May 2024 - Week 1 Edition

The Metals Have Two-Month Surge to Remember – Up 22% (Gold) and 35% (Silver)

Although the precious metals suffered a late-day dip on Tuesday, April 30, silver rose over 7% and gold rose over 3.6% and platinum gained 4% in April, while the major stock market indexes all declined from 4% to 7%. Year-to-date, gold and silver are up an identical 11.4%, while stocks are all less than half that much. 

Gold’s peak intra-day price was $2,429 on April 12 and silver was just shy of $30 per ounce at $29.81 on the same day. At that point, gold had risen 22% in two months from $1,990 on February 14 and silver rose a phenomenal 35% in the same two months.

That makes the recent correction understandable – the pause that refreshes before another surge ahead, as gold rose $35 an ounce (+1.5%) on the first day of May, and silver rose 52-cents (+2%), to return nearly $27 an ounce.

U.S. Mint bullion coin sales were up for silver so far this year, and down for gold in the first four months of 2024. However, we have a recommendation for those who want to pay lower premiums on American Gold and Silver Eagle coins. Unless you want to buy 2024-dated Eagles for a special reason, like a birthday gift or a special 2024 event in your family, tell your representative that you are willing to buy American Gold and Silver Eagles from any previous year’s date. American Gold and Silver Eagles from backdated inventory generally have lower prices, so you save when investing your money. Remember, all 2024 bullion coins become backdated the next year and lose a small premium.

Three of AARP’s Five “Worst Mistakes in Buying Gold” – And My Response

With gold at or near all-time highs, more and more major publications and organizations are printing “guides” for first-time gold buyers, often published at just the wrong time, when gold has surged about $400 in two months and is due for a rest.  One of the most popular organizations for retired people, AARP, came out with such a guide to gold buying, beginning by saying, “It’s no wonder that gold, which was selling for around $2,400 an ounce on April 19, has become a hot commodity.” Gold is a hot commodity but rather than knowing the market, they are writing off the trend. I have been predicting gold’s rise for months and even collaborated with financial wizard Steve Forbes this past October on how gold’s price would react in the market. Steve and I both predicted a surge to $2,300 an ounce with a continued increase in price to $2,500 by the end of 2024. AARP must have missed that.

One thing AARP did get correct in their alert was to be wary of counterfeits and fake gold. “When you buy gold, you must make sure that it really is gold, not painted lead, and that it’s the correct purity,” AARP wrote. However, they didn’t go on to say you should then seek out a dealer who has specialized training in spotting counterfeit coins, one who has helped law enforcement agencies stop counterfeiters and who is an authorized PNG, PCGS or NGC dealer with a high reputation in the industry. Better yet, find one who has accreditations from all of those organizations. After that preface, AARP offered five key rules for buying gold, of which I would argue the opposite position in these three of those points:

1. Buying too much. First, they warn against buying too much gold, when most investors buy too little gold as a percentage of their portfolio. While it’s true you should not invest more than 25% to 30% or so of a balanced portfolio in precious metals, investing less than 5% is too little to make a difference in your life. Most investors take a token (under 5%) position but we recommend a base of 5% to 10% in gold and silver bullion with another 15% to 25% invested in a silver and gold rare coin portfolio targeted to your area of interest.

2. Loading up on rare coins. AARP says, “Unless you love rare coins for their beauty and you’re extremely familiar with the market, stick with authentic bullion coins issued by the government.” That’s true for beginning investors and for a base bullion position but once that position is established, rare coins have the potential to appreciate far more than bullion. Why? Well, there are so few rarities in circulation of some coins their values increase not only with the price of gold but also by other collectors seeking them out and taking them off the market. This drives up the price for remaining coins in many categories. I would underline their opening point about “loving rare coins for their beauty” and advise that you become “familiar with the market” through the help of an authorized and experienced numismatic expert. Our expert representatives welcome your calls and are available to help educate and guide you on the best choices in rare coins. Call us and ask for our free Numismatic Literary Guild award-winning Gold Guide that positively compares rare coin performance to gold bullion and equity performance since 1970.

3. Insisting on physical gold. AARP recommends exchange-traded funds, or ETFs, instead of physical gold, but there is nothing like holding real gold and rare coins in your hands, for their heft and beauty. But more importantly, should crises strike the stock market and exchanges may suffer redemption problems. While ETFs are easy to trade, that also means they are easy for part-time traders to sell prematurely. Experience shows that ETF traders usually buy high and sell low, but real gold is for buying and holding over the long term, not for trading. One final note, if you buy real gold and store it in a safe place, you physically own it and have possession of it, so you know it’s really there. Do you know your ETF gold is really there? Think about it.

On Tuesday, I helped a local doctor sell 100 American Gold Eagle coins that he purchased in 2009. He realized the gain on that increase in the price of gold and made a 160% profit in 15 years. He noted that his gold coins investment was better than any other investment he’s made over the timeframe and was glad he diversified with gold.

Gold and silver had a great April but they dropped on the last day of the month, in advance of the April 30 Federal Reserve Open Market Committee (FOMC) and their policy decision being announced on Wednesday, May 1. No changes are expected in interest rates, but nervous traders don’t need logic when they sell in panic mode, Saner heads prevailed as the metals edged back up (+$15 gold) early on May 1 and then exploded $20 more after Chairman Powell began speaking at 2 pm EDT.

Basically, both stocks and gold rose on the Fed Chair’s words since he never mentioned raising rates and he said he had confidence inflation would come down later this year – words creating a temporary market euphoria.

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