It’s happened again. Uncertainty and fear of a Euro
implosion and weakness in the US stock market has sent investors
scurrying to the dollar as a “safe refuge.” As a result, gold dropped
from a new high of over $1240 per ounce to nearly $1170, its basic level
of a few weeks ago. Do not expect it to stay there. The dollar may
look strong compared to the Euro, but that is only because the
Euro is so weak. In other words, investors did not scramble to the
dollar out of an opportunity to profit – they scurried to the dollar out
of fear of losing their principle, i.e. for safety. Where will investors go when demands of Federal and State
debt, unlimited Freddie and Fannie bailout, and unfunded entitlement and
pension liabilities of the Federal, State and Local governments hammer
the dollar like unfunded Greek pension liabilities are now pounding the
Euro? (Hint: Gold, anyone?)
If
you have not already diversified at least 10-20% of your assets into
gold and silver bullion, and/or $20 St. Gaudens in MS-65, and/or your favorite
collector coins if you are a collector, this may be
a very nice buying opportunity. Some people are saying gold will go
still lower. While possible, I do not consider that likely, as current
buyers of gold are not looking for speculative profit, but rather for
long term stability, so lower prices will likely prompt more buying
rather than a panic sell off of hard assets.
After all, while the short term is uncertain, the mid to long
term prospects for gold and silver are dramatically higher than current
levels. The same is true with collector coins, however these tend to
be longer term climbers, so if you are a non-collector and you are holding
rarities, you might want to swap your rarities for more gold-based hard
assets.
With the giant
Long Beach coin show only a couple of weeks away I’m busy preparing
inventory. I have excellent buys on MS-64 and MS-65 certified common
date silver dollars, plus a few rare date Carson City Morgans. I also have a
couple handfuls of lovely pattern coins, and smatterings of
Walking Liberty Halves, Buffalo Nickels and certified modern
commemoratives. These will go at preferred prices before I go to Long Beach, so if you have an
interest any of these, be sure to contact me right away.
As for Gold, silver, and MS-65 St. Gaudens, prices are good
now and there is excellent availability, so if your time is right, call
now to place your order.
And
finally…please take a few moments in the day to enjoy the annual global
warming and spend some time outside to breathe the fresh air and smell
the flowers. That annual global warming trend we call Springtime comes but once a
year, and it’s almost over.
As you may have noticed, Gold set a new high mark above
$1240 the other day.
I think investors are a bit spooked, and who can blame
them.Last week saw the Dow drop
1000 points probably because of a glitch in the machinery.Then, on Monday, we hear about the
nearly one Trillion Dollar bailout of Greece, and the proliferation of credit
default swaps between the Dollar and the Euro. Will they never learn?
Frankly, I’m a bit spooked by that myself.If paper assets are this easily
manipulated, how stable are they really?I think this explains the furious pace of gold and coin market
activity.And yet, gold buyers are
still buying smartly, positioning themselves with their 10-20% most
knowledgeable financial planners recommend for hard asset holdings.Collectors are actively seeking those
hard (and harder) to find key dates, and buys are easily out numbering sells on
the Dealer exchanges in all bullion and coin categories.
Much of this is probably the result of mixed signals in the economy
indicating some economic recovery heavily spiked with serious negatives from
high (and not improving) unemployment to burgeoning federal debt.Despite some stock market gains as of
late, the near future prognoses for stocks is dubious.Furthermore, since it seems the Fed
will keep interest rates low for a while there is no rush to jump into dollar
denominated investments, further spurring investment into coins and precious
metals.
Along these lines, it is also interesting how much business
is being done in modern (1980 and later) issues.Most people buying modern issues are new collectors, enticed
into this area by a nearly 100 million dollar US Mint advertising budget.And yet, it is common for people who
have been collecting modern coinage, including mint and proof sets and various
commemoratives, to approach me and ask to trade their monstrous volume of these
coins for older, tried and true key date collectibles.What is happening in effect is that the
US Mint marketing program is increasing the number of collectors.
More demand for limited supply eventually translates into
higher prices.
Another interesting element in this mix is the pervasive
marketing of gold – both buying and selling – that is taking place on
television, radio and even print.Huge companies like Monex and Goldline push buying gold bullion, while
at the same time, full page ads might appear in your local paper advertising
that buyers will be in town who want to buy all your gold and silver and coins,
or you might see ads for “Cash for Gold” who also sponsor Tupperware like
parties to buy your gold.I’m sure
I don’t have to tell you that the money for this massive advertising has to
come from somewhere, and usually it is out of what you pay or receive.(Shameless plug:this is one reason why I can buy for
more and sell for less.)
My main point however is that this marketing is strongly
increasing the populations’ awareness of the value of gold and silver, and it
is also increasing the number of people who buy coins and metals.
And that point
is significant because of the strong likelihood the US dollar will fall between
30-70% in the next 5-10 years.This loss of value will certainly by from gradual erosion, but will just
as certainly include some rapid “triggers” that create a rapid upsurge in
demand for gold.Such an event
could be a perceived rise in inflation (monetary inflation is already happening
but is being disguised by recession caused price deflation), a lowering of the
US triple A credit rating, another serious rash of foreclosures in residential
or commercial real estate, a war in the middle east, or any one of a number of
possibilities.
I see no sign of hysteria yet.That is a good thing if you are interested in increasing
your hart asset position, because I am more convinced now that ever that at
some point, there will be hysteria.You will be glad you bought gold, silver and/or coins if and when that
time comes, because such events could send precious metals (and coins –
especially such “hybrid” investment/collectibles like MS-65 St. Gaudens $20
gold) to much higher price levels very rapidly.The increased number of people who now buy coins and
precious metals, and the increasing awareness of its value among the populace
will make it easier for heretofore reluctant buyers to suddenly “get it” and jump
strongly into precious metals and/or coins when prices start moving
strongly.This could even
cause a bubble in gold and metals prices which are multiples of today’s price
range.
So now – while market prices are relatively stable - is an
excellent time to rearrange your coin and metals holdings according to your
personal criteria.See page three
of the February 2010 Rare Coin Report (available at www.CNPCoins.com) to see which category of
coin/metal buyer applies to you.
One final note:as we head
toward the primary elections in June and the mid-term congressional elections
in November, many people are re-reading the US Constitution to get a handle once
again on what our Founders created.If you would like a FREE booklet containing the US Constitution and the
Declaration of Independence, I will be happy to send one to you as long as my
supply lasts.All you have to do
is email me ([email protected]) with
your name, phone, and mailing address, and I will be happy to send you one
absolutely free of charge or obligation on your part.
This is a picture of bags of $20 gold coins stacked up against the wall of the
vault at the old mint when it was in operation.
Me on the bourse (coin show) floor.
Some of the people working the the raw gold that was made into coins.