Is the Financial Storm Underway?
Total Page：16
File Type：pdf, Size：1020Kb
April 2018, Volume 24 Issue 4 Liberty Coin Service’s Monthly Review of Precious Metals and Numismatics April 11, 2018 Is The Financial Storm Underway? As expected, financial markets other 2018 Year To Date Results Japan Yen -4.9% than precious metals have become Through April 10, 2018 Mexico Peso -7.1% much more volatile in 2018 compared Colombia Peso -9.5% Precious Metals to recent years. U.S. Dollar Index 89.52 -2.93% Gold +2.7% As of yesterday, for instance, the Platinum -0.8% US And World Stock Market Indices Dow Jones Industrial Average and the Silver -2.9% Sao Paulo Bovespa +10.6% Palladium -11.6% NASDAQ +2.8% Standard & Poors 500 Indices were both down since the end of 2017. Numismatics Russell 2000 +0.5% US MS-65 Morgan Dollar, Pre-1921 +9.2% Dow Jones World (excluding US) -0.1% From their all-time peaks on January S&P 500 -0.6% 26, 2018, they were down 8.3% and US MS-63 $20 Liberty +3.7% US MS-63 $20 St Gaudens +1.0% Dow Jones Industrial Average -1.3% 7.5% respectively. While the Australia S&P/ASX 200 -3.4% NASDAQ was up 2.8% year-to-date US Dollar vs Foreign Currencies Shanghai Composite -3.5% yesterday, it was down 6.5% from its Russia Ruble +9.5% Frankfurt Xetra DAX -4.0% March 12, 2018 all-time high. Argentina Peso +8.5% Nikkei 225 -4.3% Philippines Peso +3.6% London FT 100 -5.5% Most major world stock indices were Brazil Real +2.9% also down year-to-date through yester- Indonesia Rupiah +1.9% 10 Year US Treasury Note interest rate 2.799% +16.19% day. India Rupee +1.7% The 10-Year US Treasury Note in- Sweden Krona +1.5% Energy and Other Metals terest rate was up more than 16% thus Australia Dollar +0.6% Molybdenum +54.8% Israel Shekel +0.6% Cobalt +21.3% far in 2018 and the US Dollar Index Hong Kong Dollar +0.5% Nickel +11.8% was down almost 3%. Canada Dollar +0.2% Tin +7.4% Even cryptocurrencies, which at- Peru New Sol +0.1% Crude Oil, Brent +5.4% tracted lots of attention last year, are South Korea Won -0.2% Zinc -2.1% scaring away potential buyers. For in- Taiwan Dollar -1.6% Aluminum -3.1% stance, Bitcoin peaked near $19,000 Switzerland Franc -1.8% Lead -3.8% Singapore Dollar -2.1% Copper -3.8% not long ago and is now under $7,000. Chile Peso -2.5% Natural Gas, Henry Hub -24.9% Volatile markets scare most inves- South Africa Rand -2.7% tors. There is a tendency to flee from Denmark Krone -2.8% Metal Content Value Of U.S. Coins Euro -2.9% Lincoln cent, 1959-1982 2.09¢ currencies in nations with major politi- Lincoln cent, 1982-date 0.83¢ cal or financial problems, which today China Yuan -3.3% New Zealand Dollar -3.7% Jefferson nickel, non-silver 4.29¢ would include Venezuela, Russia, Ar- Thailand Baht -4.3% Roosevelt dime, 1965-date 1.95¢ gentina, the Philippines, and Brazil, to Great Britain Pound -4.7% Washington quarter, 1965-date 4.87¢ Kennedy half dollar, 1971-date 9.74¢ the formerly strong US dollar or to Malaysia Ringgit -4.7% other currencies that are currently Still, one thing to keep in mind is that stronger than the dollar such as the Why Aren’t Precious Metals Swiss franc, euro, China yuan, British the paper contract market for gold and sil- pound, or the Japanese yen. Prices Higher Now? ver is many times larger than the trading Many investors will also get out of While demand for physical gold and sil- in the physical products. paper assets such as stocks, bonds, and ver remain solid in the Far East and in Eu- In the gold and silver paper markets, fiat (paper) currencies for traditional ropean nations such as Germany and the such as the London Bullion Market Asso- safe haven assets such as physical pre- United Kingdom, it has been less so in the ciation and the New York COMEX show cious metals. US. indications that trading may have been Therefore, one might anticipate that In fact, there was net liquidation of gold manipulated in order to suppress prices. the prices of gold and silver would and silver by people seeking to purchase For example, at the end of 2017, the now be significantly higher than they cryptocurrencies in the second half of COMEX silver futures market had an were at the end of 2017. 2017. As a result, retail premiums on sev- open interest of about 960 million ounces. Well, that’s not exactly how things eral prior-year dated products such as US As of yesterday’s close, the open interest have worked out for gold and silver Gold American Eagles and US Silver Ea- had soared to 1.135 billion ounces. In just thus far in 2018. gle Dollars fell enough that it cut into the the past week, the open interest exceeded It is true that gold, through yester- US Mint’s ability to sell new 2017- and 1.2 billion ounces which far exceeded the day, had outperformed most US and 2018-dated coins. world stock indices thus far this year, Inside this issue: What Else Is Happening? page 2 but it was only up 2.7%. Updated Morgan Silver Dollar Analysis page 3 The price of silver was actually A Speculation On Platinum page 4 down thus far in 2018! (Continued from page 1) main stable or decline. Patrick A. Heller’s Upcoming Speeches previous high of open positions before Of course there are other political and and Appearances the end of 2017. economic stresses affecting the values of The COMEX itself contributed to financial assets, including physical pre- (tentative) August 15-17, 2018, Philadel- making it possible to have that many cious metals. phia, Pennsylvania, American Numis- ounces of silver sold short (each open matic Association World’s Fair of Mon- ey. “Oops! A Lighthearted Review Of US position has a party on the long side What Else Is Happening? Circulating Coin Design Mistakes.” De- and on the short side). Thus far in Of immediate concern is what is now happening in the Middle East. Today the tails to be determined. 2018, it has reduced the required mar- gins on leveraged accounts three times. government of Saudi Arabia announced For more information on any event or to Now a short-seller is only required to it had intercepted three missiles and two arrange for a presentation at schools, sen- put up $3,600 to sell 5,000 ounces of drones launched against the country by ior citizen groups, coin clubs, Scout organ- silver instead of having to own the far rebel forces in Yemen. Saudi Arabia has izations, fraternal or business organiza- more than $80,000 worth of silver been attacking those rebels for the past tions, call 800-933-4720 or email (which most short sellers do not have three years. [email protected]. at all. In addition, US President Trump today In the COMEX gold futures market, has threatened to launch missiles against to become more contentious in the com- a leveraged short-seller need only put targets under the control of the govern- ing months and the public becomes up $3,100 in order to sell 100 ounces ment of Syria. This is in response to a more fully informed of the extent of of gold rather than putting up 100 suspected chemical attack by that gov- these somewhat hidden liabilities (they ounces of gold that are worth more ernment against some of its own citizens. were not previously included on govern- than $135,000. The Russian government, an ally of Syr- ment balance sheets and statements of In the gold market, the indications of ia’s government, has vowed to shoot revenues and expenses—which the pri- manipulation come from a different di- down any missiles, which puts the US vate sector has been doing for more than rection. The number of open futures and Russia directly facing each other in two decades). contracts on the COMEX gold ex- military action. As one example, the state of Michigan change are not that different from the As a result of these two developments, Treasury released its very first list in end of 2017 to yesterday. However, gold and silver prices jumped more than March of 110 governmental units (out COMEX gold contracts are not only usual today. The US dollar and many of 490) in Michigan that have danger- settled by delivering the underlying American and world stock indices de- ously underfunded employee pensions metal. They can be settled for cash, clined. If the US does launch missiles and/or retiree health care benefits. You for equivalent shares of gold exchange against Syria and Russia attempts to in- can view this list at https:// traded fund or, as an emergency meas- tercept them, financial markets could www.michigan.gov/documents/ ure, by “exchange for physical.” This easily experience far more turmoil. treasury/Prelim- letter settlement option involves pay- These are not the only burning devel- nary_Underfunded_Status_3.12.18_617 ing a small amount of cash plus the de- opments. The US and Chinese govern- 111_7.pdf. Sadly, the city of Lansing, livery of a London gold contract for ments have imposed tariffs on some where Liberty Coin Service is located, the same quantity of gold. Since the goods imported from the other nation.