Comparison Performances of Precious Metals vs. Stocks During First 8 Months of 2020
Gold had a good week, rallying after every correction. On Monday, August 31, gold rallied as 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 week, 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 Rose 383% in 2020 vs. 2019 (and +1,459% in Summer Months)
During the first eight months of 2020, 589,500 Troy ounces of Gold American Eagles were sold by the U.S. Mint 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 Eagles for a three-month period. Production of the $5 gold Eagles finally resumed in July, with 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 ounces, up 1,459% vs. just 13,500 ounces sold in July and August of 2019.
For the first eight months of 2020, 16,294,000 one-ounce Silver American Eagles were sold by the U.S. Mint, 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 most gold and silver American Eagle coins, partly due to rising demand and partly due to periodic supply shortages.
The Fed’s Goal is Now Clearly to Inflate the Dollar
In the last week of August every year, the Federal Reserve Bank of Kansas City hosts a central bankers’ convention in Jackson Hole, Wyoming, near the Grand Teton mountain range.
This year, due to the coronavirus pandemic, the meeting was held “virtually” via Zoom. In his keynote address last Thursday, Fed Chairman Jerome Powell clearly stated that the Fed’s primary goal for the foreseeable future will be to fight unemployment and let inflation run however high it will run. He even said the Fed will now allow inflation to overshoot their previous 2% target. This is in directly opposite of what the Fed faced 40 years ago, in 1980, when inflation was enemy #1. Fed chair Paul Volcker faced inflation, unemployment and interest rates ALL in the double-digits, providing the basis for gold’s initial run up to $850 in early 1980.
With all these new trillions of dollars added to the financial system this year, the Fed will get their wish, as this new cash is virtually guaranteed to deliver the highest inflation since the early 1980s next year.
Another result of this new wave of unbacked “fiat” money is a suddenly weak U.S. dollar after years of a strong dollar (vs. the euro and other major currencies). The U.S. Dollar Index is now down over 10% in the last five months. After peaking at 102.8 in mid-March, the Dollar Index traded at 92.1 on Monday August 31, down 10.4%. If the dollar keeps falling, that will supercharge the rise of gold in dollar terms.
Mike Fuljenz is a member of the Newsmax Finance Brain Trust. He is also the editor of the NLG award winning Michael Fuljenz Metals Market Weekly Report. Discover more by Clicking Here Now.
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