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Metal Market Report March 2022 - Week 5 Edition

March 2022 - Week 5 Edition

Expert Guide to Buying Gold and Silver Cheaper

Current year silver and gold bullion coins are very popular when they are first released but if you want to save on your bullion purchases, you can sometimes buy prior year bullion coins for less than the current year coin. Remember, current year coins become prior year coins in less than 12 months, anyway. We highly recommend, that if you are making large bullion purchases, to always ask us if a prior year’s product would save you money on your bullion purchases. Every dealer should advise customers of this money-saving option.

For example, current American Silver Eagle premiums from the small number of authorized purchasers dealing directly with the U.S. Mint have increased more than 400 percent in the past two years. The Mint has had trouble obtaining the silver blanks it needs for American Silver Eagle production. The authorized purchasers are now charging dealers $12.25 over the spot price of silver for silver bullion coins whereas they have traditionally only charged $2 to $3 over spot price. The problem with obtaining enough silver blanks for its bullion program has forced it to halt production on the 2022 renditions of the Morgan and Peace Silver Dollars that were a huge hit with clients in 2021.

“We’ll be required to make business decisions like this until the supply chain for silver blanks recovers from the disruptions caused by COVID-19,” said U.S. Mint Deputy Director Ventris C. Gibson. “I want to ensure that our customers know that the modern renditions of the historic Morgan and Peace Silver Dollars will continue next year. Our goal is straightforward: to give our loyal customers the products they want and the service they deserve.”

The stringent standards for silver blanks established by the U.S. Mint can only be met by a few select silver refiners. Additionally, there is a shortage of silver coming out of Russia, which is affecting other nations’ silver needs and forcing them to look to suppliers typically used by the United States. That is creating a global shortage on silver availability.

Data from the U.S. Geological Survey shows Russia, China and Poland are amongst the Top 10 silver producing nations in the world. Mexico, the largest silver producer in the world, is predicting a decrease in its silver production due to discoveries of lower grade silver. The U.S. is the 10th highest-ranked silver producer in the world.

This is why it is so important, if you are a silver investor, to find ways to avoid paying high premiums being charged to dealers that are passed along to consumers. Our goal is to help you do just that through programs we have with silver bullion rounds, like those representing the NRA, President Donald Trump or 1-ounce legal tender coins from foreign mints including Canada and Australia. Remember, we also have silver bars and other generic silver rounds that are .999 pure silver to meet your investment needs. Call your account representative today to invest in silver alternatives to the 2022 American Silver Eagles. At the beginning of the year, I predicted silver would reach $27 an ounce, and probably higher, in 2022. That prediction is looking better today.

Gold Remains High During Ukraine War and Interest Rate Increases

Gold soared to over $1,900 per ounce the day Russia invaded Ukraine, February 24. Gold then topped $2,000 per ounce for two days (March 8 and 9). Last week, gold hit a low of $1,915 on Tuesday and soared to $1,965 on Thursday before ending the week at $1,950.

Gold has been strong throughout the five-week-long Russian war in Ukraine. It opened at $1,920 on Monday, March 28, but quickly rallied to around $1,940. Silver has also been strong although the platinum group metals have been weak.

Meanwhile, the Federal Reserve met on March 16 and indicated they would raise interest rates up to seven times this year and four times next year, pushing short-term rates from near-zero to 3% in order to fight rising inflation rates they once said were “transitory.” This announcement had no major impact on the price of gold, as gold is fulfilling its dual role as a crisis hedge and inflation hedge.

By raising rates 2.75% (11 increases of 0.25% each) the Fed will add $825 billion to the annual cost of servicing the $30 trillion in public debt and deepen the deficit; perhaps even throwing the U.S. economy into a recession. Rising deficits amid rising inflation recalls the “stagflation” of the late 1970s, which was the time of gold’s greatest percentage gain in the shortest time – 8-fold gains in 3-1/2 years and two of the greatest rare coin bull markets in history!

Who is To Blame for High Inflation? Is it Putin? Or Big Oil? Or the Fed?

After saying it was “transitory” all last year, then saying it was “good for you,” most politicians and economists are now saying that inflation is bad, but it’s “not our fault.” President Joe Biden is mostly blaming Russia for high gas prices, but while gas prices are up about $0.70 since Russia invaded Ukraine, they are up $1.90 since Biden took office, so it’s mostly Biden’s fault and recent polls show that’s what most American’s believe. Some leading Democrats, like Elizabeth Warren, blame big oil companies, but leading Democrats and green zealots insisted on mostly an “alternative sources only” policy, which included closing oil pipelines. In doing so, they seem to imply it is greener to buy energy from despots in Russia, Venezuela or Saudi Arabia than oil from our own country

Fed Chairman Jerome Powell is now among the inflationary blame-gamers, pointing fingers everywhere but at himself, denying any role in America’s runaway prices. In his March 16, 2022, press conference, he blamed Russia for commodity price inflation when most of it was already in place, and he also blamed strong demand when “supply constraints are limiting how quickly production can respond.”  

Who’s to blame? Washington’s own “Wizard of Oz” himself – Jerome Powell. 

Here’s the tally: From February 2020 – before COVID struck America – through February 2022, the Fed more than doubled its balance sheet (from just over $4 trillion to nearly $9 trillion of debt) at the same time as the U.S. Treasury’s debt, held by the public, grew by $6.1 trillion, from $14.8 trillion to $20.9 trillion (+41.2%).

This unprecedented growth in money supply devalues the dollar and will play a significant role in revaluing scarce precious metals and other tangible assets like rare gold coins higher in the process.

Here are some sample results of all that money flowing:

  • The Consumer Price Index (CPI) is up 7.9% in the last 12 months, the highest in 40 years.
  • Durable goods prices rose faster: +18.7%
  • Used cars are up over 30% and new cars are up 18%.
  • The median existing home price is up 33.4% in the last 24 months, which means that rents will skyrocket as first-time homebuyers are priced out of the housing market and are forced to rent.
  • Gas was $2.10 per gallon two years ago and $2.45 when Biden took office. It rose to $3.65 just before Russia invaded Ukraine and is now $4.35, so gas has more than doubled in two years.

For proof that inflation started before Putin’s war, look at any chart of commodity prices. The war in Ukraine is only a month old, but the Fed’s experiment in Modern Monetary Theory (MMT) is two years old. Most commodity prices doubled long before the invasion of Ukraine began.

 

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