Gold American Eagle coin sales soared 53% in 2015, Mint says
Posted onThe U.S. Mints shattered record for sales of its silver American Eagle bullion coins was set on Dec. 15, at which point purchases to authorized wholesalers were halted. The all-time annual high for silver Eagles now stands at 47 million ounces, up almost 7% versus the 2014 record of more than 44 million.
However, sales of the Mints gold bullion coins to authorized purchasers continued through December (except for three denominations that had already sold out in November). Final sales figures are now in for these coins.
Sales of the Mints 2015 gold American Eagle coins hit 801,500 ounces last year. That marks a 52.8% increase over the 2014 sales total of 524,500 ounces.
The Mints other major gold bullion coin, the gold American Buffalo, also enjoyed a strong year. (This coin differs from the gold Eagle in that it is 99.99% gold, as opposed to the gold Eagle, which contains some copper in addition to its full ounce of gold.) The 220,500 ounces sold marked a 24.2% increase over the 177,500 sold in 2014. Last years total was the third-best annual sales performance since the Buffalos introduction in 2006, when 323,000 ounces were sold.
Now that its 2016, get ready for the Mint to roll out new versions of these three bullion coins along with its other offerings of modern proofs and collectibles. Stay tuned to Blanchard and Company for more information on when these 2016 issues will become available later this month.
Gold advanced in most major currencies in 2015
Posted onWith gold finishing 2015 down about 10%, some mainstream media outlets are declaring bullion dead on arrival in 2016. But as Jason Hamlin of the GoldStockBull Web site points out, one only has to look beyond the U.S. dollar price of gold to see that the yellow metal still has a lot going for it, especially globally.
Goldactually advanced in most majorcurrencies, Hamlin noted.
To name a few, gold posted gains in the Argentine peso, the Australian dollar, the Brazilian real, the Canadian dollar, the Mexican peso, the Russian ruble, the South African rand, the Turkish lira, and the Ukrainian hrvynia.
Analyzing golds performance in some of these currencies, U.S. Global Investors chief Frank Holmes noted that bullion priced in the Canadian dollar rose by about 7%, while it surged 31% in the Brazilian real.
Gold in fact is up about 17% in Canadian terms over the past two years. Protection from currency trouble is why people own it, and why in the vast majority of places its owners are very happy, added John Rubino of DollarCollapse.com.
Meanwhile, long-term gold investors should be exploiting the dollars strength to their own advantage. With golds biggest decline coming in U.S. dollars, this could bean excellentopportunity to buy gold with dollars during 2016, Hamlin wrote. After a strong start to the year in 2015, the dollar effectively topped out and traded sideways for most of the year. In other words, the dollar may have hit a wall.
With China having succeeded in elevating its yuan (or renminbi) currency to world-reserve status with the IMF, and with numerous nations starting to balk at investing in U.S. Treasuries as the national debt barrels toward $19 trillion, the dollars long-term robustness remains questionable. Now is a great time to hedge your bets by unloading some green paper in exchange for the metal of kings.
Gold hits 2-week highs in 2016 debut on China, Mideast fears
Posted onGold kicked off 2016 with its biggest one-day advance in a month, surging Monday by as much as 2% to two-week highs as a weakening Chinese economy shocked global stock markets and crude oil surged after Saudi Arabia cut ties with Iran.
Chinas Caixin manufacturing data for December signaled a contraction in the worlds second-largest economy, and that led to a stunning 7% plunge in the Shanghai Composite Index on Monday. Chinas woes in turn spooked U.S. markets, with the Dow shedding 400 points at one point and getting off to its worst start in 84 years.
This poor start to 2016 follows 2015s lackluster performance. Overall it was the worst year for the Dow since 2008, wrote Michael Snyder of The Economic Collapse blog.But of course the Dow was far from alone. The S&P 500, the Russell 2000 and Dow Transports also all had their worst years since 2008.It was such a down year for stocks that even Warren Buffett lost $11.3 billion in net worth last year.
Meanwhile, Saudi Arabia executed a Shiite cleric, a move that resulted in its Tehran embassy being attacked. Saudi Arabia now has cut diplomatic and commercial ties with Iran and banned travel there. The feud has now sparked rising geopolitical tensions and a boost to oil prices, which in turn is good for gold prices.
We could pick up in the course of two or three weeks all our losses from last year in gold if things heat up in the Middle East, Peter Thomas of the Zaner Group told Bloomberg. Obviously, the slowdown in China is real. With gold and silver at close to production costs, people are thinking, this isnt a bad place to be.
Gold jumped by about 2%, gaining about $20 at the peak of its run and topping $1,080 before falling back. Silver also rose, advancing by 2.7% to hit $14.17.
With strong demand coming from Asia as it gears up for its Lunar New Year holiday in early February, gold could see further gains ahead. Gold was pretty hard hit over the course of last year, Mitsubishi analyst Jonathan Butler said. With index rebalancing probably taking place over the next couple of weeks, we may see some shifting of investment flows back into gold as an underperforming asset.
Gold often seems to benefit at the start of the new year, added David Govett of Marex Spectron.
GDP forecast slashed to 0.7%, while Dows debut a bad omen for 2016
Posted onJust when you thought the U.S. economy couldnt get much worse than the 1.3% GDP forecast issued by the Atlanta Federal Reserve in late December, it did: On Monday the same bank slashed its fourth-quarter estimate to 0.7%!
The news couldnt come on a much grimmer day. After all, the Dow Jones Industrial Average got off to its worst annual start in 84 years Monday by losing as much as 450 points in the wake of a crash on the Shanghai stock market. The carnage was mitigated only by late-session buying.
Meanwhile, the S&P 500 has just as bad of a day. It has opened lower on the first opening day of a trading year on only two prior occasions, according to the Bespoke Investment Group.
This slow start does not bode well for 2016. According to analyst Mark Hulbert, the historical odds of a full-year gain when the first day is positive are 74%, compared with 51% when the stock market fell on the first trading day of the year.
The only things holding up the overall stock market, apparently, are a few winners among a legion of dreck. Calling 2016 the possible start to the emergence of the Stealth Bear Market, Jonathan Krinsky at MKM Partners noted that 2015 was all about a very small number of stocks having a great year, while the majority had a very poor year.
And is it going to get any better? The fourth-quarter earnings season is not looking positive. According to FactSet, earnings for the S&P 500 areexpected to have fallen 4.7% during the final three months of the year, Business Insider noted. It will mark the first time the index has seen three consecutive quarters of year- over-year declines in earnings since Q1 2009 through Q3 2009, FactSets John Butters added.
Back to the crummy GDP, though. Separate economic reports also issued Monday continue to suggest that the U.S. economy is on the cusp of another major slowdown. The Institute for Supply Managements factory gauge showed that manufacturing contracted in December at the fastest pace in more than six years as factories, hobbled by sluggish global growth, cut staff at the end of 2015, Bloomberg reported.
The manufacturing recession is now inevitable, Zero Hedge observed. The only question is when and how it will spread to the service sector and be recognized by the NBER.
Meanwhile, the U.S. Census Bureau reported that construction spending missed expectations of a 0.6% increase to fall 0.4%, the most since June of 2014. And moreover, in another blow to GDP, all construction spending data for the past 10 years has been found to be erroneous.
Finally, two year-end reports confirm that the U.S. economy is sucking on wind. The Dallas Federal Reserves general business activity index plunged to -20.1 in December from -4.9 in November, reflecting the implosion in oil prices in 2015. And the Chicago Business Barometer (or PMI report) unexpectedly plunged to 42.9 in December, itslowest reading since July 2009, Business Insider reported.
Given all these pessimistic economic data, no wonder the Feds vice chairman, Stanley Fischer, was recently talking up the central banks ability to impose negative interest rates to generate benign inflation and growth. And even ultra-liberal economist Robert Reich is warning that the U.S. economy in 2016 is on the edge of recession.
Burning Platform blogger Jim Quinn summed up the global situation in 2016 with this paragraph: The reckless herd has been in control for the last few years, but their recklessness is going to get them slaughtered. Corporate profits are plunging. Labor participation continues to fall. A global recession is in progress. The strong U.S. dollar is crushing exports and profits of international corporations. Real household income remains stagnant, while healthcare, rent, home prices, education, and a myriad of other daily living expenses relentlessly rises. The world is a powder keg, with tensions rising ever higher in the Middle East, Ukraine, Europe, and China. The lessons of history scream for caution at this moment in time, not recklessness. 2016 will be a year of reckoning for the reckless herd.
With GDP expectations falling, the stock market off to a bad start, earnings season looking poor, and the manufacturing sector all but in an official recession, the time to hedge your portfolio from potential losses in equities is now.
Where to turn? Gold and the miners will be the major winner next year as they will be the primary beneficiaries from continued low nominal interest rates, negative real interest rates and a watershed turn in the value of the U.S. dollar, wrote Michael Pento of Pento Portfolio Strategies in predicting bullions return to $1,250 and a stock-market correction of 20%.
Whether Pento is correct in his target price is unclear, but what is more certain is that precious metals have already corrected significantly from all-time highs, while stocks have hardly begun to lose ground. The choice is clear.
Risks To The Economic And Financial Outlook For 2016: Complacency Will Be A Losing Strategy
Posted onA familiar year-end ritual for economists, policymakers, and financial firms is to issue their forecasts for the year ahead. In reviewing these recent and often-voluminous projections, we are struck by the tight clustering of forecasts. Does this imply the risks to the outlook are low or that investors should stand pat?
As management consultant John Masters once said:
You have to recognize that every out front maneuver is going to be lonely. But if you feel entirely comfortable, then youre not far enough ahead to do any good. That warm sense of everything going well is usually the body temperature at the center of the herd. Only if youre far enough ahead to be at risk do you have a chance for large rewards.
The consensus the center of the herd as captured by reports such as the Blue Chip Survey of economists places GDP growth for 2016 (Q4 over Q4) in a 2.4-2.6% range, which includes the updated Federal Reserve projection of 2.4%, shown in the table below. Similarly, the consensus on 2016 inflation is in the 1.5-1.8% range, again nicely bracketing the Feds outlook.
This salutary outlook, on the heels of 2015 GDP growth of about 2.1% and inflation of 0.4% (1.4% core inflation), anticipates relative stability in the dollar and oil prices, little if any push on prices from wage growth, small net global effects on the domestic economy, and overall stability in longer-term expectations regarding domestic and international policies that will govern underlying growth and inflation.
Rather than produce yet another set of forecasts, we think we can be of greatest service to our clients by staying out of the weeds and focusing on the broad areas where the surprises are likely to emerge.
Monetary Policy
As the table below indicates, the median projection of the Federal Reserves FOMC members for the federal funds rate target at the end of 2016 is 1.4%.
With the current target range at 0.25-0.5%, this implies approximately three increases in the range at roughly quarterly intervals of 25-50 basis points each. Fed chief Janet Yellen has repeatedly emphasized that the increases will be slow, gradual, and data dependent. The Feds rationale is that by communicating policy plans and projections in some detail, market adjustments to their deliberate approach will be smooth with a minimum of confusion and accompanying volatility.
Well, it COULD unfold this way, but history suggests otherwise. Here are the major risks we foresee.
- There is an election coming and the Fed is under attack in campaigns on the far left and right. In the past, such political pressures have led the Fed to slow its policy responses to incoming data, particularly in those instances when the data are pointing to the need to raise rates. If and when the markets begin to sense this, volatility will increase and the smooth policy path envisioned will evaporate. The Fed is trying its best to convince all that it will focus on inflation; that said, the public and the politicians will be focusing on GDP growth and unemployment. The implications are clear.
- From a global perspective, the Fed envisions a convergence between U.S. and European growth as monetary policies diverge U.S. tightening, Europe easing, or standing pat. Such a configuration would maintain upward pressure on the dollar. With the appreciation of the dollar over the past 18 months or so likely to subtract 0.5-0.7% from GDP growth in 2016 and hold down inflation, additional dollar appreciation would undermine the Feds economic forecast and accompanying policy plans.
- The gradual slide in inflation expectations has followed the slide in actual inflation and led many toward negative views on gold for months. Yet, with the 10-year Treasury note trading around 2.3%, real, inflation-adjusted returns remain at low or even negative levels. Something has to give: If policymakers appear to be dragging their feet as wage pressures build, the economy picks up some steam, or the approaching election suggests even less policy discipline going forward, duck!
Fiscal Policy
Members of Congress have been congratulating themselves for weeks after passing the Consolidated Appropriations Act of 2016, particularly its Section Q, Protecting Americans from Tax Hikes. A demonstration of rare bipartisanship? Hardly! This grab bag of more defense spending and tax cuts for corporations, which Republicans wanted, and more spending on programs for the working poor and no adjustment in entitlements, which the Democrats wanted, coupled with a relaxation or elimination of various curbs and caps on spending, added about $160 billion to the 2016 budget deficit and nearly $700 billion to the deficits over the next decade. No pain, no gain!
A year ago, who would have predicted that House Speaker John Boehner would be out, Paul Ryan would be in, and talk about entitlement programs would be entirely absent from campaign rhetoric. But legislators bought budgetary peace over the next 12-24 months at considerable cost.
- Going forward, re-establishing spending curbs, even weak ones, will not be easy.
- With both parties concerned about domestic and global security, relevant spending will rise, perhaps significantly.
- With Democratic presidential contender Bernie Sanders dragging Hillary Clinton to the left on domestic social spending (e.g., an entitlement program for college tuition), and the Republicans inevitably having to move toward the center to have a chance at winning the White House and holding on to the Senate, fiscal discipline will find few proponents. (And support for austerity in Europe will continue to erode.) The market consequences of such developments should not be underestimated or ignored.
Wages and Employment
Most forecasters, taking note of the slowing in average monthly job growth from 260,000 in 2014 to 210,000 in 2015, are looking for additional moderation in 2016, perhaps averaging 150,000 to 160,000 each month. What is less clear is whether such slowing reflects an anticipated moderation of the demand for workers or a continuing slowing in labor force participation (supply). Here too we see some risks relative to the consensus:
- Minimal layoffs, indicated by the drop in initial claims for unemployment insurance, and increases in job postings suggest demand increasing relative to supply.
- Wage growth and its distribution across sectors, shown in the Morgan Stanley diffusion index below, coupled with ongoing increases in the minimum wage, suggest wage growth heading toward 3% will attract more attention as the year unfolds.
Demographics
Many market observers and participants typically view demographics as an interesting curiosity relevant to some degree over the longer run, but largely irrelevant over the short to intermediate run, say 6-12 months. Given our usual focus on investment strategies for the longer run, and thus underlying forces and trends, as opposed to shorter-run and difficult-to-anticipate forces, we call your attention to the recent report from the highly regarded Pew Research Center:
Sure, we all know Boomers are more likely to vote in elections than Millennials. But, and its an important but, Millennials are doing an increasing share of the voting in economic and financial markets; we think this perspective is suggestive of more rather than less volatility over the next 12-24 months.
What Does It All Mean?
Cross-currents abound political, economic, and global what else is new! While we will, of course, be monitoring developments carefully, here is how we see it now.
As the year begins, we see the risks as asymmetric and concentrated in the second half of the year. More specifically, risks are tilted toward more volatility, reflecting the tensions between and among a fiscal policy drifting on autopilot, a monetary policy pursuing a narrow path forward, building wage pressures, a strong dollar, and domestic and global demand pressures. Slow, steady, and smooth, the outlook embedded in the consensus and Fed forecasts, and the accompanying stand pat investment strategy it supports, will not avoid or manage the risks ahead.
Therefore, it is important to include precious metals and rare coins in an investment portfolio. The risks on the horizon could produce a dark and stormy market where protective assets will help insure an overall portfolio. Uncertainty produces turmoil, and a properly balanced portfolio will help navigate whatever 2016 brings.
Rare Coin Market Looks Strong In 2016 And Beyond: Heres What To Collect
Posted onLets look at some of the trends in the rare coin market in 2015 and consider what to concentrate on in 2016.
Last year was an amazing year in the numismatic realm. Many high-end collections came to market and generated huge interest as well as dollars. As the highlight of the year, the D. Brent Pogue Collection took 35 years to amass and contained only 650 coins, but the presale estimate for the collection was $200 million. This collection boasted some of the rarest numismatic treasures known, such as the 1822 gold half eagle that the Pogue family purchased for $687,500 in 1982. It is the only piece available of the three known specimens; the other two are housed in the Smithsonians private collection. And the list of storied Pogue coins goes on and on: the proof 1804 silver dollar, the 1793 chain cent, the 1792 half disme, etc.
The first reason I mention the Pogue Collection is to show what can happen when the virtues of quality and patience are combined in coin collecting. Such a dual strategy is how you create a legacy that will exist long after the coins have been sold off! The second reason is to simply illustrate that the current numismatic marketplace is ready, willing, and able to absorb these types of rarities while clamoring for more. Todays market has a real appetite for quality, and the prices realized at the Pogue sale are proof of the markets strength!
Though 2015s coin shows were busy, they nonetheless weren’t overflowing with the kinds of bargains or rarities for which were all searching. I sensed that many of the rarer coins were being held in place rather than finding themselves on the open market, the presence of which in the past has always signified that the market was about to see impressive growth. I also believe that because of an exceptionally volatile year for the metals market, many people who possess rare coins feel far more secure with their current holdings, and in all likelihood are not just standing pat but are adding to their collections as the right pieces become available. It has certainly been a good year for coins, but I think we are in store for a more active market in the upcoming year!
Historically speaking, election years and their roughly two-year aftermath have always been beneficial to our market. With so many changes that occur in the first two years of a new administration, some investors tend to lean more toward the tangible side of the investment markets, especially with the volatility and backwardation seen in commonly stable environments. At the time of this articles writing, the Dow Jones Industrial Average was struggling to stay positive for the year, crude oil was down more than 50% from its start in January, and the national homeownership rate has dropped to its lowest level since 1993. Any one of these ominous indicators would typically have investors running for a safe haven other than cash, but when you combine these facts with a new administration in the White House, you often get the perfect storm for the rare coin market.
As for where to concentrate your numismatic efforts in 2016, I still stand by the ideal of quality over quantity! Try to purchase the rarest coin you can afford, but let me include a caveat to that statement because it can be easily misread. Regardless of your budget, this rule of quality over quantity applies; it doesn’t matter if you are investing $500 a month or $50,000 a month! Im not advocating that you shop outside of your price range; what I am suggesting is that you get the highest degree of rarity for your money! There are plenty of good buys in the market, but you need to be diligent in doing your research and make sure you have a trusted professional to help guide your way.
Keep an eye on 1) early date type silver (Bust dollars or Capped Bust half dollars); 2) proof coins from any series dated before 1910; and 3) anything from the Carson City Mint. I have found these areas to be profitable as well as consistently safe arenas for your money. Most of the coins in these three series are rare, sought after, and affordable! When buying early type silver or anything in the Carson City series, keep your eye out for any examples graded AU58, as they often are reasonably priced coins with quite a bit of eye appeal. I find them a better buy than MS60 or MS61 examples because the grading services tend to be very careful about what they grade as uncirculated. Therefore, focusing on AU58 will give you a much broader selection from which to choose, youll pay less for a coin that in some cases has better eye appeal, and overall youll get more for your money.
With a new presidential administration taking office in a little more than a year from now, 2016 is going to be the perfect time to take advantage of a market that is poised to move upward in 2017. In my personal opinion 2016 will be the year of the opportunist! Happy hunting!
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Coin market analyst Douglas LePre is a senior portfolio manager at Blanchard and Company with a 30-year track record of proven results in the world of numismatic collecting and investing.
Bubble chasers buy Alibaba, while the super-wealthy load up on gold
Posted onWhat these super-wealthy investors are doing, when they’re not hoarding massive amounts of cash in anticipation of another stock-market crash, is buying the dips in gold. U.S. investors who do business in dollars are in an even better position to take advantage of this strategy. With the U.S. dollar strong, gold priced in greenbacks is especially cheap – fewer dollars therefore buy more ounces of gold.
The latest snapshot of the world’s super-wealthy is out from RBC Wealth Management and Capgemini, and it confirms that “the ranks of Asia’s wealthy – as well as the region’s wealth – continued to grow at a faster pace than the rest of the world last year.”
