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Metal Market Report October 2019 - Week 4 Edition

October 2019 - Week 4 Edition

The 2020 American Eagle May Change Designs, Bringing a 35-Year Series to an End

Treasury Secretary Steven Mnuchin has approved the Mint’s plan to change the design of the Silver and Gold American Eagle coin series, which debuted in 1986. The newly designed reverse side of the coins should be minted in 2021, the 35th anniversary of the first American Eagles, making the first 35 years a more popular “collectible” series.

One major reason for the redesign is the introduction of new high-tech anti-counterfeiting measures on the post-2020 Eagles. New Mint Director David J. Ryder has exceptional professional background in corporate security measures, and he has assembled a top-notch anti-counterfeiting team within the Mint that is preparing several overt and covert options to enhance this protection for Mint bullion products.

In adding these new anti-counterfeiting technologies, the U.S. Mint will be joining other world Mints in employing modern technology to thwart the Chinese (and other) counterfeiters who use advanced technology to foil collectors and investors. As I told a major coin publication recently, “The U.S. Mint is behind other mints in this respect.” I am also behind this change because I think new designs will bring new excitement. It will enhance collecting. This redesigning means the old series will end. We will have a beautiful and historic finite set to collect from the past. Whenever that happens, new collector interest is generated in the public.

It’s important to note that unlike the Silver American Eagle reverse, the Gold American Eagle “Family of Eagles” motif – sculpted by Miley Tucker-Frost of Beaumont, Texas – was legislated for the Gold American Eagle reverse and will be retained unless the original law is reversed – which is highly unlikely. This “family” concept was important to the sculptor, to bi-partisan legislators and me since it represents Americans of all races, religions and national origins.

What Happens to Gold When Impeachment Happens During an Election Year?

We have written often about what happens to gold bullion and rare coins during an impeachment process, specifically the impeachments of Republican Presidents by a Democratic Congress. This happened to President Nixon in 1973-74 and President Reagan in a failed impeachment attempt in 1987. In both cases, the stock market fell sharply while gold bullion and rare coins rallied sharply in a time of political crisis.

Gold has also performed very well in recent election years. Gold has risen in the last five consecutive election years, including rather sharp increases in the 2004 and 2008 election years. Here is a rundown of the last four Presidential election years, using the average price in the pre-election and election years:

I call this the “Election Year Gold Bull Market Phenomenon.”

If you combine the uncertainty of impeachment proceedings with the Election Year Bull Market trend, we could see a strong gold price performance in 2020, with the rare coin market following, as it did in during the Nixon impeachment years of 1973-74 and the late Reagan second-term controversies of 1986-88.

President Trump is Fighting China’s Massive Counterfeiting Empire

President Trump isn’t often given credit for being the first President to strongly resist China’s product piracy and massive counterfeiting efforts. His appointment of a respected anti-counterfeiting expert to head the Mint is one more step in this direction. In my opinion, many in the media don’t give the President sufficient credit for this hiring and successful efforts in addressing China’s transgressions in business and trade.

It’s a little-known fact, but the Chinese often insist that American companies operating in China turn over their product designs to the Chinese to copy. But intellectual property theft is not limited to those American companies operating in China. Chinese agents are positioned all throughout America stealing corporate secrets. Last July FBI Director Christopher Wray said that the FBI has 1,000 active investigations into attempted intellectual property theft within America, mostly involving China. (For examples, see “China’s Techno-Kleptomania” in the Wall Street Journal, October 15, 2019).

The Chinese have counterfeited many normal circulating U.S. coins as well as rare collectible coins. Among collectible classic U.S. coins, Morgan silver dollars were the most frequently counterfeited coins (reported by 71.7% of dealers), followed by Trade dollars (66.6%) and Seated Liberty dollars (48.6%).  The most frequently counterfeited rare U.S. gold coins were the $2.50 (42.1%) and $5.00 gold (36.2%).

Some of the easiest “tells” on fake coins is that they have a bogus weight. We all know the specific weight of .999 gold or silver, so that is easy to check. Many counterfeits are discovered by a simple “ring” test. The biggest giveaway, however, is the asking price. Fake coins are often sold at very low “bargain” prices. In Asia, fake gold and silver dollars are often peddled at flea markets in Hong Kong and mainland China for $1 to $3 each. Over the Internet, if you see a price that is “too good to be true,” it is too good to be true. If the dealer is willing to accept a price significantly below spot, that is a clear giveaway. 

When you buy or sell coins, deal with experts who know how to spot counterfeits and how to validate the quality and grading of the coins they buy and sell. For example, I have taught national seminars on counterfeit detection to collectors, dealers and law enforcement officials, as described on our Website.

Why Gold Rose $10 Last Week

Gold rose $10 last week but dropped $6 on Monday morning, as it tries to return to $1,500.  In the meantime, silver returned to $17.60 and seems to be operating independently of gold in many recent days and weeks. On Tuesday, October 22, silver went down a bit while gold went up. The main differences are that silver is a much narrower market and more volatile, and silver has more industrial applications while gold is more of a crisis hedge and monetary metal, so they don’t always move in tandem. One simple example is that silver might move up on days when the economy seems to improve, while gold moves when crises strike, such as Brexit complications, impeachment moves or Middle East war actions.


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