Metals Market Report Archive

The Mike Fuljenz Metals Market Report

November 2023 - Week 2 Edition

Donating a Rare 1923 $2,100 St. Gauden’s Double Eagle To This Week’s Lamar vs. McNeese Football Coin Flip

This past week, I was honored to be asked to flip the coin before the annual football rivalry between the Lamar University Cardinals and the McNeese State University Cowboys. Lamar University opened its doors in Beaumont, Texas, in 1923, so we thought it would be appropriate to use and then donate a 1923-dated St. Gaudens $20 (Double Eagle) gold coin for the game-opening coin flip at the upcoming (November 18) season-ending game in Beaumont.

I am a longtime supporter of the academic and athletic programs for Lamar and McNeese, which is located in Lake Charles, La., about an hour away. In 2007, Lamar recognized me with a 3T (Time, Talent and Treasure) Award. I have also contributed time, talent and treasure to McNeese and received an honorary Doctorate of Humane Letters from McNeese. Both of my children graduated from Lamar, so I have no bias in who wins the game – but I must add that Lamar is a heavy (two-touchdown) favorite!

With its gold content of nearly one full troy ounce, worth about $1,900, and a numismatic premium that brings an extra $200, this historic gold piece is valued at $2,100, so the coin is emblematic of how gold holds its purchasing power over a century. This $20 gold piece is now worth over 100 times its face value. In 1923, three of those gold coins would have paid tuition and books for a semester at Lamar. Today, 100 years later, the gold value of those same three coins would also pay for tuition and books for a semester, which is just shy of $6,000.

In contrast, try paying today’s tuition at any college – or even a junior college – with three $20 bills! The 1923 St. Gaudens Double Eagle gold coin by Augustus St. Gaudens is considered by coin experts as “the most beautiful coin ever designed and struck.” Owning a $20 gold St. Gaudens is like holding an art masterpiece, it’s not just a gold coin, it’s history in your hands. The $20 St. Gaudens Double Eagle obverse design is used for all American Gold Eagle coins, which I highly recommend for investors and collectors.

The Soaring Federal Deficit “Can’t Wait” for the 2024 Elections: Congress Must Act Now to Cut Spending

Congress, under new Speaker of the House Mike Johnson, is working hard to avoid another threatened government shutdown later this week. It’s just another edition in the continuing game of “kick the can down the road” but that is merely a magician’s “sleight of hand” trick to take our eyes off their main trick – massive overspending that is causing rising deficits. According to a progressive Democrat, Ben Ritz, director of the Progressive Policy Institute’s Center for Funding America’s Future, the real federal budget deficit has more than doubled over the past year, from $933 billion to $2 trillion, currently. Writing in the November 7 edition of The Wall Street Journal (“Why Democrats Should Care About Debt), he says, “Annual interest payments are already at their highest level as a percentage of GDP since the 1990s. By 2028, the government is projected to spend more than $1 trillion on interest payments each year – more than it spends on Medicaid or defense.”

To recall the last 15 years of financial mismanagement since the “Great Recession of 2008,” short-term interest rates were kept artificially low, near zero, for the entire eight years President Barack Obama was in office, and for most of the 14 years from 2008 to 2022. Then, the U.S. Treasury, Congress and the Fed used COVID as an excuse to overstimulate our economy with too much money for too long. This caused massive inflation and then they slammed on the brakes with the fastest rate increases in Federal Reserve history earlier this year.

Here is the dramatic change from 2019 (Trump’s final full year before COVID) and 2023:

It’s that last category – the steep rise in interest costs – that makes federal deficits stand out like a minor scratch turned into a dangerously infected wound. This is a serious problem since the richest (G-20) nations’ debt load has doubled since 2008 to $250 trillion. Interest rates have quadrupled in short order to over 4%, yet the average payment on that debt is only up 50 basis points (0.5%) so far, since long-term bonds are still in effect at their old rates. When those bonds mature and new bonds are auctioned, G-20 interest costs will soar by $8 trillion, equal to the combined GDP of Germany and Japan, crippling global growth.

An important barrier will be crossed next year – before the 2024 election. This year’s U.S. GDP stands at $26 trillion and we are going into a slow-growth year with lower inflation so next year’s GDP will likely be $27 trillion. This year’s public debt is $33 trillion, which means the debt is 127% of GDP but Biden’s overspending will push debt to over $35 trillion next year, making the debt/GDP ratio right around 130%.

That’s important because a 2021 study by Hirschman Capital showed that between 1800 and 2020, 53 nations allowed their sovereign debt to exceed 130% of their GDP, and all but one (that sole exception being Japan) defaulted on their debt, usually via sustained high inflation, but also through outright default. Seeing 52 (98%) failures and only slow-growth Japan beating the odds does not look promising for the United States.

Bottom line, Congress cannot wait until 2025 (after the 2024 election).  They must cut spending now.

Gold Is Rising Again

Gold declined last week but it rose $10 on Monday, November 13, from $1,935 to $1,945, in about three hours of mid-day trading, and then maintained those gains through closing. It was up again on Tuesday, closing at $1,964. Monday’s gains were mostly technical short-coverings by futures traders, along with some bargain-hunting after recent selling pressure. The markets were also awaiting the Consumer and Producer Price Indexes to be released Tuesday and Wednesday. Tuesday’s Consumer Price Index (CPI) came in milder than expected, so the stock market rose, but gold also rose on the belief that low inflation will ensure no more rate increases from the Fed, and perhaps even a rate cut early in 2024.


Metals Market Report Archive >

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.