Metals & Markets: Big news in Big Bullion as the US Mint sells out of its 2019 Silver Eagle’s stock. Here’s the latest on that and more…
Gold and silver prices showed strength throughout the majority of this week.
The spot silver price is about to close just shy of the $16 oz mark in fiat Federal Reserve notes terms.
The gold spot price is closing just under $1,330.00 full fiat US dollars per troy ounce.
This week our Metals & Markets format will be slightly different. I your host James Anderson of SD Bullion, will not be interviewing anyone.
Rather we are going to take a brief look around the precious metals industry at some of the latest most relevant news items for you the silver and gold interested listeners and viewers.
The major items we will cover are:
* Technical resistance levels for gold and silver spot prices at the moment… where are they currently for those wondering about timing?
* What changing Federal Reserve policies may mean for the precious metals to come?
* As well just yesterday morning east coast USA time, the largest industry supplier of Silver Bullion products announced yet another temporary halt of their silver bullion product production. We’re going to examine that story in further detail as the latest US Mint Silver Eagle Coin production shutdown just went into effect a mere 7 weeks into 2019.
This long term chart we are briefly beginning with is simply the full fiat US dollar gold price since 1970. Basically it starts from about $35 oz gold moving to where we are today with a gold spot price around $1,330 US dollars per ounce.
We are next going to zoom into a 5 year chart so you can see around which and where the technical gold price resistance levels currently stand.
For podcast listeners only, this chart simply illustrates the fact that over the past 5 years, we have been in a gold fiat US dollar spot price trading range with various high points just below $1,400 USD an ounce spread out of this 5 year timeframe with a low bottom of about $1,050 oz touched in late 2015.
In late 2016, when Candidate Trump was shockingly elected as the now head Executive Office of these United States of America. I and others onlooking have likely never seen such an egregious COMEX gold future sale as what we saw with that election night’s following 24 hour timeframe.
Basically when news was confirmed that Trump indeed won, the gold price shot upwards $50 oz immediately only to have the price subsequently fall $100 oz within a 24 hour period. This Trump election date in early November 2016 still remains the record highest gold notional trading volume ever recorded in the COMEX gold market on a daily basis.
Having longs flushed out, the COMEX shorts continued to drive the price of gold ultimately down over $200 oz by the end of 2016, to around the $1,125 oz mark. I would argue this event and simultaneous US dollar strength over this same timeframe have allowed the gold market to stay in sanguine, somewhat polite price range over the past two years or so.
Technically speaking various experts I trust whose track records have been solid in my experience, they are currently stating near term gold price resistance levels of $1360 to mid $1350 USD an ounce depending on the technical tactics they use. If we get a weekly or perhaps overnight close above that price point we will likely get another retest of the more important $1,400 oz psychological and last 5 year price resistance level.
On the silver side of this equation, we’ll start with the long term chart showing the full fiat US dollar silver price since 1970. Basically starting from about $1.80 oz moving to where we are today with a silver spot price of around $16 per ounce.
Of course we have had two spike and dive events over this near five decade duration, both near the nominal record $50 US dollar per troy ounce price.
Now here is the latest 5 year silver price chart valued in full fiat Federal Reserve notes.
Overhead technical resistance for silver spot price is sitting currently around $16.20 oz using weekly closes going back to 2017.
One note to take home… typically when gold and silver get bullish with their secular trend price action, gold leads in performance as silver laggards for a while. Will that be the case this go round if we clear these afore-mention technical price levels?
What could possibly be the catalyst for all this bullish bullion price action ahead.
Well this week the Federal Reserve’s meeting minutes were released and they are sending a clear communication to financial market participants that their balance sheet reduction program is likely going to end this year.
So in short order we have moved from a hawkish we’re raising interest rates Fed to a pause and speak dovish… to potentially something even more extravagant to come.
Bottom line to this section of our podcast is this, in the coming years, and perhaps even months, sentiment is likely in for a real change. The markets that have been bullish over this 5 yr timeframe will likely give way to precious metals as the Federal Reserve proves it has pained itself into a financial market propping corner.
Given the record debt levels and unfunded liability inputs ongoing, it remains entirely reasonable to expect that the Federal Reserve will not only stop decreasing its balance sheet put also move into a policy where it doubles it or more in the coming decade.
The 2020s continue to look bullish bullion.
As for industry news this week… the only thing shocking about yesterday’s announcement that the US Mint is temporarily halting 2019 Silver Eagle Coin sales was that it only took some 7 weeks into this calendar year for it to happen again.
Having been investing and working in this industry since the 2008 Financial Crisis, I and many of you have witnessed a few handful of occasions when the US mint has temporarily suspended its Silver Eagle Coin sales.
Durations have varied from a few weeks to many months, some trivial in their effect on the bullion industry, other like late 2008 and late 2015 has large effects on bullion buyers and sellers.
The Silver Eagle Coin remains the #1 product for high volume bullion dealers like ourselves at SD Bullion.com and in us dollar terms the 2nd place product’s total sales volumes are not even that close. It is common for us at SD Bullion to see 2Xs the amount of US dollars used to buy Silver Eagle Coins over all 1 oz Silver Rounds or all Gold Eagle Coin sales repectively.
In terms of US Mint sales data, it is common to see about the same amount of US dollars chasing gold eagles as silver eagles as well.
I say all this to make the following point.
Bullion dealer Silver Eagle Coin inventory levels are not exorbitantly low at this moment, but their amounts are numbered.
The US Mint is known to get caught flat footed and there are many reasons as to why that is the case.
Currently some of the largest and most easily identifiable market supply constraints for the US Mint American Silver Eagle Coin program are as follows:
A slight recent uptick in Silver Eagle Coin buying in 2019 versus the last 2 years. The US Mint’s quasi ‘just in time’ delivery nature, basically it refusal to inventory more than the US Treasury secretary deems necessary.
And of course the usual problem, Silver Eagle coin planchet supplier constraints have worsened with more and more private silver refiner and silver mint bankruptcies over the past few years.
Think of it, names which once produced bullion and are now gone… names like Northwest Territorial Mint, Elemetal, Republic Metals.
These entities disappearance from the bullion market has real world effects. It diverts much former silver bullion round and bar demand towards still functioning mints like Silvertowne or Sunshine Minting Inc.
The Sunshine Mint not only has more demand for its private label silver bullion bars and rounds as a result, it also remains perhaps the biggest silver eagle planchet provider to the US Mint today and for many years now.
You likely see what I am getting at. Having worked front lines in this industry in the fall of 2008, I know how silly it is to see an online bullion dealers website with no products to sell for days, weeks, months, quarters at a time.
How about 8 week or more backorders. Give us your money now, lock in your price, and you’ll get your product in about 2 months time, we promise.
That was then, and my belief is we’ll likely see that again in the coming decade at some point in time.
Probably not this year, nor the next, nor perhaps the one that follows. But I believe that day is coming. Most people’s only option will be to stick their cash in a derivative and hope it does not blowback on them. OR pay one of you out there an exorbitant premium on what you might be willing to depart with at the right price point.
But I digress to close over yesterday’s US Mint Silver Eagle Coin halt.
In the show notes for this week’s podcast, I am going to leave you a blog article I wrote last night on SD Bullion about this exact subject.
My article covers in further detail many of the negative contributing factors ongoing with the silver bullion industry’s supply side manufacturing and how the US Mint’s mandate by law to provide Gold and Silver Bullion coins to the public ultimately ultimately works.
If you believe that our Fort Knox gold was audited in 2017, or that since last Christmas eve’s low point and subsequent rebound in US stock market prices was simply free market value buying, well you might also believe this same individual has now also mastered high volume manufacturing and perhaps even too alchemy.
All the Silver Eagle planchets we demand and maybe too some $1,500 oz palladium bullion tonnage will show up to market in mass, if perhaps this one guy can just make a few phone calls.
Go check out that US Mint sellout article to see who I am referring to.
Thanks for tuning in, until next week all you all out there listening and watching.
About the Author
James Anderson has a BA in finance from Loyola University New Orleans. He has both worked and invested in the physical investment grade bullion markets prior to the 2008 global financial crisis.