US Mint Is Running Out of Silver Eagles
Right now everyone is looking for 2018 silver eagles, and few can find them. In fact, the US Mint is running out of silver eagles for this year. They have temporarily sold out of them, but expect more before the end of the year. Last year the 2017 eagles weren’t always readily available either, but it never reached a level where the Mint was sold out.
What this means for investors:Silver eagle sales by the mint were up 33% in August from the previous month. This likely contributed to the Mint’s depletion of silver eagles, however, buyers were also taking advantage of the cheap prices we have been seeing in metals over the summer to stock up. The demand for gold eagles did not increase significantly though. Buyers are also taking advantage of the high gold to silver ratio and buying silver right now to optimize their precious metals portfolio.
Gold Prices Firmer This Week on News of Softer Dollar
Gold prices were generally firmer this week and maintained levels from last week. Price were trading in a narrow range around $1,200. They were up most of the week as the dollar index softened. On Friday gold slipped slightly after the U.S. jobs report showed robust data.
What this means for investors: Global stocks were down as well as the dollar as investors were getting jittery over trade war concerns this week. There was talk of even further escalation in the tariff battle between the U.S. and China.
Goldman Bear Market Predictor
We (and others) have been talking about recession predictors for sometime now. Some of these are the inverted yield curve and the so called “Warren Buffet” indicator. Now Goldman’s bear market indicator is over 70%…up 10% from last year. This indicator is based on five factors: unemployment, the yield curve, inflation, valuation, and growth momentum. It’s higher now than it was before the last two market crashes and is essentially “flashing red” on forth coming downturn.
What this means for investors: The bear market indicator was at 67% last year and some analysts were warning of recession. Yet the markets (overvalued as they are) have still been showing resilience. The Dow is still going strong and the Nasdaq has hit a new record recently. This is the longest bull market in history, due in part to extended business optimism for Trump’s pro-business growth tax policies. When it bursts though, there will be far less wiggle room for for effective fiscal and monetary policy to aid recovery. Interest rates, despite rising, are still relatively low, and rates in Europe and Japan are near zero. Debt level and budget deficits are rapidly expanding. So whether the next crash is long and slow or abrupt, the recovery process will be much tougher.
The Debt Clock
The national debt is still one of the stories few want to talk about. With the increasing rate of spending coupled with tax cuts, the U.S. debt is on pace to be twice the size of the economy in 30 years. The deficit has increased by 20% in just the last year alone. Foreign governments hold $6.2 trillion of U.S. debt, and that number is quickly growing. It is costing over $260 billion a year just to pay the interest on the national debt. By 2024 the U.S. could very well be spending more on paying interest on its debt than on defense.
What this means for investors: It’s absurd to think the debt burden will ever be alleviated smoothly. Either the country will have to eventually default or wipe the balance sheet or continue printing money until the system collapses spectacularly. Whichever way it happens, it will be the downfall of the dollar. Countries like Russia and China are already maneuvering to steer away from the dollar as the world reserve currency. When fiat currencies come to a head like this, gold is the answer.
As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at 602-955-6500 or toll-free at 877-354-4040.