Gold
Last Tuesday, one Gold buyer told that it is normally hot in the month of August. Then the Gold price broke above the key $ 2,000 resistance level and it continued to grow. Gold reached a high of $ 2,075 per ounce on Friday, and then saw some gains. Gold closed the week at $ 2,035, up $ 72 per ounce (3.68%) for the week, and the ninth consecutive week that Gold is rallying. Gold has increased $ 508 (33.48%) since the beginning of 2020 and is trading at a very low level.
One of the key factors that has helped the Gold price rally is the value of the US dollar. The US dollar has also fallen for seven weeks in a row, falling by more than 5% against other major world currencies. The US dollar index has fallen from 97.87 to 93.20 over the past seven weeks.
Why is the value of the dollar declining?
A number of major European and Asian countries have handled the COVID-19 pandemic problem much better than the United States. So, now their economies are in a recovery mode, while the US continues to see our pandemic numbers increase. Many of these countries opened up as their businesses and markets opened. The world financial markets see this as recovery and their currency have gained strength against the US dollar. The value of Gold is global and we, as Americans, look at the price in terms of US dollars. That, $ 100 of the $ 300 increase in the Gold price over the past seven weeks is a result of the fall of the U.S. dollar. Many economists and market analysts believe that, based on the current situation, the US dollar index could easily fall below 90, another 3.5% or $ 70 in the price of Gold.
In the United States, our Congress and the White House continue to fight over the content of the next COVID-19 pandemic relief legislation. It turns out that the Democrats dropped to $ 2 trillion, but the content of the support package is in dispute. If lawmakers make a deal, this $ 2 trillion will be another catalyst for the Gold Prize. While politicians argue over the support package, the Federal Reserve continues to offer dollar liquidity to the world’s financial markets, another participant in the weak dollar.
What’s Happening in the Physical Gold Markets?
As I expected, when the price of Gold broke above $ 2,000 per ounce last Tuesday, the media (television, radio, press and internet) shared this information with the public. Wow, what an influx of new demand for the popular gold and silver coins. With mints backordered, as much as a month to six weeks, and very little profit taken from holders, the premium remains strong.
While the Gold price remains better than my conservative estimates, my year-end forecast of $ 2,200 may be too low. But, to hold an orderly rally, it would be good for Gold to spend at least a month trading in the $ 2,000 to $ 2,100 per ununce. This would give investors time to take profits or add to their holdings, while giving dealers the opportunity to take fresh inventory and fulfill orders back. I end this part of my report by asking gold investors, ARE YOU FREE THE RID?
Today: After seeing some worthwhile profits on Friday, the Gold Rally is back on track. Over the weekend, the COVID-19 pandemic hit 5 million cases in the US That news combined with a lower US Dollar Index led to fresh purchases in the Gold market, moving it back over $ 2,050 per ounce.
Silver
An increase of $ 72 in last week’s Gold price was not much compared to Silver’s price activity. Silver opened the week at $ 24.20 per ounce and closed the week at $ 27.54 per ounce, an increase of $ 3.34 (13.7%). Since the beginning of 2020, Silver has increased $ 9.71 per ounce, up 54.46% in just 7+ months. Last Friday during trading in Asia, Europe and the US, Silver rose $ 1.50 to a high of $ 29.90 and fell back to close at $ 27.54, the highest trading volume I have seen in years. In Friday night’s trading, the price of Silver moved more than $ 28 per ounce.
Silver has increased 34% since July, performing better than all major financial assets. Silver is at a record pace and the highest percentage profit since 1979. Demand has been driven by global exchanges on silver trade, reaching 25 billion ounces since the beginning of 2020. Physical demand for popular Silver investment products has increased by 60% this year. The Silver-to-Gold ratio has dropped to 73-to-1.
Today: Silver led Gold higher this morning, after ending Friday and in Asian markets over the weekend. It turns out that Silver is back on track to reach as much as $ 30 per ounce. Physical demand for popular silver investment items is strong, with premiums remaining high and inventories low.
State of the Numismatic Market
Last week there were two numismatic events (not conventions). These numismatic meetings took place in Las Vegas, NV and Dallas, TX, with both Heritage and Stack Bowers auctions. A few dealers and audience attended, due to concerns about pandemic. The focus of demand fell on bidding on the numismatic auctions. Dealers, collectors and investors accessed bids on the internet, auction company websites, and at live auctions.
Bidding was aggressive, especially on Gold coins valued at more than $ 2,000. With gold trading over $ 2,000 per unce, many of the popular gold coins for 1933 looked attractive compared to previous auctions. That, with many active bids, we saw a lot of record highs. Popular modern, US gold coins after 1985 (Eagles, Buffalos and High Reliefs) found strong bids, but supplies were limited. The results of bidding on popular Silver rare coins were a bit disappointing – higher than previous auctions – but not on the percentage that the Gold coins received.
Historically, the rare coin market has followed significant increases in price of precious metals. It takes anywhere from 3 to 6 months to show that is big uptick. During that period, you will see an increase in demand, causing higher auction prices and decreases in dealer inventories.
With the price of Gold going up more than $ 500 this year, I believe we will see a jump in better date $ 10 and $ 20 US Gold prices, not just the base price of the base, but the premium over melts where ‘ t they have traded for.
Something that rare coin investors need to know. History has shown me that there is always a delay of 3 to 6 months in rare currency price increases after the bullion market explodes. Many dealers have their coins priced based on cost and replacement value. Therefore, with Gold up $ 500 and Silver up $ 13, rare coin prices have to adjust higher because the base value is higher.
What happens during this time frame of 3 to 6 months?
- Dealers will withdraw undervalued coins from sales and increase prices on others.
- Dealers will become aggressive buyers on the popular underrated Gold / Silver coins.
- The well-known price reports, websites and newsletters will move the prices higher.
- Collectors and investors, who see a bull market, will increase demand, which adds to inventory shortages and higher prices.
Barry Stuppler has been a professional numismatist for 60 years, and is considered one of the nation’s foremost experts in rare coins and precious metals. Mr. Stuppler is a former president of the American Numismatic Association (ANA) and Professional Numismatists Guild (PNG). He is currently chairman of the Federal and California State Gold & Silver Political Action Committee. Barry is proud to say he has helped over 10,000 rare coins and precious metal investors and collectors to build their collections and holdings.
For more information on Barry see: https://en.wikipedia.org/wiki/Barry_Stuppler
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