GOLD 00.00 1.20 0.00%
SILVER 00.00 1.20 0.00%

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Metal Market Report October 2019 - Week 2 Edition

October 2019 - Week 2 Edition

Silver Coin Sales are Strong and Silver Price Predictions for 2020 are Rising

The rise in the price of silver this summer has caused a rise in demand for silver bullion coins at the U.S. Mint. Through August 31, 2019, the U.S. Mint sold 12,269,000 ounces of Silver American Eagle coins vs. only 9,237,500 ounces in the same eight months in 2018, an increase of 33% in demand in 2019.  This year, the Mint has sold a million or more ounces every month, while the Mint sold over a million ounces just twice in the first eight months of 2018, first in January (always a strong sales month) and in August.

An increase in the sale of bullion coins tends to cause dealers to place more ads for these coins, which then causes a rise in the customer base for bullion coins. A percentage of these buyers always graduate up to rare coins, building the national collector and investor base, and inevitably adding to our own customer base and helping to push rare coin prices higher.

The rise in the price of silver this summer has also led some major banks and precious metals analysts to increase their predictions for the price of silver by year’s end and into 2020. The large German bank, Commerzbank, revised its forecast to $19: “Silver is likely to make further gains next year, largely in tandem with gold. We envisage a silver price of $19 per troy ounce at the end of 2020 (previously: $18).”

Canada’s Bank of Montreal revised its forecast on September 11, 2019 to $20 this year, although they see a dip to $18.60 in 2020.  The bank’s precious metals analyst, Colin Hamilton, sees silver prices “breaching $20 an ounce to average the fourth quarter around $19.90 an ounce.” For 2020, the bank’s silver price expectations are $18.60 an ounce, but that is over 20% higher than their previous forecast.

Analysts at Degussa, a European precious metals firm, have also increased their price target for silver, calling for a rally to $23 an ounce by the end of 2020.

Gold Recovers Quickly

Gold dipped to $1,466 on the London morning setting on Tuesday, October 1, but quickly recovered to $1,500 by Thursday, October 3. Likewise, silver dipped to $17.11 on October 1, but recovered to $17.60 by the end of the week. Despite a decline to under $1,500 on Monday, gold is still on pace for its biggest annual gain since 2010. The escalation of impeachment rhetoric is part of the reason behind gold’s growth, as well as, the escalation of Middle east tensions in the Saudi oil fields. With bond rates declining and the stock market taking a severe dip of nearly 1,000 Dow points in two days (October 1 & 2), this makes another Fed rate cut likely at the end of October, giving gold another advantage on the interest rate front.

Politicians are Creating a “National Nightmare,” Which Should Benefit Gold

Frankly, there is NO real “national nightmare” going on right now, no matter what Chuck Todd tells us on “Meet the Press” or what Adam Schiff or Nancy Pelosi proclaim from the floor of the House. Instead, we have “the American Dream” in full view: We are in the 11th year of a booming economy with a 50-year low in unemployment, an all-time low in black and Hispanic jobless rates, low inflation, rising real wages, a booming stock market and real estate market, lifting net national household wealth to a record $115 trillion at last count. The only “nightmare” is the artificial war of words between the Democratic majority in the House and the President.

This week, the President’s trade team meets with China in hopes of solving the trade impasse with our largest trading partner while trade with our major allies is booming! Trade totals have increased over the last year. There is also a revised trade deal with Mexico and Canada which benefits all three nations, with all three willing to sign except that the U.S. House refuses to give President Trump another victory on that front. There are ongoing wars in the Middle East, Syria, Yemen and Saudi Arabia that need addressing, as do potential nuclear threats in North Korea and Iran. At home, Congress needs to address the opioid crisis, healthcare costs and other myriad challenges, but they choose to be mired in impeaching Trump instead.

The end result of this cruel bipartisan war of words could be the diminished chances of a Trump vs. Biden contest in 2020 – and the emergence of Socialist Elizabeth Warren, whose duplicity in claiming a job at Harvard based on her Indian ancestry (and other half-truths on her resume) go mostly unchallenged by an adoring press. The end-result is that we may end up with a President who will kill the bullish stock market and super-charge gold. She has “a plan” for everything. Here is a small selection, paraphrased from her Website.  (She has 49 such plans, if you want to scan her whole Master Plan at https://elizabethwarren.com/plans.)

  1. Tax the richest Americans 2% on every dollar of net worth above $50 million.
  2. Cancel student-loan debt for 95% of Americans owing college debt and provide “universal free college.”
  3. Raise the minimum wage, lower rents and provide universal affordable childcare.
  4. Overhaul corporate boards to make employees at least 40% of the company’s board members.
  5. Provide health care as a human right via “Medicare for All.”

Warren’s Manifesto may become the real “national nightmare” many fear most – bringing an end to Trump’s economic miracle – a strong and inclusive economy, envied by the world. A Warren presidency will likely accelerate the national debt rapidly and send the stock market down, while also sending gold up.

In other words – she may be good for our business and our customers, perhaps, but not so good for America.

Project 20/20 Revisited

In May, I told you a little bit about Project 20/20, which will be a program for enlightened coin accumulation – using a “rifle shot” approach rather than a “shotgun” blast to find undervalued “sleeper” coins.

As I said, we will begin by bringing you highlights of recommendations in the major types of coins we like most – for their sheer beauty, profit potential and historical importance. We’ll highlight the most undervalued coins, starting with $2.50, $3, $5 and $10 Indians and Type II and III Liberty Double Eagles.

Now, I want to bring your attention to a series that is more modern but becoming more valuable as time goes by. I’m talking about the American Gold Eagle, authorized by the 1985 Gold Bullion Act, early in Ronald Reagan’s second term. The first coins were minted in 1986 in denominations of $5, $10, $25 and $50, with gold content of 1/10, 1/4, 1/2 and 1 full Troy ounce of gold, respectively.

Some of the early date American Eagle gold coins are becoming scarce, with prices being bid up for mint state 69, lower population $10 and $25 (1/4 and 1/2 ounce) coins. As with any other coin series, it pays to be selective, to use a “rifle” approach rather than a “shotgun” approach. One major statistical screen we use is a coin’s capitalization -- its price per unit times the population report of known coins in that grade.

We will be writing more on all these coins over time, but you can get ahead of the crowd by calling your account representative now and asking about the “rifle” approach over the “shotgun” strategy to coin buying.

 

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