September 2023 - Week 3 Edition
Gold Poised to Rise in 2024
Gold rose from $1,915 to $1,930 on Friday morning, September 15, and held on to most of that gain before rising more by Tuesday, September 19. I remind you to call your Team Mike account representative to add gold and silver to your portfolio. Remember, gold has risen significantly the past 4 presidential election years!
Update on Budget Deficits and Inflation as the Federal Fiscal Year Nears its End
The Federal Open Market Committee (FOMC) met at a crucial time as the federal fiscal year ends, on September 30. Last week, marked the 22nd anniversary of 9/11. Few mentioned that since 9/11, the federal debt has multiplied 10-fold from $3.3 trillion to $33 trillion, in part because of two long wars in Afghanistan and Iraq but also a huge expansion in the welfare state and related benefits. At the same time, economic growth has slowed and labor force participation has fallen dramatically. America has changed since 9/11/01.
Just since the start of this decade, the government has added over $9 trillion more in red ink: $3.132 trillion in fiscal year 2020, $2.776 trillion in FY 2021 and $1.375 trillion in FY 2022. For FY 2023, the nonpartisan Committee for a Responsible Federal Budget (CRFB) a deficit of $2.0 trillion.
This means the Federal Reserve next week is caught in a bind because they can’t really afford to raise rates further. They have already raised short-term interest rates by over 5% in the past 17 months. Long-term rates have followed, with the benchmark 10-year Treasury rate rising from 3.25% last April to 4.35%, recently. If the cost of servicing the $33 trillion federal debt “only” costs 4%, that amounts to $1.32 trillion in interest payments per year on a debt that keeps rising.
On the inflation front, I brought you news of the Consumer Price Index last week but the next day’s Producer Price Index (PPI) was even more dramatic. The Producer Price Index (PPI) rose 0.7% in August, almost double the analysts’ consensus estimate of 0.4%. But gasoline prices surged a whopping 20% in August, and August’s overall wholesale energy prices rose by 10.5%.
Then, on Friday, the United Auto Workers (UAW) went on strike, which could push the unemployment rate above 4% for September. The weekend edition of The Wall Street Journal printed an editorial entitled, “A UAW Strike Made in Washington,” since they said, “The underlying cause of the auto walkout is the Biden Administration’s forced electric-vehicle transition.” In effect, the Biden Administration’s mandate for expensive EVs (which America is slow to buy) has forced the Big 3 (GM, Ford and Stellantis, formerly Chrysler/Jeep) to lose money on those cars, even though they still make money on standard (fossil fuel) vehicles. As long as the Biden Administration keeps forcing the Big 3 to make more unprofitable EVs, the UAW strike may result in jobs moving overseas.
As I discussed recently, it looks like this summer’s higher energy prices may be here to stay OPEC (led by Saudi Arabia) and OPEC+ (mainly Russia) are trying to keep prices high, in part to punish President Joe Biden. Crude oil has remained over $90 per barrel since last Thursday and there has been reports that in the recent G20 meeting, Saudi Arabia wants to push crude oil prices up to $100 per barrel. Arab light crude was close to $100 per barrel last week. Also, a Gulf hurricane or pipeline break could disrupt production and send oil prices up to $100 at any time.
It’s only a matter of time until gold and silver follow this energy price surge upward, since the core of the surge is based in global hot spots like Russia, Saudi Arabia and other OPEC nations. If you haven’t talked with your account representative recently, then now is the time to get prepared and add gold and silver to your portfolio. If you don’t have an account representative then call us today and we will pair you up with one our team members.
“Team Mike” is Here to Serve Your Investment Needs
Karen, my wife of 44 years, and I spent last week on vacation in Nantucket, where we toured the land of the very rich – and were served soft drinks with paper straws. We are very happy to be back where we better fit in and can use plastic straws that don’t wimp out in 10 seconds – or dissolve into warmer drinks.
On our return home, we were proud to see that the Sunday edition (September 17) of our local newspaper, the Hearst-owned Beaumont Enterprise, voted our firm the “Best of the Best” in gold buying and selling in the Southeast Texas region. This comes on top of receiving four awards at the recent World’s Money Show, including the prestigious Chester L. Krause Distinguished Service Award. I like to believe that these awards are not just for me but our whole team of numismatists, sales executives and support staff, many of whom have been together here for over 20 years. They make up what I call “Team Mike.” Without them, I could not win these awards and our companies could not continue to receive recognition for being the best of the best.
It is important to recognize all of Team Mike when dealing with our companies. We are not just one or two people but an entire dedicated team, who have been working together for a long time and all pulling in the same direction. Even though I have been here for a long time and intend to continue for a long time to come, Team Mike is in excellent hands for the next generation, with a growing team of trained professionals. I am proud to work with these fine people every day, who all have your best interests at heart.
One extra service that we perform is examining coin collections for local charities, non-profits, universities and public service organizations. In part, we help them spot any counterfeits and alert law enforcement if needed but mostly we evaluate their treasures. I recently evaluated the collection of a local university and they were pleased to hear that their collection of gold coins had gained 7-fold in value over the past 20-plus years they’ve held them. That proved to them, and it should demonstrate to all of us, the superior value of gold, silver and rare coins as a part of a well-balanced portfolio, as demonstrated in our weekly price comparisons, below:
Important Disclosure Notification: All statements, opinions, pricing, and ideas herein are believed to be reliable, truthful and accurate to the best of the Publisher's knowledge at this time. They are not guaranteed in any way by anybody and are subject to change over time. The Publisher disclaims and is not liable for any claims or losses which may be incurred by third parties while relying on information published herein. Individuals should not look at this publication as giving finance or investment advice or information for their individual suitability. All readers are advised to independently verify all representations made herein or by its representatives for your individual suitability before making your investment or collecting decisions. Arbitration: This company strives to handle customer complaint issues directly with customer in an expeditious manner. In the event an amicable resolution cannot be reached, you agree to accept binding arbitration. Any dispute, controversy, claim or disagreement arising out of or relating to transactions between you and this company shall be resolved by binding arbitration pursuant to the Federal Arbitration Act and conducted in Beaumont, Jefferson County, Texas. It is understood that the parties waive any right to a jury trial. Judgment upon the award rendered by the Arbitrator may be entered in any court having jurisdiction thereof. Reproduction or quotation of this newsletter is prohibited without written permission of the Publisher.
Metals Market Report Archive