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Metal Market Report June 2021 - Week 4 Edition

June 2021 - Week 4 Edition

New U.S. American Eagles to Debut in July – Get Ready to Buy!

The new gold and silver American Eagles are coming in July with the first design changes since the series debuted in 1986. That means there will be two designs available in the year 2021, making it a “Transition Year,” and a very desirable collectible year for investors and collectors alike.

There are some small changes to the obverse, but they will be too minor for the amateur eye to notice. Here are some highlights of the changes on the reverse (tails) side for the Gold American Eagle.

The overall design is credited to the Mint’s Artistic Infusion Program (AIP) Designer Jennie Norris, and the eagle head was sculpted by Mint Medallic Artist Renata Gordon, who has been a U.S. Mint sculptor-engraver since 2010, when she graduated from Philadelphia’s University of the Arts. The dominant feature will be a close-up profile of the head of a bald eagle facing left surrounded by these inscriptions: “UNITED STATES OF AMERICA” and then in smaller type, “E PLURIBUS UNUM” and “IN GOD WE TRUST” stacked in three layers of type. Those inscriptions will be separated by three stars on each side of the eagle and below the stars appear the inscriptions, “50 DOLLARS” and “1 OZ FINE GOLD.”

The most noticeable feature is the fierce gaze of the eagle, rendered in such fine detail that its beak and dense plumage look life-like. The artist’s ability to do that is related to Gordon’s experience as a former raptor handler when she was able to study the details of birds up close. She has noted, “I hoped to capture the intensity of his stare through the close cropping” of the design. “The American Eagle is such a noble bird.  His gaze speaks of pride and wisdom passed down through generations of time.” I think you will agree with me that this new design could generate a wave of pride in American history for those who hold this coin in their hands.

The new design of the American Silver Eagle reverse features a depiction of the American bald eagle in flight, as designed by Emily Damstra. Once again, the Eagle is displaying strength and nobility, but this time with its whole body on display and in motion, swooping down with its wings flexed behind its back carrying a large oak branch gripped firmly in its talons. The oak is another symbol of strength as well as the National Tree of the United States. The inscriptions include the face value of “ONE DOLLAR” the motto, “E PLURUBUS UNUM” and “UNITED STATES OF AMERICA” and “1 OZ FINE SILVER.”

We’ll let you know the precise date of their arrival in July but be sure to call your representative and reserve your coins, since I’m sure they will be very popular and will sell out fast.

Inflation is Rising Fast – And the Fed Finally Admitted It!

Last Wednesday, the Federal Open Market Committee (FOMC) raised their estimate of inflation this year by a full point, from 2.4% to 3.4%. It was the first indication that they admitted prices are rising!

The day before, Tuesday, June 15, the Labor Department reported that the Producer Price Index (PPI) rose 0.8% in May (almost 10% on an annual basis), well above the economists’ consensus estimate of a 0.5% increase. In the past 12 months, the PPI has risen 6.6%, the fastest pace ever recorded in that statistical series (which debuted in 2010). There were some huge monthly leaps of +2.6% in food and +2.2% in energy. Ignoring those two sectors, the “core” PPI still rose by +0.7% (an 8.4% annual rate) in May. The core rate is now running at +5.3% over the last 12 months, its fastest 12-month gain since 2014.

Due to the dollar’s decline over the last year, import prices have risen even faster. On Wednesday, the Labor Department reported that import prices rose 1.1% in May. In the past 12 months, import prices rose 11.3%, which is the fastest pace since 2011, and export prices are up 17.7% in the last 12 months.

The gold market and stock market seemed to ignore these inflation numbers, paying far more attention to the fact that officials said they now expect the next interest rate hike at the end of 2023 instead of in 2024.  At the same time, the FOMC said that it expects to continue its quantitative easing (QE) of $120 billion per month in bond buying, which is $1.44 trillion per year in new money creation.

This money-printing marathon began in March 2020 with the Fed’s “QE-Forever” plan. Since the fateful week of March 23, 2020, the Fed has purchased $3.4 trillion in securities. Three rounds of pandemic relief checks – plus massive aid to the airlines and troubled cities – added $3.3 trillion in new money.

Congress is continuing to spend fiat money. Last week, Senate Budget Committee Chairman Bernie Sanders and Majority Leader Chuck Schumer brought forth a $6 trillion “reconciliation package” that would combine key elements of President Biden’s infrastructure plan along with climate change and healthcare programs – and they have devised a strategy for trying to get this passed without any Republican votes.

This has all happened before. Right after the Declaration of Independence, the Continental Congress issued $2 million in new bills, known as Continentals, with the inscription, “The United Colonies.” Unbacked by gold or other hard assets, the bills led to hyper-inflation. By 1778, it took $6 in paper Continentals to buy what $1 bought in 1776. By November 1779, it took $40 to buy what $1 bought in 1776. As General George Washington said, “A wagonload of currency will hardly purchase a wagonload of provisions.”

The Continental failed and left our young nation with a hefty war debt. Chastened by the experience of that Continental currency, the U.S. Constitution prescribed, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts,” and America drafted a series of gold and silver coins in the 1790s, resisting the urge to issue new paper notes until the Civil War, with Lincoln’s “Greenbacks.”

In 1776 and 1862, we were trying to create or save our young nation. What’s our excuse today?  You need to buy more gold at this time.  Call your representative today!

Gold Recovers

Gold was sold off irrationally last week after some members of the Federal Open Market Committee (FOMC) hinted that they MIGHT raise interest rates a quarter point by the end of 2023 instead of 2024, as previously indicated. Bear in mind that is 2-1/2 years in the future, but it sent stocks and gold down in a knee-jerk reaction that created panic in many global markets. The U.S. Dollar Index also shot up 2% in two days in another overreaction, pushing gold down further. Gold closed Friday at $1,765 but it has recovered almost $20 on Monday as traders returned to their senses and bought gold at bargain prices.

 

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