold & Silver

At the beginning of 2023, many certified rare coins that have special attributes – like key historic dates, low mintages, attractive capitalization or great eye appeal – continue to be in demand and see rising prices. We particularly like coins that have low capitalization (Certified Population times Price) compared to other coins in their series. Our favorites include select dates of $2½ Indians, $3 Indians, $5 Indians, $10 Indians, Type 2 $20 Liberties, Type 3 $20 Liberties, $10 American Gold Eagles, and $25 American Gold Eagles.

Starting in mid-2019, we identified these series as our “20/20” program, and many have indeed outperformed the overall rare coin market, as well as the bullion market, since then. Many of the coins in these important series are up from 10% to 25% in the past year and 50% to 100% over the past three-plus years.  

Ask your professional account representative about our 20/20 program. You will be glad you did.

Today Marks the 175^th Anniversary of the Discovery of California Gold

Speaking of classic American gold, this week marks the 175th anniversary of the discovery of gold at the junction of the American and Sacramento rivers in California. It was a quiet day on January 24, 1848 – and indeed mostly a quiet YEAR, since news traveled so slowly back then. However, it was a world-changing event that shifted the population of America, and indeed much of the world, toward California.

Armies of hopeful gold miners – and even the San Francisco 49ers – are named after that event – and the NFL brand is riding a 12-game winning streak into Philadelphia, America’s first center of Freedom in meetings held nearly 250 years ago: The First Continental Congress was convened there, September 6, 1774.

On January 24, 1848, James Marshall discovered gold at Swiss immigrant John Sutter’s Mill, but neither Sutter nor Marshall were able to profit from their score – or even defend their claim against thousands of 49ers filling their land.  Both died in poverty, as did many hopeful miners, but many businesses selling supplies and equipment prospered. The previous year, 1847, the total U.S. production of gold was only 43,000 ounces, mostly as a by-product of base metal mining.  But 1848 yielded a 1,000% gain, to 484,000 ounces. The total quadrupled again in 1849 to 1,935,000 ounces, peaking in 1853 at 3,144,000 ounces.

The 1850 Census counted under 100,000 people in California, most of them arriving in 1849. In 1852 alone, 67,000 more came, including 20,000 from China. This sudden influx of gold and miners brought prosperity, but also hyperinflation.  Federal revenues in 1844 were only $29 million.  By 1854, federal revenues were up 150% to $73 million.  Alas, the government now spends $73 million every six minutes!

Almost 100,000 Americans answered the gold call in 1849. Another 90,000 made the difficult trek in 1850.  This amounted to about 1% of all Americans in the 1850 Census. After California became a state in 1850, its first census showed 92% of its headcount was male.

History repeated itself 45 years later. By the mid-1890s, we had not seen a gold rush in a long time, and the nation was badly in need of more gold. On January 24, 1894, the U.S. Treasury’s gold reserve dipped dangerously below $100 million, the warning bell maintain to a gold-convertible dollar, so Wall Street investment banks underwrote a $50 million issue of gold bonds, selling them to the public and restocking gold in the Treasury back to $107 million.  Later in 1894, another $50 million bond issue was underwritten by Drexel Morgan, but on January 24, 1895, gold reserves hit a new low of $68 million, then $45 million the following week. This dire situation was saved by the next great Gold Strike.

In one of those ironies of history, on July 9, 1896, at the Chicago Democratic convention, William Jennings Bryan warned the nation against crucifixion on a cross of gold – of this gold shortage, causing deflation and Depression. But the next month, on August 16, gold was discovered in the Klondike region of Yukon in northwestern Canada near Alaska, effectively ending the panic and the gold shortage. The news broke, as ships arrived in Seattle.

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