Week Ending February 13, 2022

Things Are Looking Up for Gold

There is reason for optimism in the gold sector with spot prices bumping $1,900.00/ounce up nearly $100 since the beginning of 2022. If the trend continues, the psychological level of $2,000.00 could be breached within 6 – 8 weeks. JP Morgan sets the intermediate breakout point at $2,280.00 in 2022. Goldman Sachs recently revised estimates upward to $2,300.00 as well as Bloomberg Intelligence’s opinion that “Gold will steal the show” in 2022. The perfect storm behind the current euphoria is trifold. Global unrest in the face of a Russian invasion of Ukraine, runaway inflation levels not seen in over 40 years, and institutional investors giving up the long fought, good fight to suppress the spot price in favor of naked short positions. The current trend is certainly vulnerable to profit taking which may shake some of the weaker hands, but the consensus is towards tangible assets lead by the precious metals sector. Do not be scared away by a slip in the daily posted spot price.

Physical Silver Stronger Than Spot

Silver reluctantly followed the strength of gold topping the $24.00/ounce mark before retreating into the mid $23.00 range. Physical silver remains decidedly stronger than the spot price would indicate which adds to the constant hope of Silver Bugs around the globe. A recent article on Zero Hedge chronicled the same “crush” that gold experiences minutes after the New York Open daily. Citing actual beat downs at the beginning of U. S. trading over the past 5 years, the research showed that without the daily attacks, silver would go over $150 per ounce. This is not hard to wrap one’s mind around when you see the growth in physical and numismatic gold and silver coins over the past 24 – 36 months.

Stay Ahead of the Trend With GMR

The numismatic market is becoming increasingly thin with the wholesale level dealers scrambling and competing for inventory which creates higher and higher bid pricing. With the trend showing no signs of slowing, local store front dealers and “Mom and Pops” will need to get more and more creative or find themselves with only Mercury Dimes and Walking Liberty Halves to offer to the increasing public appetite. GMR Gold, with its extensive industry reach and buying power, keeps our clients ahead of macro and micro trends that local dealers are unable to offer.

Economics at a Glance

Rightfully so, all eyes have been on the Federal Reserve Bank and their inability to act on the crippling effects of Inflation. Announcing an emergency closed door meeting for Valentines Day, there were no love offerings for the concerned masses. With no action taken in the dramatic assembly of the Governors, the only consensus taken was that “something needs to be done”. As they have been doing for nearly 3 years now, the United States Central Bank is “threatening” to raise interest rates as much as 7 times in 2022 in .25% increments. They also threaten to start divesting themselves of their tremendously “off balance” sheet of bond purchases which now stands at over $9T. $9T. Meeting after meeting, press conference after press conference, the need is spelled out, but the action is missing. It is this author’s opinion that a political cloud hangs over the decision-making process as 7 quarter percent increases will cost jobs as it always does. When interest rates were increased in 2000, the job loss spanned over 3 years. Unemployed Americans do not vote for the incumbents based on the simple question, “Are you better off today than you were when they were elected?” I think this is an election year.

This inflationary environment is not transitory. Inflation directly and dramatically affects the precious metals universe. There is never a bad time to increase or begin your accumulation of precious metals and coins. But some times are better than others. This is the best time I have ever seen!