Despite high premiums, occasional work stoppages and delivery delays at the U.S. Mint, the sales volume in Troy ounces for Gold and Silver American Eagle coins, once again, eclipsed last year’s totals. Despite nearly two years of COVID, October gold sales in both the American Gold Eagle series and the American Buffalo Gold Bullion Coin series are up about 1,200% over totals from 2019. Comparing October 2021 to October 2020 shows a 100% sales increase in the two-gold series from the U.S. Mint.
There’s a similar positive trend in the American Buffalo Gold bullion coin sales. Year-to-date, sales are up 51% for American Gold Eagles, 43% for American Buffalo Gold Bullion and +9% for American Silver Eagle coins.
This rise in sales is important because as more new investors enter the bullion market, we are likely to see more people graduating into the rare coin market, which usually occurs over a two-year period after their initial precious metals purchase. That’s because there’s something magic about the “heft” of a heavy gold or silver coin, along with the beauty of its design. It’s like holding a piece of American history in your hands, which often causes investors to look into the noble history of American coins. This is amplified in 2021 by the centennial celebration and minting of the new 2021 Morgan silver dollar and Peace silver dollar honoring the transition year of 1921 (the final year of the Morgan dollar and the first year of the Peace dollar), which should help increase demand for these classic silver dollars.
Inflation Continues to Rise – Putting the Federal Reserve in a Bind
So far this year, the Fed has ignored the worst inflation in 30 years, caused by massive infusions of new money since March 2020 in their attempt to stimulate the economy after COVID-19 struck. That money has led to market bubbles in stocks, Bitcoin, real estate and various commodities, but not yet in gold.
Some major central banks have already admitted inflation is far from transitory. Last week, the Bank of Canada ended their QE and signaled that they may hike rates as soon as April, and the Reserve Bank of Australia let short-term rates move way past their targets, signaling they are ready to tighten money soon.
Rising energy and food prices hurt the poor and middle class the most, so inflation will be a major election “hot button” in the mid-term elections next year and was an important factor in more recent election results. Here are some energy and food price gains so far in 2021:
The S&P Commodity Price Index is up over 47% this year and the more traditional CRB Commodity Index is up 42.6%. Last year, silver was the best-performing commodity, up over 40%. It won’t be long before gold and silver catch up to the other commodities in this year’s runaway inflationary environment.
Gold is DEAD. Bitcoin is the future.
If gold and silver were accurately tracking the increases in inflation year to date, the price of both commodities would already be 40 to 45 percent above today’s current levels. Gold should be trading at about $2,500 an ounce right now, if the market fundamentals associated with normal inflationary action were still intact. Instead they have been stuck in a narrow trading range for most of the year, with no real catalyst on the horizon to drive prices appreciably higher.
A lot of people in the futures markets, which drive the prices on a macro scale, have moved on to buying other commodities like lithium, copper and other essential minerals needed to support the government mandated move to EVs. Their price appreciation has far outstripped both gold and silver over the same timeframe. Once the Fed begins to ease up a bit on bond buying, that will make both gold and silver even less attractive to the people that normally buy them, as they will start moving some of their discretionary money back into low yielding bank CDs.