From Birch Gold Group
This week, Your News to Know rounds up the latest top stories involving gold and the overall economy. Stories include: Why the coronavirus outbreak could be the catalyst for gold’s next breakout, analyst says gold is getting ready to breach $1,800, and hoard of Iron Age coins found in Britain declared a treasure.
Coronavirus could be the black swan for a breakout in the brewing gold market
Even before the coronavirus pandemic, gold had been posting its best performance in seven years riding on a multitude of strong drivers. Among them was a turn towards loose monetary policy by the Federal Reserve (followed by other central banks around the world), which solidified gold’s spot above the all-important $1,500 level.
According to FX Empire’s Arkadiusz Sieron, the Fed’s triple rate cut in 2019 came as a direct response to recessionary concerns after the Treasury yield curve had inverted. Mere months after an apparent normalization, however, the spread between 10-year and 3-month Treasuries went negative at the end of January, marking the second inversion in less than a year.
The dip into negative territory quickly sent gold to $1,580, and the metal has stuck to these levels, even two weeks after the yield curve went back into the green. Sieron thinks that another inversion is on the way, and that fears over a domestic recession could be significantly bolstered by the coronavirus outbreak.
Thus far, the outbreak is looking like a more dangerous version of the SARS epidemic, which claimed $40 billion from the global economy and sent investors flocking to haven assets. Yet the global economy of today has been contracting for a while, and gold is now one of the few viable safe-haven options available in the wake of negative-yielding bonds. In contrast to 2019, the latest yield curve inversion comes as a result of the shrinking 10-year Treasury yield, leading Sieron to believe that the coronavirus pandemic could aggravate existing concerns over global growth and act as the catalyst for the next breakout in the gold market.
Analyst: Gold is wrapping up its sideways price action and preparing to move to $1,800
Gold prices have been moving in a mostly sideways manner ever since the metal established itself above last year’s high of $1,553 an ounce. And while some analysts view this form of price action bullish enough on its own, one firm believes that gold is nearly done lingering around seven-year highs and is getting ready for a jump of roughly 15%.
As Florian Grummes, a market analyst at Midas Touch Consulting, noted in a report published last Wednesday, gold appears to be building up momentum as prices bounce between $1,535 and $1,600. Despite gold’s outstanding performance in 2019, Grummes believes that the true fireworks are yet to come, and that a stable move past $1,600 will be the likeliest trigger. Grummes also notes that bullish sentiment has paved the way for some very exciting action in the market.
“Every dip is quickly being bought and the surprises are always happening to the upside,” he said. “Even though gold has already increased by over US$450 from the low at US$1,160 in August 2018, the bulls remain in control and are not showing any weakness.”
While the $1,600 level has undeniable psychological importance, Grummes said that a straightforward move towards $1,800 could happen as soon as gold establishes support above $1,590. In line with the strength that the market has shown for nearly a year, Grummes added that a near-term pullback below $1,550 is highly unlikely.
Archeologists have unearthed a treasure of Iron Age gold coins in Suffolk, England
While stashes of ancient gold coins are always an exceedingly valuable find, the peculiarities surrounding the 19-coin hoard from Suffolk, England found in February 2019 have led archeologists to dub the find a treasure.
The coins were found in an area near Blythburgh within a square of roughly 32 to 49 feet by a metal detectorist. It didn’t take long for experts to realize that the find was of exceptional value, sporting an unusual mix of rare gold coins minted during the Iron Age.
According to Suffolk coroner Nigel Parsley, some of the coins featured designs traditionally associated with the region. However, several coins stood out, such as the gold staters and quarter staters attributed to a pre-Roman tribal leader called Addedomaros, King of Trinovantes.
Archaeologist Dr. Anna Booth said that these coins are not commonly found in Suffolk but are rather associated with neighboring regions. Furthermore, Booth said that the hoard contained a previously-unseen coin, a few rare flower designs and two unusual pieces with a reverse S-shape.
Booth added that the coins, which are mostly dated to 45-25 B.C. and are thought to have been deposited around A.D. 20, have accrued a great deal of interest from various museums.
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GOLD OR SILVER?
Author: Don Stott | Publish Date: 02/03/2020
I’ve written about this dozens of times over the last 43 years, and now I’ll do it again, because people are always asking us what to buy. The lowest ratio I have seen, was 16 to 1 in 1980, which is what it has been throughout history, but in that case, I think it was because Bunker Hunt was trying to control the world’s silver supply, which was, and is, impossible. His efforts made him go bankrupt. His bankruptcy was helped by the futures market when they refused to buy from him when he tried to get out…as I remember…as it was a long time ago.
The ratio between gold and silver has been 16 to 1, or gold being priced at 16 times the price of silver throughout history. This goes down a thousand years or more, and if the ratio is different, a few points may make little difference, but today’s ratio of 87 to 1, is absurd. Is silver underpriced, or is gold overpriced? I have researched, and it costs a bit less than the current prices to produce both. Spot prices of metals are what is paid at the mine, basically. These costs couldn’t possibly cover the costs of mining, milling, smelting, manufacture and distribution, so current prices on our web site, are probably about right, considering that every entity in the chain must make a profit of some kind or not be in existence. Our 1% charge includes shipping, and when you sell, a small $25 charge, which is certainly not common in the industry. Why is the ratio so high? Could it be demand? There doesn’t seem to be a shortage of either at the mines. What then is the reason? I don’t know, but it seems to me that if you have a huge safe or plenty of storage space, silver is still the best buy, but it takes so much storage space, that I, for one, am buying gold. Will the ratio reduce in favor of silver in the future? I think so, but who knows when? This morning, platinum is down $19 and gold and silver are up. Why? I don’t know, so I may not be much help, other than to remind you how much space silver takes to store and to ship, if or when you want to sell.
Other than 1980, the lowest ratio I have been able to find, at least in the last 43 years, is 39 to 1. What is the answer then, as to what to invest in at today’s prices? Look at it this way: An ounce of gold’s price is 87 times the price of silver, and to put it another way, gold requires a 87th the space of silver to store, and if selling, to ship. Or, silver requires 87 times the space of gold to store and far more to ship if you sell. Me? I’ve got almost as much silver as I can store, because of its size, and therefore I am buying gold. A 500 ounce mint box of Silver Eagles, weighs about 35 pounds, and takes a lot of space in a safe. I always keep one, and a customer recently came by and wanted it. I sold it to him and replaced it. My silver supply then, remains as it was.
People seldom change their opinions, eating habits, religious affiliations, residential locations, brand of car, or much of anything as far as life style and habits are concerned. That’s why so few distrust dollars, but keep on saving in banks, and have CD’s and savings accounts. It should be so obvious that dollars always decline in value and purchasing power, and that it is foolish to store surplus assets in dollars, but most still do and always will. Un-backed paper currencies seem to have a mystic attraction to people everywhere on Earth. It is obvious that the majority will never change, and the majority will be wiped out, as they have already in Venezuela, Lebanon, and everywhere, including here in America. I’ll be 86 in a couple of weeks, and if I had stored my wealth in a bank 43 years ago when I started doing this, I would now be decapitalized. Until I started doing precious metals, I never even thought about storing wealth in gold and silver. It never occurred to me, just like it never occurs to 90% of the world’s population. I can’t change it, but I wish I could.
Is real estate a good thing to buy? If it is your home, I say yes, and if you are young and energetic, have enough capital so as not to have to borrow, and want to buy a wreck of a house in a good neighborhood, and in your area prices are going up, you have a good plumber, roofer, electrician, carpenter, and a lot of sleepless nights, maybe. I did it recently, made a few dollars, but I will never do it again. I spent too many nights thinking about what to do about this or that, and can I sell it for what I have in it, and on and on. As an example of real estate, I’m a life member of the Germantown Historical Society in Philadelphia, where I lived before moving permanently to Colorado in 1971. While I was in Philly, I built a chain of ten ice cream parlors, and my ten stores sold over 100,000 gallons of ice cream in 1970. I did so well that I bought a huge, 1888 home with (believe it or not) ten bedrooms, a 35 foot gorgeous library etc. As I remember, it had about 7,000 square feet. Ask David and Melissa. They were very young at the time, and when we went in it for the first time, they got lost in the house and cried, “Mommy, where are we?” It was a blast. As I remember, I paid $21,000 for it in 1968, and 3 years later sold it for a bit more when we moved to Colorado. It recently came up for sale, and sold for $710,000, but the third floor had been turned into two apartments, it was so large, new kitchen, bathrooms, etc. I’m sure that after all the improvements, no profit was made in 49 years. Still it’s a great house. E-mail me and I’ll send you a picture of it. I’m happy with my metals thank you! –
-Don Stott
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http://www.coloradogold.com