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Metals Market Report Weekly Archive
 

The Mike Fuljenz Metals Market Report

August 2018 - Week 2 Edition

Will Gold Bounce Back Five Times Faster than Usual This Time?

It’s discouraging to see gold fall 1.5% in one day, reaching a new 52-week low and falling below $1,200, but historically these sorts of sharp declines have led to above-average returns over the next one to three months. In fact, returns have been five times better than the average returns over those same time spans.

Bespoke Investment Group charted the last 24 times (since 1997) in which gold fell by over 1.25% in one day AND reached a new 52-week low.  Then, they looked at where gold was one month and three months after that day.  The results were astounding. Three months later, on average, gold was 9.02% higher, vs. just 1.76% higher for the average three-month return for all days. That’s more than five times faster than normal.  One month after the decline, gold recovered 2.74% vs. just 0.57% for all days – 4.8-times faster.

If you limit the survey to the 18 times in which gold fell over 1.5% and reached a 52-week low in the same day, gold gained an average 4% in the next month and 10% in the next three months.  If that works out this time, then gold would rise from $1,194 to $1,242 on September 13 and $1,313 on November 13.

This historical pattern aligns with gold’s seasonal pattern of a recovery in September through December, so don’t lose faith in gold’s long-term ability to hold its value just because of this normal summer swoon.

I Am at the Philadelphia World’s Fair of Money

All this week, August 14-18, I will be attending the World’s Fair of Money in Philadelphia.  While there, I will be attending board meetings of the Numismatic Literary Guild (NLG), the Industry Council on Tangible Assets (ICTA) and the Gold and Silver Political Action Committee, in which we will address the many new challenges to our industry.

I attended my first World’s Fair of Money in New Orleans in 1972, at age 18 as an eager young hobbyist. In the last 46 years of attending hundreds of numismatic conferences, I have been awarded more than 60 prestigious national and regional awards for consumer education and protection in rare coins and precious metals. Last year, I won ICTA’s Al Kreuzer Memorial Award Medal for “Outstanding contribution in the efforts to combat counterfeit coins and currency.” I’ve won five Numismatic Book Awards, the most recent in 2015 for the Numismatic Literary Guild’s Book of the Year award on “Type Three Double Eagles, 1877-1907,” and in 2013 I won the NLG’s Top Award and Highest Honor, the Clemy award.  The NLG awards banquet will be held Thursday night this week and I am optimistic we will win another award.

My point in saying this is that whenever you are looking for a dealer, look for one who is helping out the entire industry through board positions in one or more industry groups. Look for someone willing to work with local law enforcement in spotting counterfeits and protecting consumers.  Look for someone with numismatic awards, which denote a lifetime of education and experience in the field of rare coins and peer respect.  That way, you put the odds on your side for dealing with an ethical, knowledgeable and reliable coin dealer.

I’ll have a full report from the Philadelphia World’s Fair of Money next week.

 

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