GOLD 00.00 1.20 0.00%
SILVER 00.00 1.20 0.00%

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Metal Market Report April 2020 - Week 1 Edition

April 2020 - Week 1 Edition

U.S. Mint Sales of Gold and Silver Eagles Soar in March

With the coronavirus attack escalating during March, U.S. Gold and Silver Eagle sales soared at the U.S. Mint. Total American Gold Eagles sales (by ounce) multiplied over 21-fold from February to March, up from 7,000 ounces in February to 151,500 ounces in March. Sales were up over 13-fold from the previous March in 2019, and March sales of 1-ounce gold Eagles were up by a phenomenal 38-fold from February 2020.

Even though 2019 sales (by ounce) were higher (than 2020) in both January and February, the March 2020 sales surge was so spectacular that for the first three months of 2020, total American Gold Eagle sales (by ounce) were up 143% vs. the same three months in 2019. March was clearly a month for the record books in Mint sales.

The same is true with American Silver Eagles. Sales in 2019 were higher in both January and February, but sales in March were 545% higher than March 2019, making the full quarter 44.1% more than 2019.

The volumes are smaller with 1-ounce American Gold Buffalo coins, but the story is the same. Sales were greater in January and February of 2019, but a massive surge in March 2019 pushed first quarter sales to almost double (+98.6%) over the first quarter sales totals in 2019.

There are at least three important takeaways from this dramatic growth in Mint demand:

(1) The Mint is running short of supply and may charge a higher premium, delay shipment, or both. As a result, many dealers are running out of supply or are completely out of supply and must delay delivery or charge prices of up to double spot price for silver bullion coins. To the contrary we have a sufficient supply and charge more reasonable premiums for bullion products.

(2) The coronavirus threat is just beginning to impact global economies, likely pushing demand for gold and silver coins even higher in April.

(3) History has shown that demand for bullion coins leads a significant percentage of bullion coin buyers to move up to buying rare coins within 6 to 24 months. This often boosts demand for many of the more highly desired rare coins with limited supplies and lower capitalizations available on the market.

We have recently enjoyed our best three months of new clients in many years, and this provides a base for new rare coin buyers within 6 to 24 months. We have also seen a lot of demand for Brilliant Uncirculated (BU) older silver coins, but I have been rejecting about 30% of the coins (such as 1964 Silver Kennedy half dollars and Peace Dollars) sent to me as “BU” coins by other dealers, which I know are being sold by other dealers as BU coins. It pays to buy from dealers who practice strict grading or have taught grading standards, as I have.

First Quarter Scorecard Shows Gold as the Big Winner

The first quarter ended last Tuesday. On Wednesday morning, The Wall Street Journal listed over 100 investments and their performance for the first quarter, just ended. The biggest winner was Orange Juice, at +23.66%, but other than OJ, the biggest winners in the currency, commodity and stock categories were the U.S. Dollar (+4.48%) and Gold (+4.21%), with most other investments declining by double-digits.

In fact, Gold was up for the sixth straight quarter January to March – for the first time since its record run in 2010-11. This is all the more remarkable since nearly every other investment was down double digits.

Making gold’s performance even more impressive is that it was up double-digits in the first quarter in terms of many other currencies. Since the U.S. dollar was so strong, that masked gold’s outstanding performance in terms of some other currencies. Here are just a few of gold’s gains in the first quarter:

Gold’s advantage since the year 2000 is even greater, as we show here each week.  Since the dawn of Y2K, gold is up over 480% vs. gains of less than 100% for the Dow Industrials and the S&P 500, so gold is the clear winner over the long-term, and it deserves a prime place in every portfolio.

We have been monitoring the press for predictions of gold going higher, now that gold is on another bull run. Usually the mainstream banks only get on board once the big move gets underway. On Friday, we saw on Bloomberg that analysts at Citigroup see gold reaching a new record high above $2,000 in 2021.  As gold moves nearer $1,700, you can bet we’ll see more mainstream banks predicting higher gold prices.

 

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