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Metal Market Report September 2021 - Week 2 Edition

September 2021 - Week 2 Edition

Gold’s Track Record Shines

Gold rose 1% (almost $20) last Friday on a big job shortfall – with 720,000 new jobs expected in August but only 235,000 materialized.  However, gold lost the gain and more on Tuesday following the long Labor Day weekend. Gold fell due to a dollar rally and there was a rise in U.S. Treasury rates.

Despite the slow movement of precious metals this year, gold rose 22% last year and silver doubled that percentage with a 44% gain. Since 2000, gold is up over 500%, more than doubling the major stock market indexes.  For the past 50 years – since the dollar was set free from gold’s backing in August 1971, gold has risen by an average of 10.8% per year.  Gold exceeded the gains in the major stock market indexes and gaining over 50-fold to the dollar.  That means the dollar has lost 98% of its purchasing power vs. gold.

Not a bad track record over two years, 20 years, 50 years, 100 years or more.

Late Summer is the Best Time to Buy Gold

If you ever wondered about the best time to buy gold, the answer is when it is out of favor or when the price is down, and few people write about gold in the news. But another answer is the calendar.

Despite gold’s disappointing start this month, September is historically the best month for gold over the past 45 years, since it was legalized for Americans to own in 1975.  According to the London Bullion Market Association (LBMA), September is the No. 1 month and August has been the start of the best six months for gold.

Part of the reason for this seasonal advantage is the fabrication of gold jewelry for the upcoming holiday season in several cultures. Christmas in America, India’s wedding season, the holy days of Ramadan in Muslim nations, the Chinese New Year and Valentine’s Day create a large demand for gold. Jewelers must order bullion several months in advance of the holiday season to craft their new lines of jewelry.

Spending Limits are Coming Due (Whether Congress Sees Them or Not)

Congress is spending faster than the proverbial drunken sailor, since a poor sailor can’t spend more money than he has in his pocket. Congress has no such limitation. They just call on the Federal Reserve to buy more bonds (currently the Fed is buying $120 billion per month) or they tell the Treasury to add another $300 billion or so in deficit spending each month.  So far, that has amounted to a $3 trillion (or more) annual deficit increase.

As we come up to the end of another federal fiscal year ending September 30, neither major political party seems interested in curbing many of the massive new spending programs of the Biden Administration.  There are some watchdogs in government pointing to some hard limits on deficit spending. For instance, the Social Security and Medicare trustees reported last Tuesday, August 31:

  • The Medicare hospital trust fund will go broke in 2026, as hospital spending will exceed expected revenues by $578 billion over the next decade, despite predicted tax increases.
  • Social Security will run out of funds for seniors and disabled persons by 2034, despite an increase in Social Security tax deductions to 16.3% of payrolls in 2031 (vs. 14.1% now).

Once the Social Security trust fund runs out of money, beneficiaries would face a 22% across-the-board cut in benefits, according to the Wall Street Journal (“The Entitlement State’s Bankruptcy Dates,” September 2, 2021), but nobody in Washington, DC has the heart or the guts to cut spending or limit benefits. Neither party, for instance, is willing to raise the retirement age to 67, even though 70 is the new 60 these days.

In the Medicare morass, we may soon face rationed care in a world with a serious doctor and nurse shortage as many professionals are retiring early while fewer people are entering these worthy professions.

As the Wall Street Journal stated, “Democrats won’t mention any of this as they try to add vision, dental and hearing benefits to Medicare and lower the qualifying age to 60 from 65. They also want to pass new entitlements such as national childcare, free community colleges and universal pre-K. The trustees’ report is shouting not to expand entitlements if you can’t pay for the ones you have, but today’s politicians don’t care.”

With unlimited dollar-printing to pay for these seemingly unlimited benefits, the amount of new gold being mined each year continues to shrink. Over time, this guarantees the dollar will decline in value and gold will go up. Now is the time to take advantage of gold’s bargain price and own more real money.

Many of Our Select Four Program Coins are Rising in Price

I recently returned from the “World’s Fair of Money,” held August 10-14 in Chicago, sponsored by the American Numismatic Association, where I was presented with the prestigious Dealer of the Year award. While there, I noticed the quality rare coins from our Project 2020, a subset of our Select Four programs, were mostly priced higher with fewer coins available. The fewer coins available highlights the need to get in line with your Account Representative for the best examples of the in-demand coins in those series. As I have said, you’re either a fast rabbit or a dead rabbit when high demand coins are snapped up rapidly.

Our Select Four recommendations focus on four major gold coin series we believe most likely to see ongoing collector and dealer demand with potential future price increases. They are: (1) Type II and Type III Liberty Head Double Eagles, minted 1866 to 1907; (2) Indian Head Gold Coins minted periodically from 1854 to 1933 in denominations of $2.50 Quarter Eagle, $5 Half Eagle, $10 Eagle and $3 Indian Princess; (3) Rare Gold Commemorative Quarter Eagles, namely the 1915-S Panama-Pacific Exposition Quarter Eagle and the 1926 Sesquicentennial Independence Quarter Eagle; and (4) The $10 and $25 American Gold Eagle:  Fewer $10 and $25 Eagles were minted than other denominations almost every year since the series began in 1986, creating a modern rarity.

Call your representative today to line up one or more of these gold rarities when they become available.

 

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