Metals Market Report Archive
Metals Market Report 05-02-2023

The Mike Fuljenz Metals Market Report

May 2023 - Week 1 Edition

Gold Continues Making Steady Increases

Gold moved above $2,000 again on Monday morning, May 1, and moved up to $2013 on Tuesday, based on the renewed banking crisis. With the failure of First Republic Bank, three of the nation’s top 30 banks have gone under in less than two months but JPMorgan stepped in to buy most of the bank’s assets so gold prices temporarily retreated to $1,980. Now, traders await the Federal Reserve’s interest rate decision to be released on Wednesday.

April and 2023 Year-to-Date Performance

Gold continues to beat the stock market over the short- and long-term, with silver catching up fast.  The precious metals are performing especially well considering the fact that the major commodity indexes are down for 2023, year to date. The Commodity Research Bureau (CRB) Commodity Index is down 3.45% (YTD), and the Dow Jones (DJ) Commodity Index is down 5.67% through April 30. Crude oil is lagging, due in part to President Joe Biden releasing oil from the Strategic Petroleum Reserve but natural gas is down much further, 46% so far, in 2023.

 

The U.S. Mint still has problems delivering its Silver American Eagles but the Gold American Eagle and Buffalo Eagle sales were finally rising in March and April so the year-to-date sales of gold bullion coins at the U.S. Mint is now up 17% over sales in the same period in 2022.

More Investors Switch from Crypto to Gold

Last week (April 25), The Wall Street Journal featured an article on how investors are switching from Bitcoin and other cryptocurrencies back to the proven, “old reliable” alternative currency – Gold.

The article stated the number of Google inquiries about buying gold hit a record as “Crypto Investors Chase World’s Oldest Asset,” explaining, “the old-school precious metal has new allure for a generation seeking a respite from the cryptocurrency roller coaster.” Yes, even younger investors like a 27-year-old Canadian college student profiled in the article are seeking real money “in uncertain times.”

This is one of the main reasons why gold bullion coin sales have turned around in the last few months at the U.S. Mint and the SPDR Gold Shares, the leading gold exchange-traded fund (ETF) has gained about 20% in the last six months. Of note, is that as of May 2, the U.S. dollar is off to its worst yearly start since 2018 and it is down 8.3% since its high in September 2022. Meanwhile, Bitcoin has lost about half of its value since late 2021 and it has lost much of its “magic dust” appeal of “always going up” after falling over 75% at one point. The abrupt collapse of FTX, a leading crypto exchange, also caused a decrease in confidence among some crypto fans.

One sign of the times is that crypto advertisers spent $70 million on several ads in the 2022 Super Bowl, but not one crypto ad ran in the 2023 Super Bowl. The entire cryptocurrency market is valued at $1.2 trillion, while all the known above-ground gold market assets are valued at $14.5 trillion – or 12 times more, so it is a fallacy to compare the $2,000 price of an ounce of gold to one Bitcoin at $28,000 or so.

As we have often said, Bitcoin is only 12 years old, at most, while gold has been prized by nearly every civilization on every continent, independently, for 5,000 years, from ancient Egypt to Mexico. Gold is what partially drove global exploration, luring Europeans to the New World and the 49ers to California. Modern nations keyed their currencies to gold as recently as 50 years ago and most paper currencies only lost value when they abandoned gold as a price stabilizer. Many investors are now waking up to that fact and buying gold as it is up 586% since 2000 and the Dow and S&P are up only 197% and 184%, respectively.

Meanwhile, as private cryptocurrencies collapse or their supporters face corruption charges, governments are stepping in with Central Bank Digital Currencies (CBDCs) to take their place. China and many other nations have already launched their Crypto Digital Currencies (CDCs) and in March, the same week when Silicon Valley Bank failed – President Biden issued an Executive Order to undertake an “urgent” study for America to go all electronic with the dollar. The CBDC will naturally be run by the Federal Reserve, which has over-inflated our currency badly over the last 110 years of its existence and the dollar is losing its reserve status badly already….

As more investors abandon crypto in favor of gold, experience tells us that it is only a matter of time – maybe a year to 18 months – before a good share of these bullion investors become interested in rare coins as well – and that is already happening. Bullion and rare coins make up an important cornerstone of any diversified portfolio. I strongly encourage you to contact your professional account representative today to take advantage of this shift and add more gold to your portfolio.

 

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