From Birch Gold Group
This week, Your News to Know rounds up the latest top stories involving gold and the overall economy. Stories include: Gold retailers enjoy another good season, the Federal Reserve’s dietary recommendations for Thanksgiving, and what top analysts think of gold as an investment in the year ahead.
Gold is a more popular holiday gift than ever
Daniel Fisher, CEO of UK-based bullion retailer Physical Gold, discussed the recent surge in gold demand and why gifting gold isn’t just an Asian phenomenon. Fisher said that this is the second holiday season with off-the-charts demand. Last November’s sales were up 2,000% compared to 2019, and Fisher thinks history is repeating itself…
What’s driving this keen and ongoing demand? Fisher says:
These were people talking about how they worried about inflation, given how much money the government was printing for furlough programs during the pandemic. Some people wanted to pass down money to their kids or grandkids in a way that it didn’t lose its value over time, or they wanted them to learn the value of investment.
Among the more popular items are gold bars ranging from 5 grams (about 1/6 troy oz) to 1 kilogram (32 troy oz), along with modern gold bullion coins and older numismatic coins. Whereas a new mintage of such coins goes for around $446 each, something issued between 1911 and 1932 is likelier to fetch $470. Coins and 5-gram bars were of particular interest last November, with customers calling in due to worries over inflation and a desire to have and give something of lasting value.
Although precious metals supply issues aren’t as severe as last year’s, Fisher said that sellers are becoming more unwilling to part with older coins due to the rise in gold price and a general debasement of fiat currencies. U.S.-based retailers like Kitco Metals and Money Metals Exchange are also seeing demand spikes, but their CEOs aren’t quick to attribute these to seasonal spirits.
Bart Kitner, president of Kitco, said investors purchase gold in much larger quantities than seasonal shoppers, causing the latter’s purchases to blend in with overall high demand. Money Metals Exchange CEO Stefan Gleason said that the broad increase in gold demand, not holiday seasons, is what’s behind surges in buying.
The consensus is, you can distinguish investors from gift-givers simply by looking at the transaction. Those who buy gold as gifts tend to spend about $1,000 per transaction. Gold investors purchase in much larger quantities, well into the six or seven-digits.
Gold and the Federal Reserve’s holiday cookbook
The, “Let them eat cake” quote’s origins are debatable, but are generally attributed to Queen Marie Antoinette who couldn’t understand why peasants were rioting because they didn’t have bread to eat. It’s become an example of just how disconnected the elites can be from the everyday citizen.
Is the Federal Reserve, now, looking to go down in history with its own version of, “Let them eat cake?”
The Federal Reserve Bank of St. Louis sent out a Thanksgiving message to families in the U.S. recommending a soy-protein-based holiday meal as a method to celebrate the holidays while avoiding the burden of rising costs.
Nothing wrong with soy protein, of course. But it’s a little too close to the Marie Antoinette original for comfort…
Gas prices too high? Bicycling is healthy and fun, too!
Food costs too much? Eat something else!
Essentially, this highlights the Fed’s blasé attitude towards rising inflation. According to the American Farm Bureau Federation, an average Thanksgiving meal costs 14% more than it did last year.
In other words, we just celebrated the most expensive Thanksgiving in history – so far. (Although, if you skip the turkey like the Fed suggested, it would only cost 6.6% more than last year.)
And that brings us to the underlying bullish case for gold (especially after the market-soothing Powell renomination which might have pushed gold prices down recently). Powell’s team is behind the worst inflation we’ve seen in the last three decades, and the general consensus is next year will be even worse.
Nothing we’ve seen so far points to the contrary. Many argue that even the Fed’s self-imposed 2% “healthy” inflation target is unnecessary to begin with. Yet between Powell’s statements on how inflation running far past 2% is desirable, multi-trillion spending bills with strange items on the list, and no lack of inclination towards Modern Monetary Theory, things are starting to shape up. The Fed wants to experiment with as much inflation as it can, which is all gold needs to outperform.
Those investing in gold aren’t betting on outlandish scenarios like hyperinflation or full-fledged socialism. They aren’t necessarily survivalists or doomsday preppers. To the contrary, long-term gold investors simply have concluded that the Fed either doesn’t want to, or doesn’t care to, rein in thirty-year-high inflation.
Essentially, investors have fallen into one of two groups: Those who appreciate the Federal Reserve’s money-saving cooking tips. And those who prefer to make up their own minds about how they’ll celebrate the holidays.
Gold’s price in 2021: Analysts from top banks weigh in
With gold having hit a high of $1,845 this month, it pays to examine what analysts are saying regarding the metal’s future trajectory. In July, Goldman’s team said that $2,000 is the next target for gold, and a reachable one. Importantly, this is a target for those with an optimistic view, as it excludes rampant inflation and snags in the global economic recovery.
Swiss bank UBS seems to be somewhat out of touch with reality as it wonders why investors continue to hold onto as much gold as they are, purporting that we are moving away from the worldwide crisis. Here’s to hoping. Morgan Stanley, on the other hand, advised investors to assume a more defensive positioning with their portfolio.
The bank likes both gold and silver as inflation hedges, saying that silver might be better in the role but comes with a lot of volatility compared to gold. Those interested in buying might want to wait for bouts of dollar strength, said the bank, as these invariably push gold down in the short-term and present a buying opportunity.
And while it’s often said, accurately so, that gold has outperformed the S&P 500 Index over the last 20 years, it doesn’t hurt to remind investors that this has more to do with gold and less so with the U.S.’ top stocks. The analysis from ABC Bullion Company and Chant West had gold emerging as the top performer across all Australian assets over the last 15 years, with an average annual compound of 10.6% during the period.
Nadeem Kassam and Luiz Furlani of Raymond James the final word…
While timing the market is difficult, our analysis shows investors can improve the risk/reward profile of their portfolios by maintaining a strategic allocation to gold throughout the entire business cycle.
With global tensions spiking, thousands of Americans are moving their IRA or 401(k) into an IRA backed by physical gold. Now, thanks to a little-known IRS Tax Law, you can too. Learn how with a free info kit on gold from Birch Gold Group. It reveals how physical precious metals can protect your savings, and how to open a Gold IRA. Click here to get your free Info Kit on Gold.
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One ounce silver rounds make an excellent gift, too
about $25 now, for those of us in the cheap seats
Gold is dead. They will never allow it to be priced correctly again.
Early last year when the markets crashed a young fellow who works for me tried to sell $10k of his gold. It was a 99.9% assayed ingot from a recognised company. When he got to the place he bought it there was a queue around the block of people trying to sell. The best price they would offer him was 20% less than spot, would only buy half what he wanted to sell and he had to pay assay charges to confirm it was 99.9%.
So much for gold being a safe haven for tough times. He would have been much better off holding cash.,
The Little People are better off buying and selling near mint bullion coins at a coin shop dealer you can trust. When you buy or sell you’re going to eat at least a 10-15% premium differential on buying AND selling, regardless, so if you’re going to sell, you’d better anticipate holding that metal for years to absorb the sales costs. This is a lesson “investors” need to learn – you’re never going to buy or sell at spot prices.
Recognized coins are more difficult to fake or load with tungsten because their known size and weight is easily determined by an experienced dealer, and a high volume buyer isn’t going to to bother with individual customers because their motive is greed and profit, not a “fair” deal – especially when they have people desperate to sell.
Gold will stay down until TPTB need it to go up or they lose power.
If that was the case, why has it been “allowed” to rise from $400.00 back in 2003?
Because it will always rise to the price where it is too expensive to keep it down from, but that is not the same as actual price discovery. It is all about managing the perception of the dollar, the PMs are collateral damage.
I am not a kook that thinks it should be at 5 digits or more, but it is lagging several years behind costs. It looks good in some traditional comparisons, but those don’t hold up to the broader context of inflation and technology, in my opinion. The silver thing is looking like they might succeed in convincing people it should be at these ridiculous ratios. I don’t think that would survive if the globalist fail, but if they succeed and still crash the system, I bet those ratios stay until practical realities adjust them.
I would say if you have preps in order including being long term unemployed stashes of all needed then having some metals a good thing.Keep a basket open to other idea though,for example,I bought a 100 Bic lighters,guess short term what will have more value in a natural/man made crash of society.I would say there are many more examples of this type of thinking.that said,we see a light at end of tunnel metals will help you.
If we run out of food we will eat soy based long pig cooked on soy based fires.
Where do you think gold will be priced when the stock market is down to 8000? Where will gold be when it takes $25 to buy a gallon of milk? or $40 for a loaf of bread?
If you don’t see this coming, I seriously feel sorry for you. GOLD is real money and a tail hedge. We are entering the tail where a currency flame out is on the horizon, I would never enter into that period of collapse without a hedge and neither should you.
Only morans blubber about, “oh, I couldn’t sell my gold”…..BS. Trolls talk out their ass to scare people away from the shiney, DON’T believe them. You don’t know despair until your currency collapses, so stop moaning and get down on your knees and thanks God you have your metals so you have a prayer of survival. If you don’t have gold and silver, get some while it’s cheap.
I am trying to convince my wife we might should buy some as an inflation hedge to our mortgage debt. Isn’t debt king in inflation and cash king in deflation?
People talk about getting out of debt for moral reasons and I agree, but I am thinking of some debt for real assets that I will pay off through production and inflation. I can’t find anyone even talking about that.
On the other hand, a deflation trap would flush out all the wealth from the small fish like me trying to play like the big fish. And if I don’t get too crazy with debt, that would also be a huge buying opportunity to inflate away after the inevitable hyperinflation that follows. How much can we trust historical patterns amidst unprecedented centralized control?
You got it. We are in a more manipulated market than anyone has ever seen on this planet. I am 63. Old patterns might not work. But diversification is always the key to survival. JP Morgan was just fined like 80 million dollars for manipulation of the metals market. This shows they made billions. They always push the metal markets lower in after hour trades. Small denominations of silver are good for trading. Gold is for keeping or buying property.
What do you call 30 billon in profits and an 80 millon dollar fine? The cost of business.
Thank you.
10 to 15 percent of your net worth is a good rule of thumb.