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  • Metal Market Report September 2021 - Week 3 Edition

Metal Market Report September 2021 - Week 3 Edition

September 2021 - Week 3 Edition

Gold Rises Above $1800

Gold fought its way above $1,800 on September 14 after trading in a narrow trading range – reflecting the narrow band of the flat U.S. dollar since July 1. The major influences on gold were the rising rates of inflation released last Friday and Tuesday. The rise of the coronavirus Delta variant has also put a dent in global economic growth statistics, which usually helps gold, and it tends to be negative for silver, as a hybrid metal – part precious, part industrial. Next week, the Federal Reserve’s Open Market Committee (FOMC) will meet and disclose any new policy decisions on September 22. If they change their wording on the tapering (reduction) of quantitative easing (QE), the gold and stock markets may react strongly.

Inflation Continues to Soar – Gold Prices Will Follow in Time

Last Friday, the Labor Department announced that the Producer Price Index (PPI) surged another 0.7% in August, higher than the economists’ consensus estimate of a 0.6% increase. In the past 12 months, the PPI and core PPI have risen by 8.3% and 6.3%, respectively, the fastest pace in several years. The index for processed goods rose 1% in August and 23% year-over-year, the highest increase since February 1975.

On Tuesday, the Consumer Price Index (CPI) came out – not as red hot as the PPI, but only because the Delta variant put a damper on consumer demand in August. The PPI gained 5.3% over the last year – the largest rise in 13 years – although the index only rose +0.3% in July alone, down from +0.5% in June.

On Tuesday, the Consumer Price Index (CPI) came out – not as red hot as the PPI, but only because the Delta variant put a damper on consumer demand in August. The PPI gained 5.3% over the last year – the largest rise in 13 years – although the index only rose +0.3% in July alone, down from +0.5% in June.

Specific commodities are still up 20% or more, year-to-date, thanks mostly to Bidenomics, namely:

 

Federal Reserve officials continue to predict inflation will be transitory. The Biden Administration has artificially pushed for 50% electrical vehicle fleets by 2030, which has increased the price of EV battery components lithium and cobalt. They have also halted some fracking and pipeline projects, which has made America more energy dependent on outsiders, leading to increased prices at the pump and the grocery store. Now, we will see just how transitory these price increases are. History shows that gold usually rises during times of high inflation but Biden is doing his best to create an illusion that these increased prices are only temporary. It seems Biden is intent on repeating many parts of the history of President Jimmy Carter and the late 1970s.

Our Mid-Month “Dollar & Deficit” Report

The U.S. Dollar Index is up 3% so far this year, although the dollar has been flat during the first half of September and for most of the summer with no major gain or loss since July 1. Dollar traders are basically waiting for the Federal Reserve to tell the world when they intend to taper Quantitative Easing (QE) or raise rates.

The federal deficit in August – the 11th month of the federal fiscal year (FY’21) – totaled $170.6 billion, down 14.7% from August 2020, when the monthly deficit hit $200 billion. This brought the fiscal 2021 deficit up to $2.71 trillion through August 31, on pace for the second straight $3 trillion annual budget deficit. Last year, the onset of COVID and a major recession in the middle of the year caused the deficit; this year has seen tremendous growth, so there is little excuse for another $3 trillion deficit in 2021.  

Many of Our Select Four Program Coins are Rising in Price

I recently returned from the “World’s Fair of Money,” held August 10-14 in Chicago, sponsored by the American Numismatic Association, where I was presented with the prestigious Dealer of the Year award. While there, I noticed the quality rare coins from our Project 2020, a subset of our Select Four programs, were mostly priced higher with fewer coins available. The fewer coins available highlights the need to get in line with your Account Representative for the best examples of the in-demand coins in those series. As I have said, you’re either a fast rabbit or a dead rabbit when high demand coins are snapped up rapidly.

Our Select Four recommendations focus on four major gold coin series we believe most likely to see ongoing collector and dealer demand with potential future price increases. They are: (1) Type II and Type III Liberty Head Double Eagles, minted 1866 to 1907; (2) Indian Head Gold Coins minted periodically from 1854 to 1933 in denominations of $2.50 Quarter Eagle, $5 Half Eagle, $10 Eagle and $3 Indian Princess; (3) Rare Gold Commemorative Quarter Eagles, namely the 1915-S Panama-Pacific Exposition Quarter Eagle and the 1926 Sesquicentennial Independence Quarter Eagle; and (4) The $10 and $25 American Gold Eagle:  Fewer $10 and $25 Eagles were minted than other denominations almost every year since the series began in 1986, creating a modern rarity.

Call your representative today to line up one or more of these gold rarities when they become available.

 

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