Gold’s Tailwinds Remain Poised to Push Prices Higher in 2020
From Birch Gold Group
This week, Your News to Know rounds up the latest top stories involving gold and the overall economy. Stories include: The many upsides left in store for gold this year, why there can be no money better than gold, and a rare silver dollar from 1794 is being auctioned again.
There are plenty more acts to the show that gold has put on so far this year
As gold exploded past $2,000 shortly after breaking its all-time high, many were calling for a correction in the near term due to the sheer amount of force behind the upswing. Gold has indeed pulled back, but not by a particularly significant margin. Friday’s trading session appears to have pegged $1,935 as support before the metal bounced back to the $1,945 level to close the day.
Although it might seem that gold has moved up too fast, having blazed past the S&P 500 Index in doing so, the metal has in fact been on a steady climb since last summer. The very same driving forces that started this climb have since intensified, and gold has seen the addition of many new tailwinds in the meantime.
One of the drivers that began gold’s uptrend last year was a series of Federal Reserve interest rate cuts, accompanied by central banks around the world turning their nominal rates low or negative. Whereas the Treasury was faring well in comparison back then, it has since been subjected to a pervasive zero-interest-rate policy, with real rates plunging into negative territory. According to many experts, the latter is the biggest assurance that gold is poised to keep heading up.
But gold’s bullish sentiment hardly stops there. This year, the U.S. has printed an incredible $6 trillion of stimulus, with expectances of trillions more to be printed. This, along with certain other factors, has not only devalued the U.S. dollar by a significant margin but also sparked widespread concerns about its safety and status. With a falling greenback, sky-high inflation expectations and bonds that few investors want to own, gold holders need only wait for the metal’s next show of strength.
Gold is, and has always been, the best money
In the current climate of currency debasement and fiat uncertainty, it pays to once again reassess the notion of what money really is. As Forbes contributor Nathan Lewis points out, the average person is likelier to trust in the value of gold and silver than in a paper note. The idea isn’t uncommon when it comes to the more experienced economist, either. In the early 20th century, J.P. Morgan is known for having stated that nothing besides gold should be counted as money.
Yet, as Lewis points out, history is riddled with attempts by nations to untether their currency from gold’s tangible value and try out a new economic model. Dating back to roughly 3300 BC, gold and silver were understood to be stable money and any method of exchange was to be intrinsically tied to these precious metals. Periods where a country stuck to the gold standard invariably resulted in stretches of economic stability, while attempts to deviate from it were riddled with crashes and disasters.
One does not need to reach too far back for a clear example of this. In 1690, the Colony of Massachusetts issued the first American paper currency. Being untethered from gold, the currency met a predictable hyperinflationary end in 1781, resulting in the Founders mandating that the nation’s currency remains tied to gold and silver. The U.S. dollar held a nearly unchanged value of $20.67 for an ounce of gold between 1792 and 1933. In 1933, the greenback was devalued to $35 for an ounce of gold, and held its value until 1971 when the gold standard was abolished.
The 1960s are generally considered to be the best decade for global economic prosperity since 1914. 1914 is of particular note for several reasons, not the least of it being the start of a period where the U.S. had the most reliable gold-backed currency in the world until 1971. Throughout that stretch, the dollar was viewed as something whose value was as clear-cut as that of gold. Since 1971, the U.S., along with the rest of the world, has embarked on a familiar monetary experiment whose results have been eerily consistent throughout recorded history.
A rare 1794 silver coin that was last sold for $10 million is being auctioned again
When coins minted during early periods of U.S. history are placed on auction, numismatics enthusiasts tend to pull out all the stops. The 1794 Flowing Hair Dollars rank among the most valuable and sought-after, as they represent the first U.S. silver dollars ever produced.
Yet even such an exceptional line can have its standout. In this case, it is the famous 1794 Flowing Hair Dollar purchased at a 2013 Stack’s Bowers auction. The coin is believed to be the first to have been minted in the line, and was purchased by coin collector and partner at Legend Rare Auctions Bruce Morelan. Now, Morelan has decided to part with the coin by scheduling an auction through his firm on October 8.
“The 1794 Dollar has been a lifelong dream coin and I’m truly blessed to have owned it,” said Morelan. “I can only hope the new owner has as much joy, pride and satisfaction as I did in having it in my collection. Now that the set is complete and nothing else can be added, I’ve decided it’s time for other collectors to enjoy these magnificent coins.”
In 2013, Morelan paid more than $10 million for the unique piece, the highest price ever paid for a numismatics coin. The coming auction should therefore be an interesting one, especially as it will feature many other early-period U.S. coins whose combined value is estimated at more than $20 million.
“This is the finest collection of Mint State Dollars ever assembled,” said Laura Sperber, owner of Legend Rare Coin Auctions, while also praising both the rare coin and Morelan’s commitment to numismatics.2020, ccn, flowing hair dollar, forbes, jp morgan, nathan lewis, upi