1st American Reserve thinks this is a great post taken from the THE MIKE FULJENZ METALS MARKET REPORT of 9/30/2020.
History has made General George Washington’s winter in Valley Forge, PA (1777-78) a story of great courage, and indeed it was, but the next three winters with his dwindling army in northern winter camps were much more trying. Washington’s last major battle was at Monmouth, New Jersey, June 28, 1778. It was a draw after Washington rallied his retreating troops. The following three years and four months were a tale of strategic retreats with a dwindling army and few supplies from a bankrupt nation and Congress, using a worthless currency called “The Continental.” Many farmers preferred selling their produce to the British Army with their “hard” currency, the British pound, thereby impoverishing the Patriot army.
Here are two portraits of the U.S. Army entering their winter quarters in 1779 and 1780, taken from Ron Chernow’s “Washington: A Life.” He is the author who wrote the biography of Alexander Hamilton, which became the basis for the Broadway musical, “Hamilton,” and his most recent biography is “Grant.”
Now that gold prices have set a new high, we have seen more price predictions above $3,000 per ounce. This week, I noticed that the same person who once bet my friend Gary Alexander that gold would fall below $1,000 in 2017 – and later predicted gold would go above $3,000 – has now predicted $5,000 gold.
This is an article that 1st American Reserve finds important for its clients to know about. Gold has been rising when the dollar falls and falling a bit when it rises, but when the dollar begins to fall farther and faster, you can expect a strong rush to gold, as has been happening in Turkey and – to a lesser extent – in countries like Russia and Argentina, where their currency is chronically weak. The Wall Street Journal wrote about this last week in an article entitled, “In Turkey, Weak Lira Powers Fresh Gold Rush: Turkish households bought record volumes of gold this summer – and safe boxes to keep it at home.”
Gold rose $23 Monday morning, September 14, from $1,940 to $1,963, before settling into the high $1950s, mostly based on a weaker dollar, which was in turn based on hopes of continued “quantitative easing” by the Federal Reserve when they meet this Tuesday and Wednesday. Gold futures also rose $13 last week. In addition, gold-backed ETFs rose for the ninth straight month in August, as 39 tons of bullion worth, $2.1 billion at market prices, were added to gold ETFs in August, with seven tons bought in Asia.
Major mainstream investment advisory services are now predicting gold prices more than doubling in the next 2-3 years. First of all, Bloomberg Intelligence “is not ruling out $4,000 gold by 2023,” noting that the gold bull market is “just beginning.” Despite silver’s recent surge – growing twice as fast as gold since spring – Bloomberg Intelligence senior commodity strategist Mike McGlone LAO predicts that gold will outperform silver in the second half of the year, due primarily to a weak economy and weaker dollar.
“Gold has the catalysts to maintain performance leadership into year-end, in our view,” McGlone wrote. “Central-bank rate easing and U.S. bond yields gravitating toward zero are solid underpinnings for gold, as is the potential for increased U.S. stock-market volatility approaching the presidential election.”
1st America Reserve's hometown, Beaumont, Texas survives Hurricane Laura – But Lake Charles Was Hit Hard. As indicated in the previous week’s Metals Report, 1st American Reserve came through Hurricane Laura reasonably unscathed. We endured one day of rolling electrical backouts but most of us were either at work or were helping others in need, and we were all back at work in full force the next Monday. That wasn’t the case for our friends and family in Lake Charles, Louisiana, Mike Fuljenz original hometown. Hurricane Laura, the strongest hurricane ever to hit Louisiana, went right over Lake Charles with the highest winds on the eastern wall of Laura’s eye hitting the city directly. The peaceful eye never even gave them a moment of relief.
During the first eight months of 2020, 589,500 Troy ounces of Gold American Eagles were sold by the U.S. Mint vs. only 122,000 ounces for the same eight months in 2019, a 383% increase. This was despite periodic work shutdowns this year due to coronavirus, and a complete cessation of production of the popular $5 tenth-ounce gold Eagles for a three-month period. Production of the $5 gold Eagles finally resumed in July, with 35,000 of the smaller coins sold in July and another 30,000 sold in August.
In the last week of August every year, the Federal Reserve Bank of Kansas City hosts a central bankers’ convention in Jackson Hole, Wyoming, near the Grand Teton mountain range. This year, due to the coronavirus pandemic, the meeting was held “virtually” via Zoom. In his keynote address last Thursday, Fed Chairman Jerome Powell clearly stated that the Fed’s primary goal for the foreseeable future will be to fight unemployment and let inflation run however high it will run. He even said the Fed will now allow inflation to overshoot their previous 2% target. This is in directly opposite of what the Fed faced 40 years ago, in 1980, when inflation was enemy #1. Fed chair Paul Volcker faced inflation, unemployment and interest rates ALL in the double-digits, providing the basis for gold’s initial run up to $850 in early 1980.
As I indicated in last week’s Metals Report, our company came through last week’s hurricane reasonably unscathed. We endured one day of rolling electrical backouts but most of us were either at work or were helping others in need, and we were all back at work in full force on Monday. That wasn’t the case for my friends and family in Lake Charles, Louisiana, my original hometown. Hurricane Laura, the hardest hurricane ever to hit Louisiana, went right over Lake Charles, La. and Orange, Tx. with the highest winds on the eastern wall of Laura’s eye hitting Lake Charles directly. The peaceful eye never even gave them a moment of relief.
Gold had a good week, rallying after every correction. On Monday, August 31, gold rallied as the dollar weakened to its lowest level in two years as U.S. coronavirus cases topped six million. (Investors have often bought gold as a hedge against economic uncertainty, such as times when the coronavirus pandemic has worsened, or when the economy has flattened after beginning to rise.) For the month of August, gold reached its peak on August 6 and then remained above $1,900 in late August, while silver kept rising.
Today’s September 1, USA Today published in their Money Section an extensive and positive article on gold (“Gold Gleams in Hard Times”). Even though they only quoted me once (officially), they paraphrased a lot of material I gave them, and what I told them about the qualities of gold. They also quoted some interviews from our satisfied customers, which we helped set up for them. You will probably recognize many of these statements because you heard them here first in the weekly Metals Report – months ago.
During the first eight months of 2020, 589,500 Troy ounces of Gold American Eagles were sold by the U.S. Mint vs. only 122,000 ounces for the same eight months in 2019, a 383% increase. This was despite periodic work shutdowns this year due to coronavirus, and a complete cessation of production of the popular $5 tenth-ounce gold Eagles for a three-month period. Production of the $5 gold Eagles finally resumed in July, with 35,000 of the smaller coins sold in July and another 30,000 sold in August.
The dollar is down 10% in the last five months in part because the Federal Reserve added $3 trillion to its balance sheet and the U.S. Congress passed $3 trillion in relief packages through May with more to come.
The 2020 federal deficit is $2.8 trillion through July 31. All this compares with a paltry 108 million ounces of new gold mined each year. Even at $2,000 per ounce, that’s only $216 billion, less than 10% of the budget deficit and less than 1% of annual GDP. Gold is very hard to find, and it is increasingly found only in politically dangerous jurisdictions or in difficult geographical locations for mining equipment.
Gold had a roller-coaster week, topping $2,000 an ounce again last Tuesday, August 18, as the U.S. Dollar dropped to its lowest point in two years, falling over 10% in a 5-month period since March 18. Then, gold drifted lower as the dollar rallied. On Friday morning, August 21, gold fell from $1,950 down to $1,910 before rallying back above $1,940 as U.S. initial jobless claims climbed back above 1 million again.
as has been happening in Turkey and – to a lesser extent – in countries like Russia and Argentina, where their currency is chronically weak. The Wall Street Journal wrote about this last week in an article entitled, “In Turkey, Weak Lira Powers Fresh Gold Rush: Turkish households bought record volumes of gold this summer – and safe boxes to keep it at home.” 
addition, gold-backed ETFs rose for the ninth straight month in August, as 39 tons of bullion worth, $2.1 billion at market prices, were added to gold ETFs in August, with seven tons bought in Asia.
Metals Report, 1st American Reserve came through Hurricane Laura reasonably unscathed. We endured one day of rolling electrical backouts but most of us were either at work or were helping others in need, and we were all back at work in full force the next Monday. That wasn’t the case for our friends and family in Lake Charles, Louisiana, Mike Fuljenz original hometown. Hurricane Laura, the strongest hurricane ever to hit Louisiana, went right over Lake Charles with the highest winds on the eastern wall of Laura’s eye hitting the city directly. The peaceful eye never even gave them a moment of relief.