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With gold rising last week by $50, more big banks and investment advisors are getting on the gold bandwagon. Reuters recently spoke to nine private banks, which oversee a combined $6 trillion in assets for the world’s richest clients, and most have advised clients to increase their allocation to gold, partly since gold is the only major asset class to rise in 2020. Four of the banks added forecasts of higher gold prices. 1st American Reserve wants you to be aware of this advise.
Morgan Stanley added a 5% position to commodities including gold as of March 31. While the bank said it is unlikely to advise a position above 10% in commodities, Lisa Shalett, the Chief Investment Officer of Wealth Management at Morgan Stanley, said they “could get there,” especially if inflation picks up materially. “Our view is that the weight of monetary supply expansion is going to ultimately be debasing to the dollar, and the Fed commitments, which (are) anchoring real rates, make the case for gold pretty sturdy.” Super-rich investors, said Shalett, are “very concerned about wealth preservation and, in many ways, they have a longer historic lens than some of our other clients, so they do worry about inflation.”
UBS of Switzerland, the world’s biggest wealth manager, said that gold could hit $1,800 by year-end in their “base-case scenario,” due to ultra-low interest rates and investors seeking gold to hedge their portfolios, but they added that gold could reach a record high of $2,000 in the event of a second wave of coronavirus infections. UBS’ Kiran Ganesh said, “With the recent equity rally, people have become more nervous. People are actively seeking portfolio hedges that might perform well in a range of scenarios.”
Also, Wells Fargo’s head of real asset strategy at their Investment Institute, John LaForge, said, “I’m now getting as many questions on gold as I do on oil, which says a lot from my perspective.” And Oliver Gregson, head of the United Kingdom and Ireland at JPMorgan Private Bank said inquiries had gone up as clients increasingly viewed gold as “a port in a storm.” He forecast a $1,750 year-end target for gold. Call your experienced “Team Mike” representative to learn more!
Let’s Go to the Movies – At Home!
They’re not making many new movies now – they can’t, - not with rules about social distancing and face coverings. Even in the fall, you won’t see many new movies in theaters, unless they were already “in the can” before February, like the 25James Bond film, “No Time to Die,” scheduled to debut in April. It’s now rescheduled for November 20 in theaters. So, why not curl up with some “golden oldies” on video?
My friend Gary Alexander lives on a remote island with no theaters nearby, so I sent him some old films he hasn’t yet seen, starting with musicals, since he is a musician who has missed a few musicals since he moved offshore in 2004. One is “The Greatest Showman” (2017) about P.T. Barnum, with Hugh Jackman singing the title role. Jackman is also great in singing the role of Jean Valjean in 2012’s “Les Miserables.”
The Barnum movie also has a connection to the numismatic world in that Barnum was elected mayor of Bridgeport, Connecticut in 1875 and was instrumental in launching the Bridgeport Hospital in 1878. He started his Barnum circus late in life at age 60 and is buried in a Bridgeport cemetery he designed himself. The Bridgeport Connecticut low-mintage centennial half dollar was issued in 1936 to honor the 100year of the incorporation of Bridgeport, with the obverse depicting Barnum, the city’s most notable citizen.
Some other movies to consider watching these days include a couple of true-to-life sports histories:
“The Greatest Game Every Played” (2005), a film about U.S. golf pioneer Francis Ouimet, set in 1913, and “Glory Road” (2006) about the all-black 1966 West Texas NCAA championship basketball team.
In more recent years, here are three well-written and produced films about some more eccentric slices of life:
“The Accountant” (2016) starring Ben Affleck as an autistic accountant doubling as an assassin.
“Crazy Rich Asians” (2018), a “Hallmark movie on steroids” about the wealthy youth in Singapore.
“Knives Out” (2019), a mystery starring Daniel Craig investigating a family murder.
For an older favorite, check out the action film featuring Will Smith, “Enemy of the State” (1998).
1st American Reserve wants to share this historical item with our readers that on June 22, 1776, Congress issued $2 million in new bills, known as “Continentals.” The new paper currency featured the likeness of Revolutionary soldiers and the inscription, “The United Colonies.” Unbacked by gold or any other assets, the bills led to immediate inflation. As George Washington noted in 1778, “A wagonload of currency will hardly purchase a wagonload of provisions.” The highest full-year inflation rate in U.S. history was 29.8% in 1778 – not eclipsed in the last 242 years. The Continental left our young nation with a heavy war debt. Chastened by that inflationary experience, America minted gold coins in the 1790s and resisted the urge to issue new paper notes until the dawn of the Civil War.
On June 15, 1775, George Washington was named Commander in Chief of the Continental Army, and the U.S. Flag was born June 14, 1777. For over six years, General Washington fought a defensive campaign in mud, ice and heat against a far superior British force – just as he had done against the French in the Seven Years War. He was so popular with his troops and the public that he was the only man they wanted to become our First President. He served eight years as President when he would have far preferred retiring to run his coastal Virginia farm. Then he retired from power, as few world rulers had ever done.
Last week, Flag Day was observed in America, then George Washington’s statue was toppled and burned after being wrapped in a U.S. flag in Portland, Oregon, on June 18. Nobody seemed to care to defend him (Joe Biden’s campaign certainly didn’t) and the national media disturbingly seemed mostly silent about it.
Just a reminder. Every week, 1st American Reserve gets a few new rarities in our “Project 2020” campaign for the finest rare coin collectibles. Call your experienced “Team Mike” representative for a description of our quickly changing inventory of classic American gold and silver coins, but you must act fast. As a mentor of mine used to say, there is a difference between a “fast” rabbit and a “dead” rabbit. When gems come into our inventory, they tend to move fast. That’s why you want to be a fast rabbit in fast-changing markets.
We make our selection of “Project 2020” coins based on several factors, including sheer beauty, historical importance, popularity and low population capitalization (a coin’s value times the numbers of coins seen). We’re finding that these coins are becoming tougher and more costly to buy, since the market for many gold coins priced under $10,000 is rising. Civil War-dated and Carson City-minted coins are especially in high demand. Over the last few months, we have posted over $2 million in new bids, higher than any other dealer, on hundreds of different coins in our attempt to acquire the finest specimens of lower-mintage, low-population $10 and $25 Gold American Eagles, $2.50, $3.00, $5.00 and $10.00 Indians, Type II and Type III Liberty Gold, and the best classic Commemorative halves.
Although our bids on these coins are still rising, we continue to invest in these coins because we believe they are still underpriced relative to their population capitalization. In the process of accumulating these coins, we scrutinize each coin very carefully. We never sacrifice in our quest for top quality. We buy only hand-selected, top-quality specimens. That is why you should only buy rare coins from well-recognized experts. Each coin should have good eye appeal. When you see these coins, you will know what I mean. Each is a classic piece of American history. Owning these coins is like holding history in your hands.
Update on Project 2020 – Our Targeted Plan for Stockpiling Tomorrow’s Winners Today
1st American Reserve has been trying to “quietly” assemble an inventory of what we think will be tomorrow’s top rare coin winners – based on several factors, including sheer beauty, historical importance, popularity and low population capitalization (that’s a coin’s value multiplied by the number of coins in a specific grade). We’re finding that it’s becoming harder to acquire rare coins quietly, as these coins are becoming tougher and more costly to buy.
The market for many gold coins priced under $10,000 is definitely rising! Civil War-dated and Carson City-minted coins are in especially high demand. Over the last few months, we have posted over $2 million in higher bids (above any other dealer’s bids) on hundreds of different coins in our attempt to corner the finest specimens of lower-mintage, low-population $10 and $25 Gold American Eagles, $2.50, $3.00, $5.00 and $10.00 Indians, Type II and Type III Liberty Gold, and the best classic Commemorative halves. But even our higher bids are attracting fewer and fewer offers!
Although 1st American Reserve's bids on many of these coins are consistently rising, we continue to invest in these coins because we believe they are still underpriced relative to their population capitalization. In the process of accumulating these coins, we scrutinize each coin very carefully. We never sacrifice in our quest for top quality. We buy only hand-selected, top-quality specimens. That is why you should only buy rare coins from well-recognized experts. Each coin should have good eye appeal. When you see these coins, you will understand what I mean. Each coin is a classic piece of American history. Owning these coins is like holding history in your hands.
Call your Team Mike representative for a description of our fresh and quickly changing inventory of classic American gold and silver coins, but you must act quickly. As a numismatic mentor of mine used to say, there is a difference between a “fast” rabbit and a “dead” rabbit. When gems come into our inventory, they tend to move fast. That’s when you want to be a fast rabbit.
1st American Reserve was happy to see that the Wall Street Journal listed gold as the top performing asset last week, when comparing stock indexes, currencies and commodities. In their June 13-14 edition, Gold was listed at +3.17% for the week. The worst-performing assets were U.S. stocks, led by the S&P 500 energy sector at -11.07%. For the year-to-date, gold beat stocks by a large margin, up over 14% vs. -8.8% for the Dow and -4.2% for the S&P 500.
Let's hope it continues!
The recent significant increase in the price of gold may increase the chances of unwary buyers and sellers becoming victims of dishonest dealers, cautioned Michael Fuljenz, an award-winning precious metals writer known as America’s Gold Expert®.
“It happens virtually every time there’s a run up in gold and silver prices. Scam artists take advantage of investors and consumers who have not done their homework,” warned Fuljenz.
“Last year when gold and silver prices dropped, there was still so much public demand that the United States Mint ran out of some bullion coins inventory several times. I anticipate demand will rise even higher from 2015’s impressive levels. Investors should know how to get more value when buying and more money when selling,” Fuljenz stated.
He said there are five danger points to avoid:
- Paying far too much when you purchase new, popular gold bullion items, such as American Eagle and Canadian Maple Leaf coins. Depending on the quantity of your purchase, Fuljenz advised you should only pay between 4.5 and 5.5 percent over the intrinsic (“melt”) value of a typical, one-ounce gold bullion coin. Premiums above melt value may reach as high as 14 percent when purchasing smaller-size bullion coins that contain only one-tenth of an ounce of gold.
- Receiving far too little when you sell. Depending on the quantity and quality of coins you are selling, you should receive as least melt value for popular, one-ounce gold bullion coins and usually significantly over intrinsic value for rare coins. Several years ago, Fuljenz assisted news media in five states with investigations of so-called ‘hotel buyers’ who often paid just pennies on the dollar for some precious metals items. In one case, a high-profile buyer offered only $60 for a gold coin with a market value of $10,000 that Fuljenz loaned to investigative reporters who worked on the stories.
- Not receiving what you paid for. Fuljenz pointed out there have been recent news media stories in Orange County California and Austin, Texas about precious metals dealers failing to deliver the gold bullion coins investors ordered in good faith.
- Not receiving payment for precious metals items you shipped to a buyer.
“Before you buy or sell with a dealer, check to see the dealers’ credentials. Are they accredited by the Better Business Bureau? Are they truly experts, such as being a member of the Professional Numismatists Guild’s Accredited Precious Metals Dealer (APMD) program,” advised Fuljenz.
- Beware of counterfeit American Eagle gold and silver coins and fake bullion ingots (bars). “Even though hobby protection laws have been strengthened and counterfeit detection efforts in the precious metals and rare coin profession have increased, it pays to make sure your specific dealer is an expert in counterfeit detection,” said Fuljenz.
About Dr. Mike Fuljenz
Michael Fuljenz has won more than 50 prestigious national and regional awards and honors for his consumer education and protection work in rare coins and precious metals, including Book of the Year. He has taught counterfeit detection classes at American Numismatic Association seminars, and was recently was awarded an Honorary Doctorate in Humane Letters by McNeese State University. A respected community leader in his hometown of Beaumont, Texas, Mike also has served with distinction as a consultant to the Federal Trade Commission, United States Mint and Royal Canadian Mint, and is on the Boards of Directors of the influential Industry Council For Tangible Assets, and Crime Stoppers of Beaumont, Texas.
1st American Reserve thinks this is an article you absolutely should read:
According to an article in last Thursday’s (“Scramble for Gold Redraws Market’s Map,” June 11), gold imports to New York from Switzerland and elsewhere have been massive over the last three months. As we’ve written here in the past, one major factor in the current gold shortage stems from the fact that major Swiss gold refiners were only sporadically open from March through May due to coronavirus fears - three of the four major gold refiners were in the southern, Italian-speaking Swiss cantons, near northern Italy, which was hard hit by the coronavirus.
The Comex division of the New York Mercantile Exchange is required to hold physical gold to back each new share of gold ETFs that investors buy. Due to stocks falling sharply, demand for gold ETFs nearly quadrupled. Gold in Comex vaults within 150 miles of New York City rose from about eight million Troy ounces (250 metric tons) to almost 30 million troy ounces of gold (over 900 metric tons), according to FactSet. The Journal says that rise in gold vaults is equal to nine fully-loaded Boeing 737-700 airliners. Since commercial flights out of Switzerland were limited during those months, the Journal said private charters by logistic firms flew that gold from Europe to New York.
Stocks are now going up and down rapidly – more rapidly than at any time since the 89% decline from 1929 to 1932, followed by a rapid 93% recovery during the summer of 1932. So far, the year 2020 is a year of unprecedented volatility – the widest price swings since 1929-1933. That’s all the more reason why investors are turning to gold – the only investment that went up during the troubled 1930s. To learn more about how to properly invest in gold, call our friendly and experienced account representatives that are the heart of Team Mike!
You could say that Congress and the Federal Reserve are beginning to “go crazy” with the printing press. The parade of stimulus packages brought forth by the Federal Reserve and Congress are on course to add as much as $10 trillion in new money and new debt when all is said and done. Much of it seems to be a cynical attempt to “buy votes” this November, since they are sending out stimulus checks to people who are still working, while not even asking those businesses and workers to send in their regular taxes yet!
The official estimate for this year’s federal deficit is $3.8 trillion – more than triple the previous record – and it may go much higher than that. The total U.S. debt has risen $2.5 trillion in the first four months of this year, from $23.2 trillion in January to $25.7 trillion in May. The latest “stimulus” bill being pushed through the Senate by spendthrift Democrats is called the Monthly Economic Crisis Support Act. It was introduced by Senators Kamala Harris (D-Calif.); Bernie Sanders (Ind-Vt.); and Ed Markey (D-Mass.) The bill calls for sending $2,000 per month to individuals, $4,000 to couples, plus $2,000 per child up to three children. That’s $10,000 for a family of five, or $120,000 per year, although payments would be reduced for those families earning over $100,000. Have we ever seen such a blatant giveaway before?
At the same time, the Federal Reserve Chairman Jerome Powell is promising total giveaways to banks for loans when he says, “When it comes to lending, we’re not going to run out of ammunition,” adding, “we will provide essentially unlimited lending to support the economy.” That’s a promise of unlimited money.
Although we’re not at war, this situation promises the same kind of runaway inflation we saw in the Revolutionary War, when General George Washington complained that the paper “Continentals” the Congress had issued had become worthless: “A wagonload of continentals can’t buy a wagonload of provisions,” he complained. We saw similar inflations during World War I and II and after Vietnam.
When so much money is printed without backing, the limited amount of gold and silver left in circulation becomes more valuable, as it did in previous wartime inflationary periods.
For decades, China has been exporting a wide variety of counterfeit products, including bullion coins, rare coins and currency. A part of the problem has been the fact that we have had very little skilled oversight at the federal level. It’s a little-known fact, but under President Barack Obama, there was no nominated and confirmed Mint Director. Only when President Trump took office did he nominate a new Mint Director, David J. Ryder, who had previously served as Mint Director under George H.W. Bush. Bush nominated him for that office in September 1992, and he served until November 1993, the first year under Bill Clinton.
In the 24 years between his two tenures as Director of the Mint, Ryder became an expert in counterfeit detection after he joined Secure Products in 1994. When the Honeywell Corporation acquired Secure Products in 2007, Ryder was Managing Director of Currency for Honeywell, where he developed and launched highly advanced anti-counterfeiting systems for both manual and high-speed authentication of currency, passports, bank checks, and other commercial products. Then, in 2017, President Trump nominated Ryder as Director of the United States Mint and he was confirmed on March 21, 2018.
Mint Director Ryder’s expertise in counterfeit deterrence and detection is the first part of the solution to stopping the counterfeit invasion from China that President Obama did not provide. The second important consideration is that President Trump himself, is the first President who has been tough on China on all fronts, including counterfeit products. China very much wants American voters to defeat Trump.
The third factor in counterfeit protection is the dealer you choose. Some counterfeit coins are still being sold by dealers who are incapable of telling the difference between the real thing and the “near misses” produced by skilled counterfeiters. I taught grading and counterfeit detection for 20 years and am often called to consult with customers about suspicious coins bought from other dealers.
So, if you want to put the odds on your side, stick with David Ryder, Donald Trump and Team Mike.
Now that many leading mainstream banks have raised their gold price target and have recommended a significant portion of one’s portfolio to be in gold, it’s time to make sure your regular portfolio and your retirement portfolio are properly balanced in precious metals. A division of BankAmerica, for instance, recommends a 25% position in gold, and Bank of America just raised its year-end 2021 gold price target to $3,000 an ounce, over 50% above gold’s all-time high price and 50% above the bank’s previous target price of $2,000. The bank’s report summarizes its main argument: “The Fed Can’t Print Gold.”
Many investors have taken care of their active portfolio but they have kept their 401(k) or IRA entirely in stocks and bonds, thinking that those were the only options. Maybe their company only provided those two choices. But there are other options. Precious metals can be a part of your retirement portfolio, and our experienced team can make that transition easy for you. We have a team with long-term expertise in that field. Just call and ask for “Team Mike” and we will help you get started on the easy process of opening an account transferring funds (or “rolling over” an IRA or 401(k) account) and funding it with our preferred vehicle for long-term gains: common and rare American Eagles.
Rare American Eagle coins, minted from gold and silver, have shown appreciation in value over time, especially when held for the long-term. They are one of the few assets to offer double play potential. First, from their underlying gold and silver content and secondly, from their growing rarity, as we typically select low-mintage American Eagles that have developed strong collector premiums due to high demand and relatively low survival rates. Many of these hand selected coins have already been locked up long-term in IRAs. All you need to do is sit back and watch your nest egg mature, tax-deferred, in a Precious Metals IRA!
Total sales of bullion coins by the U.S. Mint slowed from their torrid pace in March, but they are still up strongly above the same five months in 2019. For the first five months of 2020, sales of American Eagle gold coins total 335,000 Troy ounces, up 222% from the 104,000 ounces sold last year. This May, the Mint sold 11,500 ounces, down from April, but 187% above the 4,000 ounces sold in May 2019.
Sales of American Eagle silver coins reached 490,000 ounces in May 2020. Although down from April and from last May, this brings the total American Silver Eagle sales for the year to 11,218,500 one-ounce coins, which is 25% more than the 8,987,000 coins sold through the same five months in 2019.
American Buffalo gold coin sales totaled 2,500 ounces in May, lifting their year-to-date total of 118,500 ounces, which is 166% above their sales level for the first five months of 2019, when they totaled 44,500 ounces.
One reason bullion coin sales were down in April and May was the Mint was often closed due to coronavirus concerns. If the Mint were open more days, sales would likely have been much higher.
Whenever gold and silver prices are rising, as they are now, coin dealers place more ads, and those ads bring in more new customers than usual. As you watch cable TV coverage of various crisis events, you will notice this proliferation of ads. After those new customers buy bullion coins. Within 6-24 months, a good percentage (say 10% to 20%) will graduate into rare coins, often pushing up the prices of rare coins.
Gold still leads all other major investment asset categories through the end of May, although stocks have made a strong comeback in April and May. Gold is up 15% year-to-date vs. double-digit declines in the Dow Jones Industrials and European stock market, while the widely-quoted S&P 500 is down 8.3% and the tech-heavy NASDAQ composite has delivered a positive performance of just +5.76% through May 31.
The Wall Street Journal U.S. Dollar Index is up 3.3% through May 31, meaning gold has performed an average 3.3% better in global currencies than in dollars. Gold is up over 20% YTD in the Canadian dollar, Indian rupee or British pound, and gold is up over 50% in a troubled currency like the Brazilian real.
The biggest story in the precious metals market during the second quarter, so far, is that silver came back from $12 in mid-March to $18 in a little over two months. At one point, the gold-to-silver ratio spiked to 130-to-1, when silver dipped to $12 on March 19 while gold traded at $1,560. That was also the week of maximum panic in the stock market when gold was the only asset that held its value. Silver has now risen 50% in a little over 10 weeks based on rising industrial demand and rising investor demand. The current gold-to-silver ratio has now dipped to 95-to-1, the first time it has been below 100-to-1 since mid-March.
Also, since March, we have predicted that silver would catch up to gold, and now it has. The average gold-silver ratio during 2019 was about 85-to-1, and that is probably where the ratio will soon “normalize.”