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Metals Market Report Weekly Archive
 

The Mike Fuljenz Metals Market Report

December 2018 - Week 4 Edition

Jim Cramer (and Others) Say “Buy Gold”

Last week, gold rose $23 (+1.9%), while stocks fell another 7% or more (-6.9% for the Dow, -7.1% for the S&P 500 and -8.4% for NASDAQ and the Russell 2000). As has happened so often in the past, gold ROSE on Wednesday afternoon after the Federal Reserve raised short-term interest rates 0.25%. The stock market careened down that afternoon and for the next three days in the worst Christmas-week stock market decline ever.

With stocks falling on a regular basis, investors are seeking shelter. Last week, Mad Money’s Jim Cramer predicted a gold bull market ahead. He said this market reminded him of 2007, when the Federal Reserve was not listening to the reality of the world around them but kept raising rates. He’s not alone in his concerns.

Craig Johnson, chief market technician at Piper Jaffray, said on CNBC TV last Friday that “Cramer’s spot on correct,” adding that gold may be “putting in a bottom here and it looks like we’re going to see this maybe 9 to 10 percent higher to get back to the old highs.” By the “old highs,” he’s referring to gold’s highest point in recent years, which refers to gold prices over $1,400 in August of 2016.

Early this week, gold made some spectacular moves. First, on Monday, Christmas Eve Day, gold rose another $12 to $1,270, while stocks careened down another 650 Dow points in what is resembling a free-fall for the fourth consecutive day, following a recalcitrant Federal Reserve statement, a partial federal government shutdown and the resignation of the Secretary of Defense over the President’s surprise announcement of a rapid removal of troops in Syria.  Many Americans spent Christmas in a nervous state.

Then, the day after Christmas, stocks recovered and gold hit $1,278 before retreating, while silver rose above $15 and stayed there, reaching its highest level since August. Silver fell to $13.97 in November. Since then, silver has quietly outperformed gold, although it still trails gold in year-to-date performance. Meanwhile, Bitcoin, which peaked at over $19,700 a year ago, now trades at around $3,700 – down 81%. I strongly recommend buying gold sooner rather than later.  Don’t wait, call us today!

Gold and Stocks Continue to Rapidly Move in Opposite Directions

For the last several months, we have been advising investors to take some profits (not all, of course) from their stock portfolios to invest in gold and rare coins, since stocks and precious metals markets often move in opposite directions. This stock/gold transition period, which we predicted last August, began to happen in October and the pace has accelerated dramatically in December. Last week and Christmas Eve marked a major market sell-off, which may continue into January (the exact timing is anyone’s guess).

Using September 30 – the end of the third quarter – as a starting point, here’s where we stand since then:

 

This gives gold about a 25% advantage over stocks during the first 12 weeks of the fourth quarter.  Gold and stocks tend to move in the opposite direction. The last time the stock market corrected by over 20% was in 2007-09. In a 17-month period beginning in October of 2007, the S&P 500 declined 56.8% before bottoming out in March 2009.  During those same 17 months, gold bullion returned slightly more than 25%, for a cumulative 82% advantage over the S&P 500 for those 17 months.  We’re not saying this stock market will go down as far is it did in 2007-09, but it usually pays to hedge your portfolio against a potential massive bear market.  Our experienced account representatives are here to assist you.  Please call us to find out the many ways we can help to bear market proof your portfolio.

The Current Political Crisis is Helping to Push Stock Prices Down and Gold Prices Up

As we have been saying for the last several weeks, the drive toward impeachment is helping to push stock prices down and gold coin prices up, just like in 1972-74 and 1987 when impeachment threats faced Presidents Nixon and Reagan. President Nixon resigned before facing impeachment, and stocks fell 45% in 1973 and 1974, while gold soared. President Reagan was able to avoid any strong impeachment threats but there was still a major stock market crash during the hearings over the Iran-Contra scandal during most of 1987.

The scandal over Russia meddling in the 2016 election will probably amount to nothing when all is said and done, but all the press scandal-mongering is sending stocks down and gold up as we speak. Stocks fell sharply on Friday and again on Monday as we approach the sentencing of former national security adviser Mike Flynn this week.

This high drama will not let up over the holidays or into the New Year. Then the government shut down. Europe is in chaos over Brexit, and a fuel tax in France, plus a banking crisis in Italy. We have entered an era in which chaos has become the norm, at home and abroad. You can expect to see the stock market in panic some days and gold rising more days than it falls, so make sure you plan your investment portfolio accordingly, with a 10% to 25% position in precious metals and rare coins.  Please call us today!  It is more important now to do so!

The “Ship of Gold” also Contained Small Coins (Dimes to Dollars) in the Ship’s Safe

When the S.S. Central America sank in 1857, it contained a treasure of U.S. Gold coins, but there was also a very large bag, about the size of a volleyball, found in the bottom of the unopened purser’s safe, which contained mostly U.S. silver coins. The majority of the money was in dimes, and it quickly became obvious that this was the “cash box” of the shipwreck itself, a truly marvelous historical find.

These dimes have survived without the corrosion seen on most silver coins found on shipwrecks. This is undoubtedly due to the oxygen-starved (anaerobic) conditions within the safe, a deep-sea time capsule. The safe was not water tight, but it essentially sealed off the interior environment from the outside seabed environment.  The result was that even the canvas bag holding these coins did not degrade significantly.

The thousands of dimes, along with associated larger silver coins (quarters and half dollars) and small gold coins (in $1, $2.50, and $5 denominations) made up the working money of the ship as it traveled between New York and Panama. The sailors of the labor class were paid one to three dimes per day.

There was a total face value of $1,586.55 in this bag of “ship’s money” when it was recovered. Back in 1857, the S.S. Central America was on its 44th voyage to Panama and back, since its launching in 1853. Since this was a well-established business, this money sack represents the life-blood of that business, its working capital. It is fascinating to see all of these coins that were in circulation. The dates on the dimes range from 1796 to 1857.  Holding these coins is literally like holding a piece of history in your hands.

Call us today to find out how you can own your piece of history while supplies last.  We anticipate the certified Central America dimes will arrive from PCGS in mid-January.  Get your name on our list to be called as soon as they arrive.  Other Central America products are currently in stock and available.

 

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