GOLD 00.00 1.20 0.00%
SILVER 00.00 1.20 0.00%

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Metal Market Report February 2020 - Week 3 Edition

February 2020 - Week 3 Edition

You Can Have Confidence in our Coin Grading – From Common-Date Silver to Rare U.S. Gold

In the last few years, I have examined thousands of Kennedy halves sent in by other dealers for review. It is amazing how many of these coins, rated “Brilliant Uncirculated” (BU) by other dealers, are in fact lightly circulated. Just because it is sold in a “roll” of coins does not mean that roll is a U.S. Mint roll! Many rolls of Kennedy halves were rolled from coins that were briefly put into circulation.

In those same years, our company has sold tens of thousands of Kennedy halves and never had one returned. I continue to look at all coins that our customers send us from other dealers. My employees sometimes wonder why I spend so much time examining coins that are valued at under $10, but I tell them, “You never get a second chance to make a good first impression with a new customer.”

Accurate grading is one of my passions. I taught grading and counterfeit detection for over 20 years and at over 25 national seminars for collectors, dealers and law enforcement.  I worked at leading grading services which involved grading hundreds of coins all day long. This means that when you order a BU coin from my firm, you know that I have looked at it to know that it is a real BU coin and not a “slider” (a circulated coin that may appear uncirculated to an untrained eye).

With gold now surpassing $1,600 an ounce – after rising 18.8% last year – we’re definitely in the middle of a new bull market in gold – a time when many dealers are placing more ads in a wide variety of publications, bringing in new customers. Experience has proven that, as time goes by, about one in eight buyers of silver and gold bullion end up buying rare coins. This increase creates pressure on rare coin demand, causing many rare coins to rise in price. If we have another good year or two of bullion rising, I expect rare coins to be significantly rising, too, making it especially important that you work with an award-winning dealer who grades coins accurately and fairly – whether it be a common-date Kennedy Half or a very rare U.S. gold coin.

Gold Surpasses $1,600

Gold surpassed $1,600 per ounce for the first time since March of 2013, nearly seven years ago. In the last four years, gold is up over 50% from its low of $1,050 in December 2015 – all despite a strong U.S. dollar, making gold’s rise even more dramatic in terms of most other global currencies since 2015. Gold is now at a 5-week high and silver is at a 3-week high while stocks are down based on new evidence that the coronavirus is hurting global commerce. In particular, flagship Apple issued an “earnings warning.”

Silver is Poised to Rise Even More This Year– Barron’s, February 17, 2020

So far this year, silver has trailed gold, rising only 1% vs. gold’s nearly 6% rise, but the latest Barron’s “Commodities” column tells us “Why Silver is Poised to Rise Even More This Year.” Author Myra P. Saefong begins by showing how well silver has done compared with other industrial metals. We tend to compare gold and silver as precious metals, but the world views silver more as an industrial metal, and so it has sagged with the slowing global economy, especially in light of the coronavirus scare in China.

Copper prices are down 7% so far this year, and crude oil has fallen from $61 to $51 per barrel, down 16%, making silver’s small rise look fairly healthy by comparison. This reflects silver’s dual role as both an industrial metal and precious metal. When the coronavirus is contained – and history has shown that these unique viruses generally rise and fall within six months – global growth should return, giving a boost to silver, along with copper and crude oil prices.

According to the recently released Silver Institute review of the fundamentals of the 2020 silver market, silver’s use as an industrial metal accounted for over half of total global demand in 2019 and growth in silver’s “industrial offtake” is expected to rise 3% in 2020. The Silver Institute also sees an increase in investment demand in silver bullion coins and bars for the third consecutive year.

Overall, the Silver Institute foresees a 13.5% rise in the average price of silver this year, from $16.21 in 2019 to $18.40 in 2020, representing a six-year high, with a peak price of perhaps $19 to $20. Michael DiRienzo, Executive Director of the Silver Institute, sees “a return to silver industrial demand growth, coupled with a robust increase of 7% in silver physical investment.”

 

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