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Metals Market Report Weekly Archive
 

The Mike Fuljenz Metals Market Report

July 2018 - Week 1 Edition

Commerzbank Predicts $1500 Gold and $20 Silver in 2019

For the first half of 2018, gold and silver were down 3% to 4% while the U.S. stock market was flat. The main culprit was a strong U.S. dollar in the second quarter.  Gold peaked above $1,350 on April 18 and stayed above $1,300 through May 15, but the rising U.S. dollar punished gold the last two months. Overnight between July 2 & 3, gold fell to $1,237, but it shot up $20 Tuesday morning, July 3, to $1,257. Part of the rally came from a decline in the dollar, but most traders feel the negativity in gold is washed out and the traditional August-September gold-buying season for jewelry fabrication will soon begin.

Germany’s Commerzbank regards gold’s current price weakness as “temporary,” adding that “gold should turn positive once the dollar strength starts to fade.” They say the market has already priced in two more Fed rate hikes, which may not happen. Also, gold traders have apparently assumed that geopolitical dangers in North Korea, the Middle East and elsewhere are suddenly solved, but troubles may return and give gold a boost. Commerzbank has downgraded their third-quarter gold price forecast, but they still envisage a gold price of $1,350 per troy ounce at the end of 2018 and “$1,500 by the end of 2019.” They also expect to see silver at $18 by the end of 2018 and “$20 per troy ounce by the end of 2019.”

The Change in the $20 Bill Won’t Happen Any Time Soon

Over two years ago, in April of 2016, President Obama's Treasury Secretary Jack Lew announced that Harriet Tubman would replace Andrew Jackson on the face of the new $20 bill by the year 2020, the centennial of women gaining the vote.  But then Donald Trump was elected President in November of that year. At first, President Trump’s new Treasury Secretary Steven Mnuchin answered questions about the new $20 bill design by saying, “It’s not something we're focused on at the moment.” 

Earlier this year, Senator Jeanne Shaheen (D-Del) inquired about the long delay, and Drew Mahoney, the Treasury’s Assistant Secretary for Legislative Affairs, wrote back, saying, “The redesign of the next currency series is still in the early stages, and neither the final designs nor all features have been finalized for the new notes. For this reason, the department is unable to provide additional information regarding the potential designs at this time.” Mahoney added that “at least 10 more years will go by before a new $20 note is issued,” meaning it will be delayed until 2028.

Now here's the story behind that delay. I was talking with a Republican U.S. Congressman from a south Texas district who was with President Trump in the Oval Office.  The Congressman and President Trump shared their mutual admiration for Andrew Jackson, while gazing at a portrait of Jackson.  He asked the President what he thought of Harriet Tubman replacing Andrew Jackson on the $20 bill and Trump at first expressed surprise, then amazement.  He excused himself to make a call, came back and said, “that is not going to happen.” So, it appears like this long delay is more or less a delay for as long as Trump is President.

Lin-Manuel Miranda, writer and star of “Hamilton,” staged an impromptu version of the musical for President Obama and met with then-Treasury Secretary Jacob Lew to lobby to keep Alexander Hamilton’s face on the $10 bill. It worked, so there seems to be precedent for President Trump and Secretary Treasury Steve Mnuchin to favor the continuation of Andrew Jackson on the $20 bill.

For the record, I believe we need more inclusion in our paper money and coinage, but I thought this “inside politics” story was interesting.

Beware Counterfeit Coins … and Badges

Counterfeit coins have always been a danger.  I have taught classes in spotting counterfeit coins to collectors, dealers and law enforcement and I have been on call for police and federal agencies charged with protecting consumers from fraudulent coin sales. Since 1986 when the United States Mint first introduced silver and gold American Eagle bullion coins, they have been both the top-selling coins and the most-counterfeited coins, according to a new survey by the Anti-Counterfeiting Task Force (ACTF). Nearly half (43.3%) of U.S. coin dealers in their survey reported customers seeking to sell them counterfeit silver American Eagle bullion coins, while 41.2% reported customers trying to sell them fake gold American Eagle bullion coins. Fake Kruggerands were also reported by 30.4% of coin dealers and fake Canadian gold Maple Leaf by 24.2% of dealers.

Beth Deisher, the Industry Council for Tangible Assets Director of Anti-Counterfeiting, said that these counterfeiters primarily come from China and “target the most popular products, usually market leaders with the highest brand identification.” There is also a problem with fake bullion bars and ingots. Over half (57.8%) of dealers reported customers trying to sell them fake PAMP (Suisse) gold ingots and bars. 

Among collectible classic U.S. coins, Morgan silver dollars were the most frequently counterfeited coins (by 71.7% of dealers), followed by Trade dollars (66.6%) and Seated Liberty dollars (48.6%).  The most frequently counterfeited collectible U.S. gold coins were the $2.50 gold (42.1%) and $5.00 gold (36.22%).

The customers are usually not the criminals, according to Deisher. “Dealers tell us they often encounter people who have unknowingly purchased fake coins or bars via the internet or from flea markets thinking they have gotten a bargain because the price they paid is a fraction of the market value of the real items. When they attempt to sell their ‘bargains’ to dealers they learn there is no Santa Claus in numismatics.”

And here’s a new wrinkle on counterfeits.  A New Jersey man admitted on June 25 to impersonating a federal agent while selling counterfeit coins and bars and unlawfully importing counterfeit coins and bars into the United States, according to U.S. Attorney Craig Carpenito. Jonathan A. Kirschner, 34, also known as “Jonathan Kratcher,” pleaded guilty before U.S. District Judge Robert B. Kugler in Camden, N.J., federal court to one count of falsely impersonating an agent of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), plus one count of unlawfully importing counterfeit coins and bars into the United States. His badge looks very realistic, so now there’s a new level of counterfeiting to monitor.

Kirschner admitted that on May 9, 2017, he sold fake gold bars to a coin collector for $11,000 in cash. Kirschner wore an ATF badge on a chain around his neck and claimed to be an ATF agent. Kirschner also admitted that he sold 49 counterfeit Morgan dollar coins to two people in Mt. Laurel, NJ, on June 4, 2017.

When you buy or sell coins, it pays to deal with true experts who know how to spot counterfeits, and who know how to validate the quality and grading of the coins they buy and sell. Go to their website and check out the credentials of the dealer. For instance, I am a Professional Numismatist Guild Authorized Precious Metals Dealer.

 

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