If January was bad, February was appalling, but this is actually good news for two reasons. Here’s the details…
The U.S. Mint is showing very weak sales yet again.
Here’s the reporting from Reuters (bold for emphasis):
February sales of U.S. Mint American Eagle gold coins fell 80 percent from the same month a year earlier, the slowest February sales in 11 years, while February silver coin sales fell to the lowest since 2008, government data showed on Wednesday.
The U.S. Mint data showed sales of American Eagle gold coins totaled 5,500 ounces in February, down 90.6 percent from the previous month when 58,500 ounces were sold. The year prior, 27,500 ounces were sold.
Data showed the U.S. Mint sold 942,500 ounces of American Eagle silver coins in February, down 70.9 percent from the month before when 3.2 million ounces were sold. That was 22.4 percent lower than the year prior, when 1.2 million ounces were sold, according to the data.
The U.S. Mint sold 20,000 ounces of American Eagle platinum coins. It was the first time the U.S. Mint sold platinum coins since January 2017, when it sold the same amount.
Last month, sales of U.S. Mint American Eagle gold coins marked their slowest January sales in 10 years. January silver coin sales fell to the lowest since 2009.
There’s good news with all of this, and no, we’re not the Spin Doctors either.
You see, there’s two themes: Contrarian indicator and value investing.
On the surface this looks like bad news, and it is, but notice everything highlighted in bold. We’re going back to the time right before the bubble popped and the world entered the Global Financial Crisis as it’s commonly called.
So we’re right back to where we were. And we know, that coming out of the GFC, gold & silver skyrocketed.
So we can take this weakness as the drop-off that precludes the crash.
We established that with this chart showing silver and the Dow in 2008:
The point is the softness was before and during the crashing, but the metals turned the corner first and took off in price.
Silver fell for five months. And if we take September 2017 through February 2018, well what do we have? A silver price under falling pressure for six months.
So “terrible sales” at the U.S. Mint, the “worst since 2008” are telling us something: The stock market/economy is at the best it’s going to get.
In other words, there’s only one way to go in the metals (higher prices), and, barring hyperinflation, only one way to go in the stock market/paper assets (lower prices).
And it sure looks like the weakness over the last six months in the metals may have been the “crash” of the metals in anticipation of the move higher.
There is so much liquidity sloshing around in global finance, that it’s possible we’ve seen all we’re gonna see for the “gold & silver will go down with the stock market” crowd.
If that’s the case, then we’re not going down to $1,000 or $13.50, but rather, we’re about to start the next serious leg-up in price.
As for the value investing theme, well, that’s just it. It’s hardest to buy something when it’s so hated, but it’s so hated right now, gold & silver that is, that prices are ridiculously cheap.
I mean, gold & silver are so hated right now that even the “die-hards” have thrown in the towel, and I’ll spare the names because everybody knows I’m talking about Andy Hoffman and Bix Weir.
I once heard Jim Sinclair say that most will lose out because they can’t wait it out.
What’s did they used to tell us in the Army?
It’s always coldest before the daylight?
Sure, it never helped when your standing in shorts and a t-shirt before the sunrise, freezing and waiting for the First Sergeant to say “Fall in” so you could start getting the blood moving with some good old fashioned PT, but you know it was going to suck so you just suck it up.
When nobody wants it, that’s when you buy hand over fist. When everybody wants it, that’s when you sell some.
Right now nobody wants it, and that’s exactly why I do.
We’re right there at the point where it can’t get any worse, and that means it can only get better.
– Half Dollar