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Beware: Grossly overpriced American Eagles and Buffalos

Numismatic News/Staff/6-7-2019

“The personal finance market is filled with slick advertisements touting gold bullion coins labeled with a superb grade or in holders with decorative, autographed inserts. These may be fine collectibles for some, but you could pay more than twice the value of the precious metal content of the coin. There certainly are better ways for investors to buy bullion coins much closer to their actual intrinsic value,” stated Barry Stuppler, president of the Professional Numismatists Guild (PNG).”

USAGOLD note:  To say that we agree with this Numismatic News piece is an understatement. We have been at the vanguard warning investors about this type of offering for a number of years. We get calls almost weekly from individuals involved in one of these transactions. Unfortunately there is not a great deal we can do to help, although we might be able to help mitigate the losses, i.e. get you to break even sooner if the gold and silver prices rise. The point is to avoid this sort of thing altogether and stick with owning bullion coins as gold items that are priced at minimum premiums over the gold content.

Here is a warning we published all the way back in 2013.

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“Those people who know how to listen are also people who learn. The moment you stop learning, you die.  Age is not the number of years you have been living.  Age is the condition of your soul.” – Armen Sarkissian* (Lunch with Financial Times, 6-15-2019)

“Life is always preparing you for something you just never know what.” – Armen Sarkissian

“If you don’t own gold, you know neither history nor economics.” – Ray Dalio, Bridgewater Associates

For twelve consecutive years, gold was up every single year whether there were inflation fears, deflation fears; strong dollar, weak dollar; political stability, political instability. It didn’t matter – strong oil, weak oil. . . Gold went up for twelve years. . . When gold embarks upon its next move, I believe that you will see that long wave take gold relatively quickly, but it will be measured in years, up to $3000 to $5000 target that I believe is fundamentally justified based on the facts we have today.” – Thomas Kaplan, Electrum Group (Peer to Peer Conversations with David Rubinstein)

* Armen Sarkissian is the president of Armenia. Prior to his stint in politics, he was a theoretical physicist in the old Soviet Union where he won the prestigious Lenin Prize.


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Physical gold vs gold stocks: Which performs best in a recession?

Munknee/Lorimer Wilson/6-14-2019

“When overall stock market corrections happen, they don’t leave any stocks behind. Contrary to popular belief, gold stocks are not spared while physical gold has proven to perform well in corrections.”

USAGOLD note: That’s the bottom line.  For the full rationale including supporting demand, we recommend a visit to the link. Gold essentially is a solid disinflation hedge particularly if things regress to the point that the recession affects the stability of financial institutions. When it comes to asset preservation over the long run, nothing compares to the physical in form of coins and bullion.

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What strategies are USAGOLD clients deploying now?

• Taking advantage of the high gold-silver ratio – especially in IRAs
• Buying US $20 gold pieces while premiums are at all-time lows
• Buying hard-to-get pre-1933 European gold coins at bullion-related prices

Here’s a quick snapshot-breakdown on each:

Taking advantage of the high gold-silver ratio – especially in IRAs

We have processed several swaps of gold to silver within IRA’s over the past 30 days.  At the moment, the ratio is almost 88 to one.  We haven’t seen the ratio that high in twenty years.  In fact, the only higher ratio over the past 30 years came in 1990 at 100 to one.  The ultimate goal for most investors is to end up with more gold by trading the silver back for gold when the ratio narrows, thus ending up with more ounces of gold.  That strategy worked well in both the early 2000s and in 2007-2008 just before the credit bubble implosion.  If you have an interest in taking advantage of this market opportunity, give us a call and we will be happy to walk you through the numbers and help you with the transaction.

For those, who own gold but don’t own silver, now would be a good time to add balance to your precious metals portfolio while prices are cyclically low.

ORDER DESK: 1-800-869-5115 x100/

Here’s a gold-silver ratio chart for your review –

Buying U.S. $20 gold pieces while premiums are at all-time lows

Gold investors like to buy off the bargain table and the premiums on U.S. $20 gold pieces are now at all-time lows.  The volume in this area over the past six months at USAGOLD has been nothing short of remarkable with a large number of six-figure transactions processed.  There are a variety of options too numerous to list here.  Too, we try to fit the items purchased to the particular objectives the client has in mind.  Once again, the best way to go about this is to talk with your broker directly.  At times, we pick up special opportunities at good prices and we can pass those savings along.

ORDER DESK: 1-800-869-5115 x100/


Buying hard-to-get pre-1933 European gold coins at bullion-related prices

We offered a special last week of Australia minted British sovereign gold coins that sold out in less than three hours – a testament to the strength of this market.  It doesn’t hurt that gold itself is bumping along lows, but when you add to thae appeal with difficult-to-obtain items at a low premium, the offer tends to sell out quickly.  We now have a number of smaller lots available (including the French 40 franc lot posted below) that we can offer to those with an interest –  pre-1933 European and South American gold coins at bullion-related prices.  Call for details and to find out what we now have available.

ORDER DESK: 1-800-869-5115 x100/

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How billionaires are preparing for the next bear market

Visual Capitalist/Jeff Desjardins/5-16-2019

“In bear or bull markets, billionaires are constantly worried about one thing: protecting their wealth. This video shows how some billionaires protect themselves from downturns – including turning to uncorrelated assets such as gold.”

PBB note:  Most billionaires do not take delivery of their gold because of the storage problem. That is not the case for the small private investor. A quarter of a million dollars or less in gold coins stores neatly in a modest-sized safe deposit box. Of course, if you would rather store your gold and/or silver at a depository, we can help with the arrangements. Safe storage includes insurance and the costs are not prohibitive. In fact the annual fees on storing are roughly comparable to what most ETFs charge with the added benefit of a delivery option on the coins or bullion stored. To learn more, we invite you to contact our Order Desk directly.

ORDER DESK: 1-800-869-5115 x100/

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Forecasts, Commentary & Analysis
on the Economy and Precious Metals

June, 2019

Gold breaks to the upside
COMEX speculator positions post largest single gain on record

The June issue of News & Views is now out to subscribers.  This month we delve into the changing sentiment in gold among professional money managers and small private investors alike – that and a lot more.



If you appreciate analysis that is a bit off the beaten track and concentrates on the long term merits of gold and silver ownership, you might appreciate receiving our monthly newsletter on an on-going basis. It is offered free-of-charge as a service to our regular clientele and as a courtesy to prospective clients.

Image by The Visual Capitalist/Jeff Desjardins

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Silver Eagle sales on strong pace for 2019 – up 40% over last year

(USAGOLD-May 1, 2019) – The U.S. Mint reports sales of American Eagle gold and silver bullion coins running ahead of last year’s pace at the end of May. Silver Eagle sales have been notably robust – up 40.39% over the same period last year with 866,000 one-ounce coins sold in May as opposed to 380,000 sold in May of last year. Gold Eagle sales are up 8.33% over the first five months of last year.  Month over month, Gold Eagle sales were down significantly from May of last year when 24,000 ounces were sold as compared with 4000 ounces this year. Silver Eagle sales, on the other, were more than double sales for May of last year.

Many analysts consider bullion coin sales a bellwether for overall interest in the precious metals among investors. This year’s uptick over last year indicates increased activity among American investors interested in including gold and silver in their holdings as safe-haven hedges and an underpriced asset class with that latter motivation particularly striking in the Silver Eagle category.


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Disinflation: The elephant in the room (sitting on the gold price)

Economic Research Cycle Institute/Lakshman Achuthan/5-30-2019

“The [U.S. Future Inflation Gauge] turned down early last year, and by summertime it was clear that a fresh inflation cycle downturn was taking hold. That inflation cycle downturn wasn’t obvious to the Fed, which hiked rates in September and December. Despite being forced to pivot hard early this year, Fed Chairman Powell just this month called low inflation ‘transitory.’ Bond markets were also caught flat-footed, with the 10-year treasury yield around 3¼% in October, and again in November, as inflation expectations remained high through last fall. This is the elephant in the room crushing bond yields. It’s really about the inflation cycle.”

USAGOLD note: Investors often ask why the gold price has been stuck at the $1300 level for so long with the amount of danger present in financial markets and the economy. Why didn’t gold rocket higher when trade negotiations between the United States and China broke down?  Why didn’t gold react positively to the Fed’s transition from rate hikes to a rate pause?  Why hasn’t gold responded to the upside with all the political turmoil in the nation’s capital?   Etc. . .

The answer lies in a term rarely featured in gold market discussion – disinflation.  At present, it is the elephant in the room, as ERCI describes it above. Just as it crushes bond yields, it sits on the price of gold – at least for now. But that could all change at a moment’s notice.

The problem with disinflation is that occasionally it slips the gate. General malaise gives way to a deeper crisis.  Some of you who were clients during the 2008 financial crisis probably remember that gold was slow to react. In 2006-2007, it was bumping along in a narrow range on either side of the $650 mark in a disinflationary environment very similar to the one we are experiencing now. (Please see chart below.)

Then, in late 2007, the roof began to come down on financial institutions – Lehman Brothers, Bear Stearns, IndyMac, Washington Mutual, Fannie Mae, Merrill Lynch, just to name a few of the big-name casualties.  Only then, as investors moved aggressively to gold for its safe haven and store of value attributes, did the price begin to move higher with some authority. In 2008 it reached $1000 per ounce.  By late 2009, gold had kicked into overdrive. It began a rapid climb that culminated at a record high of over $1900 per ounce. The whole run – from $650 to over $1900 – occurred during a period when disinflation dominated the financial landscape.

During disinflationary periods like the one we are experiencing now, gold owners must practice patience keeping in mind the real reason for the investment – to act as a safe haven and store of value if the wheels come off elsewhere in the portfolio.  Gold is wealth insurance first and a speculative investment second. As the old saying goes, you do not need gold until you need it, and then you might need it more than you thought.

Final note:  Though disinflation dominates the markets today, that might not always be the case.  With the announcement this past week of tariffs on Mexico, the Trump administration has now levied tariffs on America’s two largest importers accounting for almost one-third of U.S. imports.  Some economists think that the tariffs could become a source of consumer price inflation in the months ahead (not to mention the potential for a myriad of other unforeseen and unintended consequences).  In fact, several large retailers including Walgreens, the Dollar Store and Costco (among others) have already warned of higher prices in the not-too-distant future. Those warnings came before the recent announcement of tariffs on Mexican imports.

If the dominant economic paradigm shifts to inflation, gold will remain an important choice for prudent investors looking to hedge uncertainty. As I wrote many years ago in The ABCs of Gold Investing – How To Protect and Build Your Wealth With Gold, “Inflation, deflation, disinflation, stagflation, and hyperinflation—it matters not. Gold protects against any or all and no matter in which order they arrive. I is for the Inflation-Deflation debate—Buy gold and let others worry about what’s next for the world economy.”

–– Michael J. Kosares

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Short and Sweet

The inverted yield curve as a harbinger
of higher gold prices

(Grey vertical bars indicate recessions.)

During the course of the past several weeks, we have heard much about the inverted yield curve in three-month and ten-year Treasuries as a harbinger of recessions. Missed in the press reports is the fact that it has also been a harbinger of higher gold prices. In the chart above, please note the upward surges in the price of gold in the five-year periods following the two most recent yield inversions in 2000 and 2006. The first occurred with gold trading in the $300 range. It subsequently rose to the $600-650 level in 2006. The second occurred with gold priced in the $600-650 range. It subsequently rose to over $1900 per ounce in 2011 – its all-time high.

“Ominously,” writes Robin Wigglesworth and Joe Rennison in a recent Financial Times editorial, “the US yield curve has now inverted once again, with the 10-year Treasury yield on March 22 dipping below the three-month T-bill yield for the first time since 2007. Combined with the length of the post-crisis expansion — this summer it will become the longest growth spurt in US history — and deteriorating economic data, the inverted yield curve has stirred fears that the countdown to the next downturn has already begun.”

Peter Fisher, formerly head of fixed income at BlackRock and currently a professor at Tuck School of Business at Dartmouth, puts it succinctly in that same Financial Times editorial. “The mistake,” he says, “is to think it [an inverted yield curve] is a predictor of recessions. I think it causes recessions.” The rise in the price of gold following the two prior instances of yield inversion, it is now well understood, came in response to aggressive central bank monetary easing and the sudden emergence of credit-related systemic risks.


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Short and Sweet

Gold in six easy lessons

1. Don’t buy it because you need to make money; buy it to protect the money you already made.

2. Don’t look at price as a barrier; look at it as an incentive.

3. Don’t buy the paper pretenders; buy the real thing in the form of coins and bullion.

4. Don’t fall prey to glitzy TV ads; do your due diligence instead.

5. Don’t allow naysayers to divert your interest; allow yourself the right to protect your interests as you see fit.

6. Don’t forget the golden rule: Those who own the gold make the rules!

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This page catalogs price predictions on gold and silver prices from top pundits and prognosticators – a casting of the runes that begins in January and is updated regularly as new additions surface.


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