We shouldn’t be concerned if the precious metals prices experience a correction lower along with a broader market selloff. Of course, it is…
As most Americans plowed into the Biggest Stock Market Bubble in history this year, wise investors purchased the highest Dollar amount of Gold Eagles ever. Even though the worst of the Pandemic seems to be in the rear-view mirror, demand for Gold Eagles was much stronger than last year, especially in the past two months.
According to the U.S. Mint, Gold Eagle Sales for October and November were 279,000 oz, nearly 130,000 oz more than was sold for Full-Year 2018!! That’s correct. The U.S. Mint sold more Gold Eagles in October and November (279,000 oz) than it sold for all of 2018 (152,000 oz). Furthermore, total Gold Eagle sales for Jan-Nov 29th of 1,201,500 oz surpassed last year’s total of 844,500 oz by a wide margin.
And, if we look at annual Gold Eagle sales since 2005, this year’s total is the third-highest. However, I would imagine when the December sales come in, it will surpass the 1,220,500 sales in 2010.
As I mentioned at the beginning of the article, 2021 Gold Eagle sales are the ‘HIGHEST DOLLAR AMOUNT” ever. In 2009, the average gold price was $972. If we include a premium with the total price at approximately $1,050 per Gold Eagle coin, that is $1.5 billion in sales. Now, compare that to the 1,201,500 oz sold at an average price of $1,900 to equal $2.3 billion.
While $2.3 billion of Gold Eagle sold so far in 2021, it’s peanuts to the $8.4 trillion massive increase in the U.S. stock market this year. Savvy investors protected $2.3 billion worth of wealth in Gold Eagles versus the $8.4 trillion increase in the Wilshire 5000 Index market cap.
Thus, the $2.3 billion is only 0.03% of the $8.4 trillion increase in U.S. stocks. Even though we may see the gold price correct lower, this is only temporary as the world heads closer to the ENERGY CLIFF. Furthermore, if we go by the World Gold Council, the total U.S. Gold Bar & Coin demand for this year will be approximately 3.8 million oz with an estimated value of $7.2 billion. Which means, Gold Eagle sales represent about 1/3 of the total U.S. gold bar and coin investment this year.
Regardless, $7.2 billion of U.S. physical gold bullion purchases is still only 0.09%, or one-tenth of one percent of the massive increase in the U.S. Stock Market Bubble. Guess who is going to be the better investor over the mid-long term??
Here is the chart of the Wilshire 5000 Market Cap heading into BUBBLE HEAVEN…
You will also notice that $8.55 trillion of Assets is now on the Fed’s Balance sheet. According to Ed Yardeni, Central banks hold nearly $31 trillion on their Balance Sheets… a nifty trick to prop up the Global economy and financial system. We must remember that Central banks only held $5 trillion on their balance sheets before the 2008-2009 Financial Crisis.
So, even though Gold Eagle sales have reached 1.2 million oz this year… it’s peanuts compared to the massive Financial Bubbles that will be BLOWING UP all over the world as we head over the ENERGY CLIFF.
Lastly, we shouldn’t be concerned if the precious metals prices experience a correction lower along with a broader market selloff. Of course, it is not a guarantee that this will happen, but it is just a short-term cycle on the way to much higher prices. Moreover, it will be interesting to see how lower gold and silver prices impact the “AVAILABILITY & PREMIUMS” of bullion products.
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