Still a Buyer’s Market for Gold?

We have seen some unprecedented events around the globe over the past few weeks. Including “lock down” of 75 million United States citizens. Italy says Army will help enforce lockdown, effectively declaring martial law; might extend lockdown through early May. US, Mexico agree to shut southern border. These are just a few headlines that are plastered around news sites. This type of reporting is what we would definitely consider “geo-turmoil.”

With the scary headlines there are some good news mixed in. It seems that there is a drug cocktail that is knocking the covid-19 virus back with some success. Hydroxychloroquine is the name of part of it. In an effort to support global response, the drug company Novartis, will donate up to 130 million doses of hydroxychloroquine. Thank you, Novartis.

Hopefully we are headed out of the woods of this pandemic. I certainly hope so. The fact is though; the financial ripple effect that has already started may last far into the future. Our government will help by handing out money. Historically when the government hands out aide, it does so by simply printing more greenbacks. Known as “helicopter money”, the infusion of cash is meant to calm the financial panic that many Americans may be experiencing. The effect of this can be even more weakening of the U.S. dollar.

There have been violent price divergences developing between physical precious metals prices and spot prices in silver. When you buy plain one ounce silver coins or rounds expect monster premiums.

Example: Spot silver closed Friday March 21, 2020 at $12.69 ask. Prices for 2020 Silver American Eagle 1 ounce coins were $25 each for quantities of 1-20 pieces.  

My calculations say that is a 97% premium over spot price. This premium is due to a couple of factors: Supply shortage and weak dollar.

Gold and silver have both seen a decline in spot price. Much of the decline can be attributed to sell off to cover margin calls in the sharp declining US stock market.  These factors along with others help insure a future bull market in precious metals.

Disconnect of paper and coin prices are obvious in the silver market right now. Gold however is a different story right now. There have been minimal premium increases as of now.  Giving our customers a value-buying window (for now).

Historical Gold Price Performance in USD

Period            Change ($)   Change %

30 Days -112.50         -6.98%

6 Months       -17.90           -1.18%

1 Year            +186.40        +14.20%

5 Years          +316.40        +26.76%

Since 2000   +1,211.00     +420.78%

American Rare Coin and Bullion are most definitely students of history. Which always repeats itself? There are many coins in the Pre 1933 gold market that have huge upsides compared to their past market highs. The highs occurred in the last real bull gold market. 2009-2012 provided growth in spot price almost to $2000 per ounce.

Here are a few FACTS.

Today $20 Liberty gold pieces graded MS63 trade for $1875.

During 2009-2012, these same $20s traded in excess of $3000.

Public auction records show some trades over $4000

I personally traded 100s of these $20 at $3200-$3500 dealer to dealer.

I believe the market is on the way back to those levels.  There are other factors contributing to the global financial picture other than the Coronavirus. The elephant in the room right now is oil pricing. This issue is not getting much press for obvious reasons, but it will. We will touch on that in the next market update.

Bottom line in my opinion is, weak US dollar = future Bull market in gold. 

Call us to secure the $20 Libs I mentioned above. Those are just one of the value US gold coins. 

Hope to visit soon.

Trey Cox, CEO American Rare Coin & Bullion.

1-866-789-2646