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Metals Market Report Weekly Archive
 

The Mike Fuljenz Metals Market Report

November 2018 - Week 2 Edition

Silver Reaches “Double Bottom” Buying Territory

The election outcome seemed so simple and satisfactory to both Parties last Wednesday, with gold and stocks both rising the next day, but all of sudden over a dozen House races and two Senate seats were viciously contended by week’s end, and both gold and stocks began descending. The Dow fell over 200 points on Friday and over 600 points Monday, while gold fell from $1,235 on Wednesday to $1,200 on Monday. Charges and counter-charges between the Parties were flying as the old animosities returned.

Silver has reached a “double bottom” price pattern at or below $14. Technical chartists call a “double bottom” a very bullish pattern in which a stock or commodity sets a double bottom separated by an interim peak.  Silver set a low of $13.82 in December 2015, followed by a quick rise to $20.71 in August of 2016.  Now, silver is back to $14, dipping down to $13.99 late Monday.  Silver may touch its 2015 lows, or it may not, but it is close enough to those lows to provide a technical “double bottom.”

This is a fairly accurate depiction of the silver market over the last three years – setting two bottoms and is another sign that now is the time to buy!

The last century has seen three dramatic surges and retreats in the price of silver:

  1. First came a rise from $0.50 to $1.336 during and just after World War I, followed by a collapse to $0.25 in 1932, in the depths of the Great Depression.
  1. Then came a long 200-fold price increase from $0.25 to $50 in the next 48 years, from 1932 to 1980, followed by a 21-year 92% price decrease.
  1. Finally, we saw a 12-fold increase from $4.06 to $48.70 in the 10 years from 2001 to 2011, followed by a 72% price drop from 2011 to 2015.

Now that silver’s low price is set in place under $14, is it possible we will see another assault on $50 or higher?  For that to happen, the low of $13.82 must hold.  Provided that holds, and I believe it will, we could see dramatic new highs in silver in the next few years, making now a great buying opportunity.

Honor President Kennedy’s Memory with the 1964 90% Silver Kennedy Half-Dollars

Next week marks the 55th anniversary of the tragic assassination of President John F. Kennedy in Dallas on November 22, 1963. No matter what you think of the details of who (or what group) was behind this terrible event, there is no question that it changed the course of our nation and the world. In world affairs, the President was planning to withdraw troops gradually from Vietnam after the 1964 election, but he never got that chance. He was also our last hard money President, reflected by a coin minted in his honor.

Shortly after his assassination, the U.S. Mint worked overtime to produce a 90% silver half-dollar in the President’s honor. The 1964 Kennedy Half Dollar became the last 90% silver coin ever minted in the U.S.  In 1965, the silver content in the Kennedy Half was reduced to 40% and President Lyndon Johnson took silver out of most of the rest of U.S. coinage that year. In signing the Coinage Act of 1965 on June 23, 1965, President Johnson said that this was “the first fundamental change in our coinage in 173 years…. Since that time, our coinage of dimes, quarters, half dollars and dollars have contained 90 percent silver. Today, except for the silver dollar, we are establishing new coinage… the new dimes and quarters will contain no silver. They will be composites, with faces of the same alloy used in our 5-cent piece.” 

At that point, President Johnson seemed to defy all laws of supply and demand, not to mention human nature, by adding, “Our present silver coins won’t disappear, and they won’t even become rarities…. If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content.”

The President was very wrong. Silver doubled in price within three years and is now over 10-fold higher. You cannot repeal the laws of supply and demand. Sir Thomas Gresham, a financier to King Edward VI in the mid-1500s, formulated a financial law for a situation like this: “Bad money drives out good.” In today’s language, that could be updated to say: “cheap fiat money drives precious money into hiding.”

The 90% silver Kennedy Half-Dollars were only made for one year, 1964. When the silver content was reduced to 40% in 1965, “bad money drove good money into hiding,” as most Americans put their 1964 coins into safe-keeping, spending their 1965 coins. Most 1964 JFK silver halves were circulated for a few months before they went into hiding, but we have a good selection of brilliant uncirculated (BU) 90% silver 1964 Kennedy Halves in honor of this great President – a World War II decorated war hero, who saved his compatriots on the PT-109 boat, although severely injured, earning the Purple Heart, along with Navy and Marine Corps medals. He also won the Pulitzer Prize for his book, “Profiles in Courage.”

In office, President Kennedy created the Navy SEALs program as well as the Peace Corps, while inspiring the nation to reach the moon by the end of the 1960s. He is also the youngest man ever elected President (although Teddy Roosevelt was a few months younger when he inherited the Presidency after William McKinley was assassinated). Amazingly enough, Kennedy was also the first President who began life as a Boy Scout! As the only Democratic President who was an NRA life member, he said “I believe the Second Amendment will always be important” and the NRA “fills an important role in our national defense.” He will always be one of our most beloved Presidents. Please call our office and ask our account representatives to reserve some brilliant uncirculated JFK halves for yourself and gifts for your family members. We also have some JFK halves graded by NGC MS-64 to MS-66 at special prices!

 

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