Award-Winning Metals Market Report: March 2016 - Week 4 Edition

Mike Fuljenz
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Posted: Mar 23, 2016 12:01 AM

Gold gained $5 last week, but it was a roller coaster ride, down $25 in the first three days of the week, then up $39 on Thursday and declining about $10 on Friday. The stock market eked out a small gain for the year, up 0.3%, but gold is still performing 18% better than the S&P 500 stock index so far this year. Gold rallied on the Fed’s announcement that they might raise interest rates only twice this year instead of four times, although it’s very possible they won’t raise rates at all. Gold is also rallying on European buying, where interest rates are currently below zero (-0.4% at last count). European insurers, who are accustomed to investing in bonds for income and stability are turning to gold for a more favorable return.

When Counterfeiters Get Better, You Need a Skilled Counterfeit Detector

One of the biggest stories in the coin world last week was the discovery of a series of fake gold bars professionally packaged in an apparently exact knockoff of the packaging design of a leading Swiss precious metals dealer. These are believed to originate out of China, which seems to be able to counterfeit anything these days. Not only was the “.9999 gold” a counterfeit, but so was the packaging. In recent months, we’ve also heard cases of counterfeit American Eagle Coins and phony one-ounce rounds.

In previous years, we have also seen tungsten bars painted over with gold leaf. In an interview with NBC News, about these tungsten-filled “gold” bars, I said, “The people who get hit are not the bigger dealers,” since they have the knowledge and the tools to detect counterfeits, but smaller dealers are often fooled.

Whenever gold makes a positive move up, as it has done in the first quarter of 2016, we see ads for coin dealers sprouting up like weeds. Publications have little or no way to check-out advertisers. Their main criterion for reliability is whether their check for the ad clears the bank. Don’t be tricked by an ad on the Internet or on late-night TV. As my father always told me when I wanted to stay out late, “Son, nothing good every happens after midnight.” Always check the industry credentials on any dealer you contact.

I have taught dozens of courses on numismatics, including advanced techniques for spotting counterfeits. I have been able to help wronged parties get their money back, including an elderly man who sent $84,000 to a counterfeiter last year as well as a doctor who spent $750,000 on counterfeit coins. Working with the Secret Service and law enforcement officials, I was able to get those investors’ the return of their money.

When buying coins, it pays to deal with a reputable dealer who is not only honest in business practices but one who is skilled in numismatics, particularly the detection of counterfeits. You can get hurt by a good person who is not an expert, or by a fraud who poses as a numismatist but has never won an award, never worked with law enforcement agencies or helped anyone recover from a counterfeit coin scammer.

When investigating suspected fraud, I have a lot of allies in law enforcement and numismatics. Over the years, I have worked with the Secret Service, the Numismatic Crime Information Center (NCIC), several state and local law enforcement officials and one very talented investigative reporter in southeast Texas.

If you need help with a suspected counterfeit product, feel free to contact me and my team.

1866-1876 Gold Survives: At Historic U.S. Mint

On the battlefield, the British-made Whitworth rifle was a favorite weapon of Yankee and Confederate sharpshooters during the Civil War. On the home front, hard money – especially gold coinage – would have enjoyed similar popularity with civilians … if they could have gotten it. Coins of all kinds virtually vanished from view in both the North and the South because of widespread hoarding during the war.

The Union and Confederacy both issued paper money to keep the wheels of commerce turning and pay their large armies, but almost no one trusted it. Many remembered hearing the phrase “not worth a Continental” to describe the colonies’ nearly worthless currency during the American Revolution.

Gold coins were minted during the Civil War and immediately after, but few found their way into people’s pockets and purses. Some turned out to be quite scarce and all are prized today as valuable collectibles.

Recently, we acquired an original collection of popular double eagles - $20 gold pieces - issued about a decade after the War Between the States. Heightening their historical significance all had been stored for many years at the old San Francisco Mint, one of the few major buildings to survive that city’s calamitous earthquake in 1906. That building, now a museum, is affectionately known as “The Granite Lady” because it withstood the quake and the fires that followed.

This collection contains original double eagles dated between 1866 and 1876, many bearing the coveted “S” mint mark, showing they were made at the San Francisco Mint. We immediately had them submitted to the respected Professional Coin Grading Service, and Numismatic Guaranty Corporation, which certified their authenticity and grade and sealed them in protective holders displaying their Granite Lady pedigree. Call us for current price and availability. These remarkable coins are truly “history in your hands.”

Top JPMorgan Forecaster Sees Gold Going Higher and Stocks Lower

One of Wall Street’s top-rated forecasters, Marko Kolanovic, JPMorgan’s Global Head of Quantitative and Derivatives Research, told CNBC's “Fast Money” last week that the recent run in stocks has been based on short-covering – momentum investors “covering their bets” that the market would fall. This is not a healthy market rally, in his view, putting the recent stock gains in jeopardy of a sudden reversal.

Kolanovic went on to advise investors to make a “defensive” switch from stocks to gold. He said that last week’s “dovish” Federal Reserve outlook “should put some downward pressure on the dollar and hence should be supportive of gold.” He also said that the rising chances of a Donald Trump presidency means that the dollar would likely fall – due to Trump’s trade-war rhetoric, which is unfavorable to the dollar.

In sum, CNBC put up a screen that showed the “World According to Marko” looking like this:

· Gold Goes Higher

· Stocks “Stuck” in Range

· Dollar Gets Cheaper

· Trump Presidency Could Become Reality

Whether Hillary Clinton or Donald Trump wins, gold would seem to be a far better bet than stocks.