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Metal Market Report October 2022 - Week 1 Edition

October 2022 - Week 1 Edition

Gold and Silver Moving Higher

Gold and Silver opened October with a bang, as did most stock markets. The fourth quarter has a track record of being positive in both gold and the stock market, and that’s good news after a terrible first nine months in most markets. Gold was up over $35 (+2.2%) on Monday to pierce $1,700 per ounce again and silver soared a phenomenal $1.75 (+9.2%), from $19.00 to $20.75. The Dow was also up 765 points.

Prepare for a Much More Positive Fourth Quarter!

If you’re like most investors on our mailing list, you probably own both stocks and gold but unlike most advisors on Wall Street, we and the World Gold Council both recommend a strong position of 10% to about 25% of a balanced portfolio to be positioned in rare coins and precious metals.

History shows that gold and silver are preferable to all forms of paper money over time and if you wish to time your purchases, gold tends to be stronger in the fourth quarter than any other time of year. Part of that has to do with the holiday seasons in several cultures. India’s Diwali, or Festival of Lights begins on October 24 this year. for the U.S. it’s Christmas and Valentine’s Day and in China gold is a favorite gift for the Chinese New Year.

If you take all 47 years in which it was legal for Americans to buy gold (1975 to 2021), the average six-month gain from August 1 to January 31 was 5.93%, or 15-fold in 47 years, compounded. However, the average six-month gain from February 1 to July 31 was only 0.8% per year or 45% total, in 47 years. In other words, if you just bought and held gold, your gains from August to January were over 30 times your gains from February to July.

Rare coins continued to be strong in many categories during 2022, despite the decline in gold and silver bullion prices in U.S. dollars. Low-population, low-capitalization uncirculated coins in the series we have favored – such as the classical half-dollar silver Commemoratives, the 20th Century Indian gold coin series, the Type 2 and Type 3 $20 Liberty gold coin series, as well as, better date $10 and $25 American Gold Eagle coins – have been increasing in price. If you are interested in these proven results for our expertly-selected rare coins, contact one of our professional account representatives, today, to add some of these key issues to your portfolio, as there is a very limited supply coming onto the market.

The first nine months of 2022 were dismal in the stock and bond market as well as precious metals, but both stocks and metals rallied on October’s opening market day: Monday, October 3:

While the precious metals were down in America, that was because of the strong dollar. Gold was up 7%+ in euros, 12%+ in British pounds and 16% in Japanese yen, the most widely traded currencies.

The U.S. Mint Still Struggles to Solve Its “Silver Problem”

As for U.S. Mint sales, total Gold Bullion sales are still increasing slowly, compared to 2021, but Silver bullion sales are lagging badly, despite the Mint’s claim to improving sales volume in September.  As a matter of fact, American Silver Eagle sales continue to decline, even though silver prices rose 6% in September and gold prices fell 2.5%. That’s because premiums are unconscionably high, up to 14% for a product that is being artificially inflated, when we can sell competing silver bullion coins from other foreign mints for just 6% over spot prices, as well as, silver rounds and bars for even less.

The U.S. Mint sold 2,735,000 Silver Eagles in September of 2021, but they only sold 833,000 silver Eagles this September, due to a shortage of planchets, or authorized silver blanks used for minting the coin. We keep waiting for a response from the Secretary of Treasury and the Mint Director for a solution to these problems but have yet to receive an adequate explanation. Instead, we received a letter from the U.S. Mint that inaccurately claimed production of American Silver Eagles had increased, yet monthly production numbers clearly show that is not the case and the Mint is not gaining on demand.

“This year we significantly increased production quantities of one of our most popular coins, the American Eagle One Ounce Silver Dollar, which will lead to broader availability for our customers,” stated a portion of the letter. The letter came after we asked U.S. Mint Director Ventris Gibson about the American Silver Eagle shortage during an event at the World’s Fair of Money in Chicago. The Mint was actually advertising and selling a new silver medal that uses the same blank/planchet as the American Silver Eagle. According to federal law and the Mint’s own past procedures, the Mint is prohibited from using these blanks until public demand for American Silver Eagle coins is properly met.

In the meantime, we must counsel the bulk of our customers to seek lower-premium silver bullion coins from other world mints or to purchase generic silver rounds or silver bars that have much lower premiums.

 

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