March 2015 – Week 4 Edition
Published by Award-Winning Texas Coin Company Universal Coin & Bullion
A National Gold & Silver Dealer Helping Customers Buy Gold Since 1994
Gold turned on a dime last Wednesday during the Federal Open Market Committee (FOMC) press conference, when the Fed seemed to be saying that they would delay any increase in key short-term U.S. interest rates. They said their decision would be “data dependent,” focusing on wage rates, job growth, GDP economic growth and a rise in inflation rates to 2%. Since inflation is now low and turning negative, and the economy has suddenly slowed down, it looks like the Fed won’t raise rates until at least the fall and maybe not until 2016 or later. This pushed gold up from a low of $1147 early last Wednesday to $1178 by the end of the day and then over $1180 by Friday. Silver rose even faster, up 7.2% last week.
The Dollar Dropped 4% to the Euro in 10 Days, Boosting Gold in Dollar Terms
The Fed’s statement last week sent the U.S. dollar down and gold up. Gold in America had fallen victim to a sharply rising dollar, but the fall of the recent fall in the dollar has boosted U.S. gold prices. On the previous Friday, March 13, the euro had fallen below $1.05, but as of Monday, March 23, the euro is up to $1.0926, up more than 4% in 10 days. The price of gold has also risen by almost 4%, from $1147 right before the Fed announcement, to $1188 on Monday morning. Most of that gain came from the dollar fall.
The U.S. dollar’s bull market has run for almost exactly seven years – beginning on March 16, 2008 and peaking (so far) as of March 13, 2015. In the 42-year history of the U.S. Dollar Index, there have been three bull markets and three bear markets, averaging seven years each, so it is entirely possible that the U.S. dollar peaked in mid-March 2015. We won’t know that for several months, but HSBC analyst David Bloom has said that this dollar rally is already “greater than the average seen since the early 1970s.”
Last May, the euro peaked at $1.40. Then it fell about 25% to $1.05 in about 10 months. That fast of a decline usually leads to a sharp market reversal, even if the dollar’s bull market is not quite over.
As we have shown here often, the price of gold in terms of the euro has kept rising all throughout 2014 and early 2015, so any rally in the euro (and dollar decline) means gold will likely rise in both currencies.
The Federal Reserve will probably keep postponing any interest rate increase. The Fed has already told us that they expect inflation to remain under 1% in 2015 (they predict 0.6% to 0.8%). The Fed does not expect inflation to reach their 2% target until 2017, so it is quite possible that the Fed will not raise rates for TWO YEARS, which should contribute to the dollar’s further decline and a revived gold bull market.
Old Indian Book and New Type III Double Eagle Book Desired by Dealers
My new book on Type III Double Eagles, to be released by April 2015, should increase demand for coins in this series. In 2000 my first edition about this popular series received the Numismatic Literary Guild Investment Book of the Year Award further boosting interest in double eagles. There will be some gorgeous photographs and innovative tools in this new edition that should greatly help collectors, investors and dealers who participate in this popular series. At a recent California convention some major dealers asked me for boxes of these books as soon as possible. Demand for my previous book, Indian Gold Coins of the 20th Century, is also increasing. A good sign for the Indian gold coin market.
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