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  • Metal Market Report August 2019 - Week 1 Edition

Metal Market Report August 2019 - Week 1 Edition

August 2019 - Week 1 Edition

American Eagle Silver Bullion Coin Sales are Up 46% in 2019

Through July 31, the U.S. Mint has reported selling 11,262,000 one-ounce American Eagle Silver Bullion coins vs. just 7,705,500 ounces through July 31 last year, a gain of 46.2%. Silver’s recent surge to a 13-month high has increased interest in the popular bullion product, and we know from experience that a first-time investment in a bullion coin like the American Eagle Silver coin leads about one in six bullion investors to convert into a rare coin buyer within one or two years, especially if bullion prices keep rising.

Silver traded as low as $14.37 as of May 29, rising over $2 per ounce (+15%) to $16.50 on August 5, just 10 weeks later, thereby drawing many first-time investors into “poor man’s gold.” 

Gold Reaches 6-Year High

Gold reached a new 6-year high of $1,468 Monday, August 5, 2019, while the Dow has fallen over 800 points. The U.S. Dollar Index has fallen 1.25% since Thursday, August 1 and the 10-year Treasury bond has fallen below 2% yield down to just 1.73%. It’s not just the Federal Reserve rate cut last Wednesday – which was widely expected – but the surprise announcement of $300 billion in 10% tariffs on China by President Trump last Thursday, which caused a rise in gold and fall in stocks, the dollar and interest rates in the last few days. Gold is now doing better than stocks year-to-date, after trailing stocks most of 2019.

Gold’s latest leg up began on Monday, May 6, the morning after President Trump first threatened China with higher tariffs. On Sunday, May 5, the President announced that he would increase tariffs on $200 billion of Chinese imports to 25% from 10%. He also floated the possibility of extending a new 25% duty on another $325 billion of imports not already covered, saying “The United States has been losing, for many years, $600 to $800 billion a year. Sorry, we’re not going to be doing that anymore!”

Here’s how we stand for the last three months, since President Trump started threatening tariff increases:

 

Project 20/20 Revisited

In May, I told you a little bit about Project 20/20, which will be a program for enlightened coin accumulation – using a “rifle shot” approach rather than a “shotgun” blast to find undervalued “sleeper” coins.

As I said, we will begin by bringing you highlights of recommendations in the major types of coins we like most – for their sheer beauty, profit potential and historical importance. We’ll highlight the most undervalued coins, starting with $2.50, $3, $5 and $10 Indians and Type II and III Liberty Double Eagles.

Now, I want to bring your attention to a series that is more modern but becoming more valuable as time goes by. I’m talking about the American Gold Eagle, authorized by the 1985 Gold Bullion Act, early in Ronald Reagan’s second term. The first coins were minted in 1986 in denominations of $5, $10, $25 and $50, with gold content of 1/10, 1/4, 1/2 and 1 full Troy ounce of gold, respectively.

The obverse features the classical Augustus Saint-Gaudens design on the $20 gold coin commissioned by President Theodore Roosevelt, a full-length Lady Liberty with flowing hair, holding a torch in her right hand and an olive branch in her left with the Capitol building in the left background. The reverse design, by sculptor Miley Tucker Frost, features a male eagle carrying an olive branch flying above a nest with a female eagle and her hatchlings. The 22-karat alloy is the English standard known as “crown gold” (0.9167 fine), alloyed with a small amount of silver and copper to provide more wear-resistant surface.

Some of the early date American Eagle gold coins are becoming scarce, with prices being bid up for mint state 69, lower population $10 and $25 (1/4 and 1/2 ounce) coins. As with any other coin series, it pays to be selective, to use a “rifle” approach rather than a “shotgun” approach. One major statistical screen we use is a coin’s capitalization -- its price per unit times the population report of known coins in that grade.

We will be writing more on all these coins over time, but you can get ahead of the crowd by calling your account representative now and asking about the “rifle” approach over the “shotgun” strategy to coin buying.

 

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