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Metals Market Report Weekly Archive
 

The Mike Fuljenz Metals Market Report

January 2019 - Week 1 Edition

Gold Scores Large Advantage over Stocks in the Fourth Quarter of 2018

Gold closed 2018 at its highest price since June 15th, moving in the opposite direction of stocks, which fell the most of any December since 1931.  During the fourth quarter, the S&P 500 lost 14% while gold gained 8%. During the month of December alone, gold rose $65 an ounce (+5.4%) while the S&P 500 fell 9.2%. As of September 30, the S&P 500 was up 9% for the year, while gold was down 8.4%. Since then, however, their roles have reversed, with gold gaining 8.1% vs. declines in stocks ranging from -11.8% (Dow Jones) to -17.5% (NASDAQ).  The brightest side of gold’s performance story in 2018 is in terms of other currencies. Most foreign stock markets have fallen further than the U.S. stock market, and gold is up in most foreign currencies. The U.S. dollar was up about 5% in 2018, sending most commodities down in dollar terms. With gold down 1% in dollar terms, that means it averaged about +4% in terms of the euro and most other currencies. It gained double-digit percentages against troubled emerging market currencies, like the Turkish lira or Argentine peso.  Nothing gained much in 2018 except some obscure investments like Palladium. Bitcoin lost 71.4%.

 

We have now gone 19% into the new century. After 19 years, gold has gone up much faster than the S&P 500 and the Dow Jones industrials. 

Gold Price Projections for 2019 Range from $1,350 to $1,565

Most major banks and investment houses haven’t issued fresh gold price projections since last October, but we should see quite a few in the next two weeks.  Back on October 30, at the annual meeting of the London Bullion Market Association (held in Boston this year), the average predicted price for gold 12 months from that date was $1,532, a huge 25% gain from the $1,230 price at the time. Another poll, conducted informally before the meeting began, predicted an average gold price of $1,565 in late 2019.  That was a very unusual outcome, since the LBMA is noted for being very conservative in their price projections. In the 10 years since they met in Kyoto in 2008, their average price prediction for the coming year was just +8%. In one of those years (2015), they predicted a decline.  In the 19 years the LBMA has been meeting, they have never predicted a price gain anywhere near this large.  Their official annual poll will come out in mid-January, so we’ll see if they stick by their guns with a $1,500+ price prediction.

As it stands, at least three non-American banks see gold rising to $1,400 or more in the year ahead.

Germany’s Commerzbank (last October) predicted gold to rise to $1,300 by year-end 2018 (it came close!) and $1,500 in 2019. They say gold’s previous weakness was caused by the strong U.S. dollar, plus the strong U.S. stock market and weak emerging market currencies and global stock markets. As of last October, they see those fundamentals changing, with the dollar declining along with U.S. stocks, giving gold a boost. Heavy “short” positions in gold will then push gold higher as traders cover their shorts.  The Dutch bank ABN Amro sees gold and silver rising steadily throughout 2019, with gold reaching $1,400 and silver $18.00 at the end of 2019, with each quarter rising steadily throughout the year.  Canada’s TD Bank sees gold at $1,375 to $1,400 in late 2019.  Six months ago, Bart Melek, global head of commodity strategy at TD Securities in Toronto, said precious metals will start to rebound in the final quarter of 2018 and then average $1,375 in the last quarter of $2019, perhaps reaching $1,400. Like Commerzbank, he said, “As time moves on, there’ll be less and less reasons to get into the US dollar” and “as we move into 2019, the US dollar will weaken, which is a very powerful fuel for the gold complex.”

Stateside, not many banks are predicting higher gold, but Bank of America Merrill Lynch said that gold could average $1,350 an ounce in 2019 due to widening budget deficits, due to the recent tax cuts.  Their head of global commodities and derivatives research, Francisco Blanch, said “we’re still pretty constructive longer term on gold,” because “in the long run, a huge U.S. government budget deficit is pretty positive for gold,” he said.  “Gold is set to surge over the next year as concerns deepen about the widening U.S. budget deficit and a tariff-driven trade war starts to damage the country’s economy.”  We’ll keep you posted as more gold price predictions come in.  I am recognized as America’s Gold Expert® and I strongly recommend that you BUY GOLD NOW!

The Current Political Crisis is Helping to Push Stock Prices Down and Gold Prices Up

As we have been saying for the last several weeks, the drive toward impeachment is helping to push stock prices down and gold coin prices up, just like in 1972-74 and 1987 when impeachment threats faced Presidents Nixon and Reagan. President Nixon resigned before facing impeachment, and stocks fell 45% in 1973 and 1974, while gold and rare coin indexes soared. President Reagan was able to avoid any strong impeachment threats but there was still a major stock market crash during the hearings over the Iran-Contra scandal during most of 1987 and rare coin indexes again soared.  The scandal over Russia meddling in the 2016 election will probably amount to nothing when all is said and done, but all the press scandal-mongering is sending stocks down and gold up as we speak. Stocks fell sharply on Friday and again on Monday as we approach the sentencing of former national security adviser Mike Flynn in this year.  This high drama will probably not let up in the New Year. The government is shut down. Europe is in chaos over Brexit, and a fuel tax in France, plus a banking crisis in Italy. We have entered an era in which chaos has become the norm, at home and abroad. You can expect to see the stock market in panic some days and gold rising more days than it falls, so make sure you plan your investment portfolio accordingly, with a 10% to 25% position in precious metals and rare coins.  Please call us today!  It is more important now to do so!

The “Ship of Gold” also Contained Small Coins (Dimes to Dollars) in the Ship’s Safe

When the S.S. Central America sank in 1857, it contained a treasure of U.S. Gold coins, but there was also a very large bag, about the size of a volleyball, found in the bottom of the unopened purser’s safe, which contained mostly U.S. silver coins. The majority of the money was in dimes, and it quickly became obvious that this was the “cash box” of the shipwreck itself, a truly marvelous historical find.

These dimes have survived without the corrosion seen on most silver coins found on shipwrecks. This is undoubtedly due to the oxygen-starved (anaerobic) conditions within the safe, a deep-sea time capsule. The safe was not water tight, but it essentially sealed off the interior environment from the outside seabed environment.  The result was that even the canvas bag holding these coins did not degrade significantly.  The thousands of dimes, along with associated larger silver coins (quarters and half dollars) and small gold coins (in $1, $2.50, and $5 denominations) made up the working money of the ship as it traveled between New York and Panama. The sailors of the labor class were paid one to three dimes per day.  There was a total face value of $1,586.55 in this bag of “ship’s money” when it was recovered. Back in 1857, the S.S. Central America was on its 44th voyage to Panama and back, since its launching in 1853. Since this was a well-established business, this money sack represents the life-blood of that business, its working capital. It is fascinating to see all of these coins that were in circulation. The dates on the dimes range from 1796 to 1857.  Holding these coins is literally like holding a piece of history in your hands.

Call us today to find out how you can own your piece of history while supplies last.  We anticipate the certified Central America dimes will arrive from PCGS in mid-January.  Get your name on our list to be called as soon as they arrive.  Central America gold coins are currently in stock and available.

 

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