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Metals Market Report Weekly Archive
 

The Mike Fuljenz Metals Market Report

December 2018 - Week 2 Edition

Gold and Silver Rise on Prospects of the Fed Stopping Rate Increases

Gold rose $25 last week to reach $1,248 for the first time since July 11.  Silver rose 48-cents (+3.4%) for the week. Stocks went in the other direction, with the Dow Jones Industrials falling 1,150 points (-4.5%), the S&P 500 down 4.6%, NASDAQ falling 4.9% and the Dow Transportation Index falling 8%.  For the first week of December, gold had a 6.7% advantage over Dow stocks and silver had a 7.9% advantage. And on Monday morning, December 10, the Dow Jones Industrials opened down another 500 points.

It really doesn’t matter what the Fed does next week at their next meeting of the Federal Open Market Committee (FOMC), which meets eight times a year. Four of those eight meetings include a press conference afterwards, and those are the four times in which the Fed has announced rate increases in the last three years. Gold has usually risen following most of those rate increases, but the “pundits” out there keep assuming that gold will go down as rates increase, so they bid gold up when they think the Fed will refrain from raising rates and they sell gold when they think the Fed will raise rates. They base these decisions on the latest economic indicators released in the weeks before the next FOMC meeting.

On Friday, the Labor Department announced that only 155,000 payroll jobs were created in November. This was substantially below the economists’ expectations of 198,000 new jobs. On top of that, the total number of October payroll jobs was revised down to 237,000, from 250,000 previously estimated. This “downbeat” report sent the stock market down and gold up, because it convinced traders that the U.S. economy might be slowing down, so the Fed will be less likely to raise rates at its meeting next week.

Gold for December delivery at the Comex closed at $1,247, its highest level since July 10, while the Dow fell over 550 points on Friday. For the full week, there was a wide divergence between stocks and metals.

As we have been saying since August, now is the time to take some profits out of your stock accounts and redirect some of those profits into gold and silver, plus rare coins for portfolio diversification. You don’t want to wait until stocks totally collapse or gold takes off, since those moves can happen very fast.

“Why Slumping Silver Prices Could Turn Higher” – Barron’s, December 10, 2018

Barron’s Commodities Corner column covered silver this week. Author Myra Saefong says silver now “deserves a second look” since “silver prices look to be a bargain, sitting close to their lowest levels in nearly three years.” As we have been saying here, silver is a double-play investment, a “hybrid” metal, serving as a precious metal used historically in coins and also in several important industrial applications. The percentage of silver used in industry is now at 65% and rising. As we have reported before, silver’s cutting-edge uses are in solar energy panels, photovoltaic cells and many promising electrical applications.

There’s also a dramatic rise in investment demand. Barron’s notes that the U.S. Mint announced sales of American Eagle silver bullion coins in November were “the third highest monthly total so far this year.”

The U.S. Mint has sold 242% more silver American Eagles in September through November this year than last year, so many investors see what Barron’s is seeing – that silver is a bargain now.

Impeachment Update: The Cohen Crimes Point Toward “Individual No. 1”

Last week, Michael Cohen, the President’s former personal lawyer, pled guilty to multiple felonies and in the process of a plea bargain admitted to committing these crimes at the direction of “Individual No.1,” which most assume to be the President. This got all the Democrat sharks licking their chops to pursue either criminal charges or impeachment proceedings against “Individual No. 1” sometime during 2019.

As we have said, there have been two times in the last 50 years in which a Democratic Congress has sought impeachment against a sitting Republican President, and in both those times stocks fell while rare coins have soared. In the first case, gold bullion soared, too.  During the threatened impeachment of Richard M. Nixon from 1972 to 1974, stocks fell 45% and the CU Rare Coin index rose 348%.  In the same three years, gold bullion soared from under $60 per ounce to over $180 per ounce.

There was also an impeachment threat in the Reagan years. On March 6, 1987, Representative Henry B. Gonzales, a Democrat from 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 crash!

At 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 pays 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 fast – and coins can rise very fast – in times of national uncertainty.

Make a List (Check it Twice) – Make Your Rare Coin “Wish List” Now

We’ll remind you again in a couple of weeks, but while you’re making a Christmas list of what you’d like in your stocking, take a look at your coin collection and look for the “gaps,” the coins you would really like to own, the empty spots in your gold coin sets, or the types of coins you do not yet own, or the silver and gold designs that speak to you, or the dates that might be meaningful in your family history. Check out our inventory for what is available now or make a special request, because the first of the year is the best time to make that request. That is when we are out shopping across the country on your behalf, when the best inventories are typically available.

 

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