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Metal Market Report January 2021 - Week 2 Edition

January 2021 - Week 2 Edition

2020 Update, Part 2: Silver Topped All Other Investments in 2020

Gold dropped $75 on Friday, January 8, from $1,910 to $1,835, driven by a dollar recovery and higher U.S. Treasury yields, as the 10-year Treasury bond yield finally climbed above 1%. However, gold had gained a quick $115 in December, so this sudden drop merely took gold back to mid-December prices Gold recovered $10 on Monday morning. If that sounds volatile, it is, but consider that in one week Bitcoin rose from $31,000 to $41,000 and then fell back to $31,000 on Monday.

On January 4, 2021, The Wall Street Journal printed its annual survey of 116 leading investment assets, divided into four categories – 46 U.S. and global stock market sectors and indexes, 42 global currencies, 18 commodities and 10 bond ETFs. The leading investment among all 116 of them was Silver, up 47.7%.

According to the Journal, Copper gained 25.77% and Gold gained 24.59% in 2020.

In the Coin Market, 2020 Silver American Eagle demand more than doubled, while demand for the Gold American Eagle grew 455%, and gold American Buffalo bullion coin demand grew nearly fourfold in 2020.  

This superb year for gold, silver and Mint sales brought many new customers into the gold coin market. As a result, we enjoyed a very good year for acquiring new customers, as did others in our industry. We know that a good percentage of new bullion customers will likely become rare coin investors and collectors over the next two years. This, in turn, drives up the demand and prices of rare coins in the rare coin market.  A number of rare gold coins increased in value more than the price of gold did during 2020

The First Two Biden Years Should Be a Bonanza for Gold and Silver

As we close the book on the Trump years, it was a good time for both gold and stocks. Gold grew from $1,146 at the end of 2016 to $1,891 at the end of 2020, a 65% gain. Silver grew 63%, from $16.24 to $26.48. Despite New York Times columnist Paul Krugman predicting the stock market would crash after Trump was elected, the Dow gained 70%, from 18,000 on election night to 30,600 at the end of 2020. That was a pretty successful run for all three investments, helping investors’ portfolios grow.

Now, what do the next two to four years look like for gold, silver and the stock market?

There have been only two times in the last 40 years when the Democrats have swept all three branches of government – the White House, the Senate and the House of Representatives. Those two elections were in 1992 (Bill Clinton) and 2008 (Barack Obama). In the following two years, in each case, gold, silver and stocks soared, so there is hope for investors in all three investments over the next two years.

  • In 1993 and 1994, silver gained 32%, from $3.67 to $4.85, and gold gained 15%, from $333 to $383. During the same two years, the Dow Jones index gained 16.3%
  • In 2009 and 2010, silver tripled, from $10.79 to $30.63, and gold soared 61.5%, from $870 to $1,405. During the same two years, the Dow Jones index gained 29.2%

The outlook gets even better, politically. When you look back at the first two years of both Clinton and Obama, they over-extended their mandates with healthcare plans and they were chastised by an outraged electorate, which delivered historic rebukes at the ballot box. First came the Republican Revolution in the 1994 mid-term elections in a massive 104-seat swing, from a 78-seat Democrat majority (256 to 178) to a 26 Republican majority (230 to 204). In the Senate, Republicans went from 14 seats down to 4 seats up.

In a nearly exact replay in 2009, President Barack Obama passed a national healthcare plan that Hillary Clinton had once envisioned, and there was another Republican Revolution, spurred by a Tea Party. The turnaround in House seats was even greater than in 1994 – from a 256-179 Democrat majority of 77 seats to a strong 49-seat 242-193 Republican majority. Gold and stocks continued rising after that election.

This time around, Biden does not have a massive mandate in either house. Unlike the 77 or 78 seat majority in the House (as in 1993 or 2009), he has a narrow 11-seat majority. Instead of a 14 or 15 seat margin in the Senate, Biden has a 50-50 tie.  There is always the possibility of a renegade Democrat voting with the Republicans on some issues, so he has no strong mandate. Biden was in Washington in 1994 and 2010 to learn the lessons of the past, so he knows that if he takes an aggressive course of “reforming America” in the left-leaning direction of his progressive wing, he will likely lose both Houses of Congress in 2022.

That’s good news in either direction: If Biden is moderate, America wins; if he’s radical, the Republicans should win in 2022. In the meantime, history indicates that gold, silver and stocks will enjoy a good run.

Our 2021 price projections of $2,350 gold and $32 silver represent a 24% gain in gold and 21% in silver, which could be conservative based on the historical precedent of President Obama’s first two years. If you don’t yet hold gold in your IRA, contact your representative to see how easy it is to properly diversify your IRA holdings in precious metals for better returns in the long run.

Get to Know the “Team Mike” Professionals at 1st American Reserve
Working with Dr. Mike Fuljenz, America’s Gold Expert®

Chris Whiddon, a Sr. Account Manager at 1st American Reserve, has been with the company for 20 years and has a computer information systems degree from Lamar University, which he earned while also working at Sears Inc. He is married and he and his wife have a son.

 

Chris has an interesting story in that he had three job interviews on the same day in 2000 and chose to join 1st American Reserve over other career paths. He had been an amateur coin collector since his grandfather gave him his first collectible coin when he was eight years old. He didn’t realize at the time that there was a precious metals industry where he would spend his career. 

Since then, he has been incredibly successful and helped thousands of clients find the special coins they were seeking for their own collections. Chris still collects coins and has an affinity for $20 Liberty gold coins and $2 ½ Indian gold coins, as well as coins recovered from the S.S. Central America shipwreck. He also collects guns and baseball memorabilia.

Chris is involved in the community through his volunteer work with All Saints Episcopal School and as a little league baseball coach. Chris is available for all of your numismatic needs, so give him a call for a personal touch.

 

 

 

 

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