Blog , Finance

Comparison Performances of Precious Metals vs. Stocks During the First Eight Months of 2020

Posted on Wednesday, September 16, 2020
by Mike Fuljenz

gold mint bullion coin shortage pandemic metals stocks comparison investOn Monday, August 31, gold rallied while the dollar weakened to its lowest level in two years as U.S. coronavirus cases topped six million. (Investors have often bought gold as a hedge against economic uncertainty, such as times when the coronavirus pandemic has worsened, or when the economy has flattened after beginning to rise.) For the month of August, gold reached its peak on August 6 and then remained above $1,900 in late August, while silver kept rising.

Silver has soared phenomenally, rising from barely $12 in mid-March to $28.24 on August 31. Silver rose 14% in August while gold traded net flat for the month. Stocks also rose during August, but stocks were a “mixed bag,” as a very few glamourous big-name big-cap (worth over $1 trillion each) tech stocks accounted for much of the rise in the NASDAQ and S&P 500 indexes, while the small-stock Russell 2000 index declined in 2020. Last month, the makeup of the 30 Dow Jones Industrials was re-arranged once again, with three new stocks replacing three old stocks, while “gold is always gold” throughout history.

The U.S. Mint’s Gold Eagle Sales Have Risen 383% in 2020 vs. 2019

During the first eight months of 2020, the U.S. Mint sold 589,500 Troy ounces of Gold American Eagles vs. only 122,000 ounces for the same eight months in 2019, a 383% increase. This was despite periodic work shutdowns this year due to Coronavirus and a complete cessation of production of the popular $5 tenth-ounce Gold American Eagles for a three-month period. Production of $5 gold Eagles finally resumed in July, with only 35,000 of the smaller coins sold in July and another 30,000 sold in August.

During the summer months of July and August 2020, the total of Gold American Eagle ounces sold reached 210,500, up 1,459% vs. just 13,500 ounces sold in July and August of 2019.

For the first eight months of 2020, the U.S. Mint sold 16,294,000 one-ounce Silver American Eagles, a 32.8% increase over the 12,269,000 ounces sold in the same eight months of 2019, despite several work stoppages in the popular silver Eagle series. Premiums to dealers also rose sharply on some gold and Silver American Eagle coins, partly due to rising demand and partly due to periodic supply shortages. Buyer demand continues to be strong in September for tangible assets.

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3 years ago

Tell the full story. Compare results from Sept 2016 to Sept 2020.

3 years ago

While gold and silver, along with platinum should be part of one’s overall investment portfolio (3 to 5 percent maximum in most cases), articles like this try to erroneously convey, in a less than subtle fashion, that precious metals are consistently a better investment than either stocks or bonds over the long term. Which is of course not true. Precious metals are fundamentally a hedge against inflation over the long-term (several years or decades), which is their chief value in one’s portfolio.

By cherry-picking dates, which is common in all such advertisements such as this article, precious metals are positioned to inexperienced investors as the magic investment that only has a massive upside, while ignoring the price swings inherent in all precious metals markets. Again, there is absolutely nothing wrong with adding precious metals to one’s overall investment portfolio, but it should not be viewed as replacement for other investments that pay both regular dividends (something most seniors value highly in these ultra-low interest times) and capital appreciation of one’s principle (actually growth that exceeds the rate of inflation). The latter being important, because as we all live longer our money must also grow faster than the rate of inflation so we don’t outlast our means to pay for things. Just a thought.

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