July 2023 - Week 4 Edition
Gold Investors Shouldn’t Fear Federal Reserve Decisions
Gold had another strong week last week, rising above $1,980 on Thursday, July 20, but then retreating in advance of the Federal Reserve meeting this week. As of last Friday, the odds of the Fed raising rates by another 0.25% rose to 75%, according to the live market betting by interest rate traders on the Fed Funds rate, using the CME Group FedWatch Tool. As of the close on Monday, July 24, the odds went up to 99%, so gold basically retreated on the high likelihood of another interest rate increase on Wednesday. However, if Fed Chairman Jerome Powell indicates that this may be the last increase or issues a “dovish” statement at around 1 pm CST on Wednesday, gold could have a positive reaction to the upside.
The Long-Term View Remains Positive for Gold
We should not ignore the last nine months of a steep rise in gold and a decline in the U.S. dollar. The U.S. Dollar Index fell from 113.3 on October 9, 2022, to 99.77 on July 13, 2023, a 12% decline in nine months. In those same months, gold rose from $1,665 to $1,955, up over 17%, due to this dollar tailwind.
The dollar isn’t down because of high inflation alone. The dollar is mostly down because of the profligate budget deficits during the Biden years. London’s Financial Times wrote a devastating editorial, titled “The Trouble with American Exceptionalism,” on July 16, 2023, pointing out that our deficits are way above any other nation, making us the world’s most fiscally irresponsible nation. FT said that during the pandemic the U.S. budget deficit tripled to over 10% of our GDP. Instead of coming back to normal in the Biden years, the U.S. budget deficit is scheduled to average 6% of GDP in Biden’s years, well above historic norms and six times the average of other developed (rich) nations. In other words, if the U.S. tried to join the European Union (EU), our application would probably be rejected due to our fiscal irresponsibility, based on their criteria.
As 2024 approaches, we should also begin preparing for a rather bizarre election year if it turns out to be a repeat of the 2020 election, between former Republican president, Donald Trump and Democrat incumbent, Joe Biden. Trump is currently facing multiple criminal investigations mostly brought by overzealous democrats looking for any way possible to discredit and keep him off the ballot while Biden appears to be a mentally flawed candidate with his own mounting potential legal issues. Whoever wins will face the potential of serious global hot spots in a never-ending Ukraine conflict and a possible Chinese invasion of Taiwan.
In previous election years, as I’ll show in a future Metals Report, the gold market scored significant gains when election hype and global events heated up while our political candidates struggled to meet the challenge. I implore you to call our professional account representatives today to add more gold to your portfolio.
Get Us Your Wishlist Ready For The World’s Largest Money Show
Put America’s Gold Expert® To Work For You!
Two weeks from now, the world’s largest money show of the year, the “World’s Fair of Money,” will open in Pittsburgh, PA running for almost five days, August 8-12. I have been going to these shows for over 50 years now – which basically means I’m getting old enough to have seen almost everything in big-money shows like this and this is the week you absolutely need to get with your account representative and let them know which coins you have on your wish list, so my team and I can help find the coins of your dreams.
I want you to know that I and my best numismatic team members will be looking for specific coins for you, so now is the time to make your top “wish list” of coins known to your account representative. We are compiling a master list to look out for those specific coins you want the most for your collection or investment portfolio.
At previous World’s Fair of Money shows, I have taught seminars on subjects like counterfeit detection and coin grading. I have also taught coin authentication and how to protect your collection from theft or fraud. Each year, I come home from this and other big coin shows with a proverbial Santa Claus sack full of special rarities that our clients have been seeking for a long while but I seldom tell you two weeks in advance to make a “wish list.” I usually just ask my staff for their list of needs but this time I want to give you a chance to look over your coin assets and find specific coins you need or have always wanted so that my team and I can be on the lookout for your needs. This is the show where trophy coins are found.
This conference is also special for me since I have been informed that I’ll be receiving the Krause Award for a lifetime of work and “exemplary accomplishment in numismatics.” The full title is the “Chester L. Krause Memorial Distinguished Service Award,” named after Chester Krause (1923-2016), a lifelong coin collector and publisher, the founder of Krause Publications. The award has been given out since 1951, once per year “in recognition of numerous years of outstanding, dedicated service to numismatics.” In layman’s terms, this is the Lifetime Achievement Award for the numismatic industry. I am very proud to be receiving this award, especially in the centennial year of Chester Krause’s birth.
My wife tells me these awards just mean I’m getting older, nearing 70 now, but I can now claim to have top awards from all four major numismatic organizations, The American Numismatic Association (ANA), the Professional Numismatists Guild (PNG), the Numismatic Literary Guild (NLG) and the National Coin and Bullion Association (NCBA), formerly ICTA. You’ve probably heard of the “EGOT” winners. That refers to those few individuals who have won an Emmy, a Grammy, an Oscar and a Tony, the top awards in television, music, movies and Broadway, respectively. Only 18 people have done so – 14 Americans and four Britons. I don’t know how many have won top awards in all four numismatic organizations, but it is likely fewer than 18 and you won’t find many active coin dealers on that list. This is truly a humbling moment for me.
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