Blog , Finance

It is the Best Time of the Year to Buy Gold

Posted on Friday, September 10, 2021
by Mike Fuljenz

If you ever wondered about the best time to buy gold, the answer is when it is out of favor or when the price is down, and few people write about gold in the news. But another answer is the calendar.

Despite gold’s disappointing start this month, September is historically the best month for gold over the past 45 years, since it was legalized for Americans to own in 1975.  According to the London Bullion Market Association (LBMA), September is the No. 1 month and August has been the start of the best six months for gold.

Part of the reason for this seasonal advantage is the fabrication of gold jewelry for the upcoming holiday season in several cultures. Christmas in America, India’s wedding season, the holy days of Ramadan in Muslim nations, the Chinese New Year and Valentine’s Day create a large demand for gold. Jewelers must order bullion several months in advance of the holiday season to craft their new lines of jewelry.

Sales of American Silver Eagle and American Gold Eagle coins picked up in August with 3.93 million American Silver Eagles sold (vs. 3.1 million in July), and 136,000 ounces of American Gold Eagles sold in August vs. 58,500 in July.Month-End “Mint & Market Review” for August

During the first eight months of 2021, 847,500 Troy ounces of American Gold Eagles were sold by the U.S. Mint, a 44% increase over last year’s sales of 589,500 Troy ounces of American Gold Eagles in the same eight months. Both numbers are spectacularly higher than the meager 122,000 ounces sold in the same eight months in 2019, despite periodic work shutdowns in both 2020 and 2021 due to coronavirus.

For the first eight months of 2021, the U.S. Mint sold 22,940,500 one-ounce American Silver Eagles. This was a 41% increase over the 16,294,000 Silver American Eagles sold in the same eight months of 2019. It was also a 33% increase over the 12,269,000 ounces sold in the same eight months of 2019 despite several work stoppages and delays, plus increases in premiums to dealers.

The Mint has not separated the sales figures of the two types of 2021 Eagle designs yet, but that should come at a later date. Also, sales of the American Buffalo Gold coin totaled 235,500 ounces for the first eight months of 2021, up 28% from 2020 when 184,000 one-ounce American Buffalo Gold coins were sold.

Spending Limits are Coming Due (Whether Congress Sees Them or Not)

Congress is spending faster than the proverbial drunken sailor, since a poor sailor can’t spend more money than he has in his pocket. Congress has no such limitation. They just call on the Federal Reserve to buy more bonds (currently the Fed is buying $120 billion per month) or they tell the Treasury to add another $300 billion or so in deficit spending each month.  So far, that has amounted to a $3 trillion (or more) annual deficit increase.

As we come up to the end of another federal fiscal year ending September 30, neither major political party seems interested in curbing many of the massive new spending programs of the Biden Administration.  There are some watchdogs in government pointing to some hard limits on deficit spending. For instance, the Social Security and Medicare trustees reported last Tuesday, August 31:

  • The Medicare hospital trust fund will go broke in 2026, as hospital spending will exceed expected revenues by $578 billion over the next decade, despite predicted tax increases.
  • Social Security will run out of funds for seniors and disabled persons by 2034, despite an increase in Social Security tax deductions to 16.3% of payrolls in 2031 (vs. 14.1% now).

Once the Social Security trust fund runs out of money, beneficiaries would face a 22% across-the-board cut in benefits, according to the Wall Street Journal (“The Entitlement State’s Bankruptcy Dates,” September 2, 2021), but nobody in Washington, DC has the heart or the guts to cut spending or limit benefits. Neither party, for instance, is willing to raise the retirement age to 67, even though 70 is the new 60 these days.

In the Medicare morass, we may soon face rationed care in a world with a serious doctor and nurse shortage as many professionals are retiring early while fewer people are entering these worthy professions.

As the Wall Street Journal stated, “Democrats won’t mention any of this as they try to add vision, dental and hearing benefits to Medicare and lower the qualifying age to 60 from 65. They also want to pass new entitlements such as national childcare, free community colleges and universal pre-K. The trustees’ report is shouting not to expand entitlements if you can’t pay for the ones you have, but today’s politicians don’t care.”

With unlimited dollar-printing to pay for these seemingly unlimited benefits, the amount of new gold being mined each year continues to shrink. Over time, this guarantees the dollar will decline in value and gold will go up. Now is the time to take advantage of gold’s bargain price and own more real money.

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