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Metals Market Report Weekly Archive
 

The Mike Fuljenz Metals Market Report

December 2018 - Week 1 Edition

The Cohen Testimony Pushes Some Democrats Closer to Impeachment

Last week, court documents were made public by special counsel Robert S. Mueller III detailing new allegations against Michael Cohen, the president’s former lawyer, saying that he was the negotiator at the Trump Organization pursuing a deal for a Moscow business venture, while Trump was running for President. Trump was talking about building a large skyscraper in Moscow while seeking the Republican nomination for president. On the campaign trail, he was publicly pressing for warmer relations between the U.S. and Russia, and an end to economic sanctions imposed by the Obama administration. Democrats say that these policy positions were for personal gains that might have benefited his family business.  Representative-elect Alexandria Ocasio-Cortez said these reports provide enough evidence for starting impeachment proceedings against President Trump. Ms. Ocasio-Cortez said these reports are “really concerning” and said she is interested in learning what else investigators will dig up now that the former Trump “fixer,” Michael Cohen, in a guilty plea this week, claims to have lied to Congress about the work he did on a Trump Tower Moscow project in the middle of the campaign. “I’ve been supportive of impeachment for some time now,” she told reporters last Friday. “I think this just adds to the case.”

In recent weeks, we’ve been writing about how gold soared and stocks fell during the threatened impeachment of Richard M. Nixon from 1972 to 1974 – the Watergate scandal years, which led to Nixon’s resignation. In those years, stocks fell 45% and the CU Rare Coin index rose 348%.

There was an impeachment threat in the Reagan years, too. On March 6, 1987, Representative Henry B. Gonzales, a Democrat of Texas, introduced articles of impeachment against President Ronald Reagan regarding the Iran Contra affair. It’s not well remembered today, but there were hearings running for three months – from May 5 to August 6, 1987 – including testimony by Oliver North and others, followed by Congressional Committee meetings investigating Iran-Contra through the fall. The impeachment threat wasn’t over until the final committee report came out in November, after a huge 36% stock market crashAt the same time, we saw the beginnings of a large bull market in rare coins. From 1986 to 1990, the Rare Coin CU 3000 Index rose 665% at a time when gold bullion and stocks were essentially flat.

The bottom line is that it has paid to invest in rare coins when “impeachment” threats are in the air. As in both of those past episodes of political uncertainty and wild stock market gyrations, it pays to take some stock market profits off the table and invest in gold and silver bullion and rare coins. It never pays to wait too long, since stocks can fall very fastand coins can rise very fastin times of national uncertainty.

George Herbert Walker Bush (1924-2018) Exhibited a Lifetime of Service

George Bush, 94, lived a life of service, encouraging other Americans to create “1,000 points of light.” His own life was a series of several hundred points of light, including being president of his senior class, president of a community fund-raising group and captain of both his varsity baseball and soccer teams. When war broke out, he enlisted in the U.S. Navy on his 18th birthday in June 1942. Less than a year later, he became the youngest aviator in the Navy at that time. In his Pacific mission on September 2, 1944, his aircraft was hit by flak, but he successfully released his bombs and scored several hits. With engines ablaze, he flew several miles from the island target where he and one other crew member bailed out. The other man’s parachute did not open. Other aviators were shot down and executed, moving him to ask, “Why had I been spared, and what did God have for me?”  In all, he flew 58 combat missions, for which he received the Distinguished Flying Cross, three Air Medals and the Presidential Unit Citation.  After the war, he could have remained in his chosen career in the oil business, but again he chose a life of service, starting by running as a Republican in Texas – when Democrats still controlled the “Solid South” – in the House of Representatives (1967-71), then as the U.S. Ambassador to the United Nations (1971-73), Chairman of the Republican National Committee (1973-74), then Chief of the U.S. Liaison Office to the People’s Republic of China (1974-75), then Director of the Central Intelligence Agency (1976-77) and Vice President with Ronald Reagan (1981-89) and 41st President of the United States (1989-1993).

In his last 25 years of life, he let the 1,000 points shine greater than ever. Creating “The Points of Light Movement” while President, he said, “Points of Light are the soul of America. They are ordinary people who reach beyond themselves to touch the lives of those in need, bringing hope and opportunity, care and friendship. By giving so generously of themselves, these remarkable individuals show us not only what is best in our heritage but what all of us are called to become.”  After merging with the Hands-on Network in 2007, the Points of Light Foundation has about 250 affiliates with over four million volunteers in 22 countries and partnerships with thousands of nonprofits and companies volunteering around the world.  In 2011, Points of Light paid tribute to President George H. W. Bush and volunteer service at the Kennedy Center in Washington, D.C. President Bush was joined by three other living past Presidents, Jimmy Carter, Bill Clinton and son George W. Bush, to highlight the role of volunteer service.

Central Banks Are Loading Up on Gold – and So Should You!

The World Gold Council just reported that central bank demand for gold rose 22% in the third quarter of 2018 vs. the same quarter in 2017, reaching the highest level of quarterly demand since Q4’15. This also marks the highest year-to-date central bank demand in the first nine months of any year since 2015.

In the third quarter, Russia added the most of any nation – 92.2 metric tons – pushing its total reserve to over 2,000 tons, as Russia is basically divesting itself of most of its U.S. Treasuries in exchange for gold. Turkey was the second-largest gold accumulator last quarter, adding 18.5 tons in a quarter when its beleaguered currency (the lira) lost 25% to the dollar. India is next in line, adding 13.7 tons of gold last quarter. Kazakhstan was the fourth biggest buyer last quarter, adding 13.4 tons, bringing its total holdings to 335.1 tons, up from just 131 tons five years ago. The currencies of these gold-accumulating nations have been particularly weak to the dollar this year, which means that gold has risen in terms of their home currencies, even though it has fallen in dollar terms. Here are the four biggest gold-buying nations in the last quarter, and how gold has performed in their home currency during the first nine months of 2018 (compared to a 5.6% decline in dollar terms).

Such massive levels of gold buying by Russia and China should raise “red flags” in Washington, D.C. These two superpowers have been in the process of selling their dollar-based Treasury holdings and buying gold to gain more financial flexibility – something that every wise investor should be doing now.

Our Founding Fathers knew that gold and silver were the only true form of money. They learned the hard way from using worthless paper “Continental” currency during the Revolutionary War. Article I, Section 10 of the U.S. Constitution says, “No state shall…coin money, emit bills of credit, make anything but gold and silver a tender in payment of debts.”  Like central banks today, our fore-fathers knew that only gold and silver were reliable forms of money. To buy American gold is patriotic, too.

 

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