April 2023 - Week 1 Edition

GOLD and SILVER Bullying Their Way Ahead of Stocks in Q1

Gold had a strong first quarter (+8%). Silver was even stronger than gold in March, gaining 15% in that one month to close slightly above break-even for the first quarter after being down sharply in the first two months of the year. Gold beat some stocks, depending on your choice of stocks, since the Dow Jones index was flat, while the tech-heavy NASDAQ 100 was inflated with a few heavily-weighted big winners (two stocks make up 25% of that index). Gold (+8%) edged the S&P 500 (+7.5%) for the first quarter.

The U.S. Dollar Index was basically flat for the first two months but declined -2.25% in March, pushing it down about 1% for the quarter. Among the top three currencies, the British pound did the best and the Japanese yen lagged, with the euro in the middle at +1.55%. Crude oil fell 5% in the quarter, but it made up those losses on the first trading day of April, gaining $5 a barrel to return to its starting price of $80.

Silver American Eagle Sales Down Again in March – Despite a Torrid Silver Market

Despite a 15% rise in silver during March 2023, sales of the U.S. Mint’s signature one-ounce Silver American Eagle bullion coin continued to lag in year-over-year sales.  In March 2022, the Mint sold 1,080,500 one-ounce silver Eagles but in March 2023 sales were off 16.7%, at only 900,000 coins.  For the first quarter of 2023, the sales decline was more severe, down 24.2% from 7,581,500 ounces in 2022 to 5,749,000 ounces this year.  The reason is the extremely high premium charged by the authorized purchasers, which is passed on to retail dealers and then to customers.

Gold American Eagle sales were about even in the quarter for this year versus 2022 – 426,500 ounces sold last year vs. 435,500 ounces in 2023.  If you add in the American Buffalo one-ounce gold bullion coin, the totals are nearly identical at just 1.2% higher in 2023: 581,000 gold ounces last year vs. 587,000 ounces this year (Eagle and Buffalo combined).

It’s no coincidence that other world mints have picked up in bullion coin sales. We reported recently that the British Royal Mint said their gold bullion sales rose 25% in 2022 over 2021, and their silver sales rose even faster, up 29%. Now, we learn that is true also in Australia.  The Perth (Australia) Mint announced a doubling in its sales of silver bullion coins over the past three years and a 21.4% gain in silver bullion coin sales in the most recent calendar year. This comes as no surprise since their premiums over spot – per coin – have been far less than Silver American Eagles for over two years.

SILVER BULLION COIN SALES at the Australian Mint vs. U.S. Mint, 2019 to 2022

While the British Royal Mint and Perth Australian Mint have been increasing their silver bullion coin sales, our U.S. Mint has lost in the sales of silver bullion. Contact your professional account representative to find out more on how you can still invest in other quality pure silver bullion coins without having to buy American Silver Eagles at a high premium. If you have questions, we have the answers on buying rare coins and silver and gold bullion. Call today.

Rare Coin Bull Markets Since 1970

1971-74: Nixon closed the gold window on August 15, 1971, followed by Watergate, the OPEC oil embargo, high inflation, a 45% stock market crash (worst since the 1930s) and the end of the Vietnam War.  In that time, silver rose 250%, and gold and the CU 3000 Rare Coin Index rose 348%, but that was just the start.

1976-80: Inflation continued to rise under Jimmy Carter. The Soviets took control of nations around the world, Iraq and Iran went to war, while Iran captured 54 American hostages and Carter seemed helpless. In that time, silver spiked up 2,300%, gold rose 800%, platinum 400% and the CU 3000 Rare Coin index had its greatest surge of the decade, up 1,195%, to reach $40,000 – a 40-fold increase since its launch.

1986-90: Despite relatively low inflation, this marked a huge bull market in rare coins due mostly to the avalanche of failing banks and savings & loan institutions and a massive 1987 stock market crash. One-third of all S&Ls failed and over 2,000 banks (out of about 14,000, or 15%) also financially collapsed, driving investors into bullion and rare coins. From 1983 to 1989, the CU 3000 Rare Coin Index gained 603%.

2001-2009: From 9/11 and the war on terror to the great financial crisis of 2008-09, there were two deep recessions and record-high deficit spending. Gold soared from $255 per ounce before 9/11 to break $1,000 in 2008 and then reach a record high of $1,800 in 2011. Rare coins also surged from 2002 to 2009, although in this case gold bullion was the clear winner, up 600% in the decade from 2001 to 2011.

Here are two other remarkable similarities during those past rare coin bull markets and now.  The first was a rapid increase of interest rates by the Federal Reserve during these past rare coin bull markets.

• From the end of 1971 to July 1, 1974, the Fed Funds rate shot up from 3% to 13.5%.

• From the end of 1977 to December 1980, the Fed Funds rate soared, from 4.6% to 19.2%

• From October 1986 to March 1989, the Fed Funds rate rose from 5.84% to 9.87%

• From June 30, 2004, to June 30, 2006, the Fed Funds rate rose sharply, from 1% to 5.25%.

• And now, from March 2022 to March 2023, the Fed Funds rate has risen from zero to 4.6%.

Oil prices were also rising rapidly during these past bull markets in rare coins and precious metals:

• Due to the OPEC cartel, oil prices rose from $23.30 a barrel (March 1973) to $63.30 a year later.

• Oil prices doubled again from $65.40 in January 1979 to $143.79 in June 1980.

• Oil collapsed, but then resurged from $28.81 in March 1986 to $90 a barrel in September 1990.

• Oil surged after 9/11, from $33.79 in December 2001 to an all-time high of $177 in May 2008,

• Recently, oil surged from $22 per barrel in April 2020 to over $110 in May 2022.

It looks like we have all the ingredients in place for another surge in rare coins and precious metals: (1)  rising interest rates; (2) rising oil prices; (3) a looming banking crisis; (4) global uncertainty, now in Russia, China and elsewhere; (5) huge deficit spending, as never before, with no intention of stopping it.

The difference is that we are now early in the cycle, so we have time to take positions for the next big rise in precious metals and rare coins. Contact your professional account representative ASAP for the right mix of rare coins and bullion coins for your existing portfolio or IRA balance to create the “insurance” you need for the crisis ahead.

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