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Metal Market Report July 2020 - Week 1 Edition

July 2020 - Week 1 Edition

$2,000 Gold Possible 

Gold closed the first half of 2020 up 17.9% vs. a 9.6% decline for the Dow and -4.0% for the S&P 500, giving gold about a 22% to 27% advantage over blue-chip U.S. stocks so far this year. Gold has also surpassed $1,780 for the first time since October of 2012. The spring months are generally weak for gold, but gold’s performance in the second quarter of 2020 was +8.8%, matching its second quarter gain last year. In 2019, gold gained 18.5% for the full year – its best year since 2010 – and gold’s performance in the first half is just shy of its full-year 2019 gain, so a 12% gain to $2,000 gold by year-end is possible.


U.S. Mint Coin Shortage Continues 

The U.S. Mint continues to reduce its production and sales of silver American Eagles and smaller-denomination gold American Eagles. There were no sales of $5 (one-tenth ounce) gold Eagles during the April-June quarter and limited sales of other fractional-ounce gold Eagles. In June, 42,500 of 44,000 ounces of all gold Eagles sold (96.6%) were full one-ounce Gold American Eagles, making the premiums on smaller-denomination eagles higher. Production of everything but 1-ounce gold is down. Silver American Eagle production and sales are also down, and premiums were up due to the pandemic, since fewer Mint employees were consistently available, and the Mint sometimes closed. 

American Eagle bullion coins are usually struck at the West Point Mint, but the Philadelphia Mint was called on to help with production and produced 240,000 Silver Eagles in April. Historically, these will likely be called “Pandemic Eagles,” and, when certified, command a premium. 

June closed the first half of the year strongly with 44,000 ounces of Gold American Eagles sold during the month vs. only 4,500 ounces sold in June 2019, an increase of 878%! For the first six months of 2020, sales of Gold American Eagles reached 379,000 Troy ounces, up 249% from the 108,500 ounces sold last year during the same period.  Sales would have been higher if the West Point Mint had not suffered multiple Covid-19-related interruptions. 

Premiums on Silver Eagles are still high because the demand is so much higher than the Mint can supply. Despite production interruptions since March, sales of American Silver Eagle sales are up 25.7% for the year, so far – to 12,596,500, or 25% more than the 10,022,000 coins sold in the first six months in 2019. 

The Mint sold 7,500 American Buffalo 1-ounce gold coins in June 2020, 150% above the 3,000 coins sold in June.  This lifted their year-to-date sales total to 126,000 ounces, 165% above the 2019 levels. 

A year ago, some short-sighted dealers were melting many valuable gold coins, like more common-date MS-60 to MS-63 $20 Libs and Saints, since they were selling at a small premium over melt value. Now, even some newly minted bullion coins are selling at significant premiums, since the Mint can’t make enough to meet demand. For this reason and others, the premiums for common and slightly better-date $20 Liberty and Saints graded MS-62 to MS-64 are rising significantly. 

Whenever gold prices are rising, as they are now, many coin dealers will place more bullion ads, and those ads usually bring in more new customers than normal. After those new customers buy bullion coins, within six to 24 months, a good percentage will graduate into buying rare coins, often pushing up the prices of rare coins. That is why you need to call our professional account representatives today!  


The Wall Street Journal Once Again Lists “Metals on Top” Last Week

Two weeks ago, we listed gold as the top-performing investment for the second week of June, according to the weekly Wall Street Journal listing of 11 leading commodities, 10 leading currencies and 36 leading global stock market indexes. Gold was #1 and copper was #2. Last week, the same two metals came in 1-2 among these 57 investments, only this time copper came in #1 and gold came in #2. Silver came in #4.


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