1st American Reserve Blog

As America’s Gold Expert®, I’m often accused of being a “cheerleader” for the precious metals and rare coins, but this year I’m actually a little more conservative than Citibank and some of the other mainstream banks.

For Gold, I’m predicting a slightly lower range than Citibank of somewhere between $2,200 and $2,350 but I don’t think gold can reach $2,200 within three months, like Citibank does.  I’m thinking it will take six months to reach $2,200 and a more likely peak price would be $2,350 in the second half of 2021.

Gold gained $100 in the first week of December, rising from $1,762.55 on the final November 30 London price setting to $1,865 on Monday, December 7. In the same seven days, silver is up even faster, +11%, from $22.15 on November 30 to $24.60 on December 7. The U.S. Dollar index declined about 1% in the same week, but that doesn’t account for the nearly 6% rise in gold in that same time frame. The primary engine for rising gold and silver prices seems to be the fear of another major lockdown and the increased likelihood that another major stimulus (spending) bill will pass Congress this month.

The advent of Coronavirus has caused the temporary end of handshakes, big Thanksgiving dinners, open school rooms, large corporate meetings, big football crowds, concerts, night clubs, conventions, most air travel and now some newspaper headlines tell us that coronavirus could spell the end of coins and the cash economy. Every financial transaction will take place online or with credit cards, Pay Pal, crypto-currencies or some new program they claim.

During November, the U.S. Mint sold 4,805,000 one-ounce Silver American Eagle coins, more than 10 times the 463,000 coins sold in November 2019, bringing the year-to-date totals to almost a 100% gain (29.3 million ounces vs. 14.8 million last year). Gold American Eagle sales were up 673% in November, with 85,000 Troy ounces sold vs. 11,000 in November 2019 that brought the 2020 11-month total up to over 5-fold from 2019 (794,500 Troy ounces in the first 11 months of 2020 vs. 150,000 ounces in 2019). The Buffalo Gold coin sales were also up strongly, +370% for November and +286% for the year-to-date

Irving Berlin had most American holidays cornered in his songs (White Christmas, Easter Parade, God Bless America), but his Thanksgiving song, nominated for an Academy Award as “Best Song,” didn’t contain the word thanks. It was Count your Blessings:

As we take a four-day break for Thanksgiving weekend this Thursday, we all have personal reasons for giving thanks, but we also have overriding reasons for giving thanks for national blessings in this particularly difficult year of 2020, which everyone has come to despise. Consider these opening thoughts:

Gold and Silver Long-Term Fundamentals are Sound

Gold fell $30 Monday morning, November 23, to $1,835, based on promising COVID-19 vaccine news and stalled progress on more stimulus packages in Congress, but these are all temporary, knee-jerk reactions, which have no bearing on the long-term fundamentals for gold and silver. As we said last week, this may be an unrealistic “honeymoon” attitude toward Joe Biden, or temporary amnesia about all the deficit spending in 2020, since rising inflation, more deficits and social unrest likely await us next year.

Gold rebounded early Monday, November 16, to nearly $1,900 per ounce ($1,897.20) as the U.S. dollar weakened. The move marked a recovery from its sudden $100 drop a week before, when Pfizer announced a COVID-19 vaccine and raised hopes for a sudden end to the pandemic.

Gold fell on Monday, November 9, from $1,960 To under $1,860 an ounce in under six hours, from 6am to noon (EST), based on preliminary announcements of an effective COVID-19 vaccine being available, however that conclusion is premature and there is no reason why a solution to COVID-19 should in any way be related to the price of gold. The Congress and the Fed have already over-spent $3+ trillion in 2020 and they are on track to over-spend by at least $1 trillion per year under President Joe Biden, especially if Biden succumbs to the policies of Kamala Harris, Bernie Sanders and Alexandra Ocasio-Cortez.  Either way, future deficits will only escalate, driving the price of gold and silver much higher.

John Linscomb, an assistant manager at 1st American Reserve, joined the company 17 years ago. His background is interesting in that he grew up on a cattle ranch and continues his love of the outdoors. During hunting season, when he is not in the office or spending time with his family, you can find John in a deer stand. In the summer, he is known to hook a few lunkers, as well.

John is especially proud of 1st American’s A+ rating with the Better Business Bureau and the fact they have been accredited with the BBB since 2002.

Giant banks like Bank of America and Goldman Sachs say that silver could double to $50 per ounce if Joe Biden wins next week’s presidential election, primarily due to enactments of some elements of the New Green Deal, which could double silver’s industrial demand for solar panels and other applications.

First, we are likely to see commemorative versions of the Morgan and Peace dollars in 2021 to mark the centennial year of the final Morgan dollar and first Peace dollar in 1921. In mid-1921, we will also see a change in the reverse design of the gold and silver American Eagles. These will engender new interest in both the old and new designs and generate new interest in coin collection, resulting in numerous new ads posted in various media, which generates new customers. Experience has shown us over the years that about one out of six of these many new buyers of bullion coins later turns into buyers of numismatic coins, strengthening the market for years.

Gold doesn’t need inflation to soar, just so long as gold delivers a “real” positive return – a positive gain after inflation, especially in comparison to prevailing short-term interest rates.  With the Federal Reserve now promising to keep interest rates at or near zero through 2023, investors can accumulate gold with confidence that it will deliver real returns for at least the next three years, and likely much longer, due to the huge infusion of new fiat currency and federal deficit spending this year and for many years to come.

Now that many leading mainstream banks have raised their gold price target and have recommended a significant portion of one’s portfolio be in gold, it’s time to make sure that your regular portfolio and your retirement portfolio are properly balanced in precious metals. After all, as the Bank of America said when it raised its target price of gold to $3,000, “The Fed Can’t Print Gold.”

The U.S. Department of Labor reported last week that its Producer Price Index (PPI) rose by 0.3% in August (a 3.6% annual rate), higher than the economists’ consensus expectation of a 0.2% increase. Service costs rose 0.5% in August, and some commodities have risen spectacularly in price since March. Lumber and silver have more than doubled in the last six months, while copper and gold have each risen over 40%.