Market News

Should You Worry About The Future of the U.S. Dollar?

Investment | May 5, 2021
The U.S. dollar is under fire from multiple fronts – and that increases the importance of investing in tangible assets like gold bullion more than ever before. The U.S. dollar is being devalued at home – by our own government that is printing new money and expanding the money supply at a historic pace. And,…

Gold Jumps to 7-Week High as Inflation Rears its Ugly Head

Gold | April 22, 2021
Gold climbed to a seven-week high this week – boosted by weakness in the stock market, signs that inflation is emerging in the U.S. and amid strong demand from India and China for physical bullion. The short-term trend turned positive for gold last week as the yellow metal climbed above its 50-day moving average –…

1937-D Buffalo Nickel – 3 Legs

Market News | April 19, 2021
In early 1902, President Theodore Roosevelt made it a priority to update and improve the look of U.S. coinage. However, there were constraints that prevented even the president from getting what he wanted. An earlier 1890 act of Congress made it a requirement that all U.S coins remain in circulation for a minimum of 25…

World’s Largest Memorial to Confederate Leaders

Market News | April 14, 2021
Since the days of the ancient Greeks and the Romans, commemorative coins have been popular as they honored important historical events. The 1925 Stone Mountain Silver Half Dollar is a prime example. America’s largest Confederate Memorial is carved 42 feet deep and 400 feet above the ground on the side of a huge granite mountain…

Maximize Your Finances Ahead of the May 17th IRS Deadline

Investment | April 7, 2021
For two years running now, the IRS gifted taxpayers with extra time to file their income tax returns. You now have until May 17, 2021 to compile your financial documents, complete your tax return and make contributions to 2020 IRA accounts. This extra time offers you a valuable opportunity to review your portfolio and diversification…

[Editor’s note: It’s hard to know what to believe in today’s environment. From cable news networks, to talk radio show to internet news sites – where do you get the facts? Folder tabs with various tax type names

That’s why we did the research. And that’s why we are delivering tax facts in this special report – about what President Biden’s proposed tax changes could mean for you. Using sources like the Internal Revenue Service and the Tax Foundation, the nation’s leading independent tax policy nonprofit, we drilled down on key proposals and outline here how they could impact your taxes, deductions and implications for passing wealth from one generation to the next.

These are just proposals and official legislation has not yet been submitted to Congress. Yet, we wanted to provide you with the information you need now – so you can prepare your finances ahead of potential tax law changes.

If these proposals become law it is valuable to understand how it will affect you and why it may be important to increase your allocation to gold now before the tax plan passes.]

Democrats Control the White House and Congress

What could Democratic control mean for your taxes? If you are nervous, you aren’t alone.

There’s good reason for concern. In general, President Biden’s tax proposals will raise taxes on high-income earners, remove long-standing deductions and tax a larger percentage of generational wealth transfer.

If all these tax proposals become law, it would raise $3.3 trillion over the next decade, according to the Tax Foundation.

How much of that will come from you?

Here’s what we found.

It’s True, High Earners Will Pay More Income Tax

Are you married, filing jointly with income over $400,000? It’s time to prepare and reposition your finances now. The Biden proposal is coming for you. Your tax bracket jumps from 32% to 39.6% under the proposed increase.

Key changes that lie ahead if tax proposals are passed:

 

  Current Law Biden Proposal
Income Tax Rates 37% Top marginal tax rate Increase top tax rate to 39.6%. This move would return the top tax rate to the level seen before the 2017 Tax Cuts and Jobs Act. 
Long Term Capital Gains Hold assets over a year: 20% For taxpayers with income above $1 million – increase to 39.6%
Itemized deductions Various

Limit deductions for taxpayers earning over $400,000 to 28% AGI

Retirement Plan deductions They are deductible with limits. Eliminate deductions. Replace with a 26% flat tax credit.
Payroll Tax (that funds the Social Security Trust Fund)
6.2% payroll tax on income up to $137,700. Then $0.

Adds Payroll tax on people with income over $400,000 (wages between $137,700 and $400,000

will not be taxed). This creates the so-called “donut hole” of income that is not taxed.

 

It’s True, Wealthy Heirs Will Pay More in Taxes

There are many proposed changes for the estate tax.

Biden’s plan attacks and increases the estate tax in two ways.

  • It increases the estate tax rate from 40% to 45%.
  • It lowers the size of the estate that can be taxed from $11.7 million to $3.5 million.

Let’s walk through this a bit more – if this applies to you – this is a significant change.

The current estate tax level is 40%. Biden’s proposal will raise the estate tax to 45%.

The Biden tax proposal includes a lowering of the estate tax exclusion level.

Current Law

  • If you currently leave $11.7 million or less to an heir – it is not subject to the estate tax.
  • If you bequeath over $11.7 million – it would be taxed at 40% under current law.

Under the Biden tax proposal – this exclusion amount will revert back to pre-2017 Tax Cut and Jobs Act levels to $3.5 million.

  • This means: if you leave an estate worth over $3.5 million to your heirs – it would be taxed at a new higher 45% estate tax rate – if this proposal becomes law.

Many families will be affected by the proposed change to the estate tax.

It’s time to take action now to preserve and protect your wealth.

We can help you with that. There are more details below on what you can do now if this could affect your family.

Basis Step-Up at Death.  Currently – heirs pay NO capital gains tax. Under the Biden tax proposal – this is eliminated. Heirs would pay the capital gains tax. (A step-up in basis is the readjustment of the value of an appreciated asset for tax purposes upon inheritance, according to Investopedia).

How Gold Can Protect Your Wealth

Are you concerned?

Now is the time to take action and re-position some holdings to get in front of these proposed tax changes.

Gold bullion and rare coins have long been touted by trust attorneys as an efficient and discreet method of transferring wealth from one generation to another.

With the proposed estate tax level falling from $11.7 million to $3.5 million – that means many more families will be forced to pay the 45% tax rate. That significantly reduces the wealth you can give to your heirs – as the government will take a much larger portion of your family’s money.

Gold is an excellent vehicle for the private preservation of wealth.

If you or your family could be impacted by the proposed shift in the estate tax law, don’t wait. Contact a Blanchard portfolio manager for a confidential portfolio review – and to learn strategies to maximize your wealth transfer.

Coming next: Part two of this Tax series will discuss the elimination of key deductions you may rely on now.

Want to read more? Subscribe to the Blanchard Newsletter and get our tales from the vault, our favorite stories from around the world and the latest tangible assets news delivered to your inbox weekly.

David Zanca, Senior Portfolio Manager, holding slabbed coin with Blanchard signage in background

The investing world spotlight shifted to silver this week. The same group of Internet day traders that drove GameStop dramatically higher in January turned their focus to silver. While the online message boards touted silver ETFs at first, the news triggered a rush into the physical silver market. The U.S. Mint’s silver coin sales jumped 24% to 4.775 million ounces last month – that was the highest for a January since 2017. Several U.S. major bullion dealers ran out of silver on the last day of January. The buying frenzy drove the price of silver to an 8-year high and unleashed massive market volatility.

As widespread commentary about silver – some true and some not true – circulated on websites, we spoke with David Zanca, a 25-year veteran of the precious metals industry and Senior Portfolio Manager at Blanchard and Company, to gain the inside scoop on recent silver market developments.  

Editor: What type of misinformation are you seeing about the recent silver market volatility?

David Zanca: The most misleading statement is that there is no more silver available for investment in the United States. That’s not true.

I see dealers quoted stating that their demand over this past weekend was 10 times normal. That says nothing because their normal weekend demand could only be 10 ounces. It’s misleading.

Yes, there is a tremendous increase in a physical silver demand. But, do we know that it is 10 times? I don’t know.

Editor: What are you seeing in terms of silver pricing during the recent surge?

David Zanca: Some folks that are supposed to be legitimate firms are charging $12 and 15 over the spot price for silver products that can be had for only $6 over the spot price.

Editor: Let’s dive into what some of those terms mean in a minute. But, first, how are they getting away with that?

David Zanca: It’s because of the hype. There are many new, inexperienced and very excited investors – but they don’t know where to turn.

Editor: What drove silver prices to an 8-year high in the past few days?

David Zanca: The sleeping giant was awakened. The general public is concerned – and some are even fearful or angry – that the U.S. government is continuing to print money.

People work very hard to earn their money. Yet, the government devalues their hard work and their dollars by printing more money.

It’s not fair to anyone and especially to the average guy or the middle class.

Fear and anger are powerful motivators.

A new wave of investors is learning they can easily reduce their exposure to the U.S. dollar system – by trading their dollars for precious metals. We’ve seen the same phenomenon in bitcoin. Yet, metals are different because you can see it, you can hold it in your hands – gold and silver are tangible, physical assets. And, unlike the exploding paper money supply, precious metals have a very slowly increasing supply.

Editor: What was the trigger for this new wave of silver buying?

David Zanca: What happened is a lot of people started talking about it – and explaining how simple it was to trade dollars for metals. The Federal Reserve created the powder keg – by continuing to print money and devalue everyone’s wealth and work. And the Internet chat boards lit the fuse.

We are seeing more new clients than I have ever seen since 1994 when I first joined the precious metals industry.

People are scared. They read and hear about all this new money the Federal Reserve is printing and they know they need to protect themselves.

Now, it’s spreading like a wildfire. It’s spreading among people – how simple it is to trade your dollars for gold and silver.

Editor: Let’s talk about how the silver physical market is priced?

David Zanca: The basis for pricing a Silver American Eagle is the paper spot market.

When investment demand increases, those investors that own physical metals are rewarded because there is a limited amount of physical silver that can be used for investment.

When demand increases, the paper spot market price and the physical market price begin to separate and widen. 

For example, the paper price could just move sideways in a narrow trading range. But, if physical demand increases – the physical price will continue to climb – and that separation will become greater. That is sometimes referred to as the “premium” over spot price.

A premium is typically about $4-8 over the spot price, depending on the product.

Editor: What’s happened to silver premiums lately and why?

David Zanca: The premiums have gone up. There is a tremendous increase in demand for physical investment silver. And, that demand rewards those who own the physical metal – they can demand more for the physical than what the paper spot price is reflecting. This is why investors should own physical metals rather than any form of paper like an ETF or gold mining stock.

Editor: What is the spot and physical price now?

David Zanca: The price of a one ounce American Silver Eagle is $34.46. The silver spot price is $26.78. The premium is the difference between those two prices.  (Note: Current prices at the time of publication.)

When people see the spot price going down or not moving up as fast as the physical price – that is an indication that physical demand is rapidly accelerating.

Editor: Tell me again – how has the silver premium changed in recent days? It’s shocking.

David Zanca: As I mentioned, some folks that are supposed to be legitimate firms are charging $12 and 15 over spot for product that can be had for $6.00 over this spot.

Editor: How does Blanchard handle the premium?

David Zanca: We only move premiums when our costs rise.  Any rise in price is due to our underlying costs to acquire the product.

Editor: How are Blanchard’s supplies?

David Zanca: Multiple products like fractional gold are completely sold out. Quarter ounce gold is sold out. Silver supplies are tightening quickly. Some product is in a delayed delivery status. Delayed delivery is inconsequential as long as your dealer – the source you are purchasing from – will allow you to liquidate even prior to delivery. Here at Blanchard – we do that. I’m not aware of any other firm that will do that for a client.

Editor: How can a metals investor find out what the fair pricing is?

David Zanca:  New investors should try to actually speak on the phone to an advisor at the firm they wish to purchase from. At Blanchard, we create long-term relationships with our clients. We educate them and let them make an informed decision as to whether they want to invest or not.

Editor: What is the most important thing for new investors to know?

David Zanca: In years past, investing in gold and silver was regarded as a niche investment. Now, buying physical gold and silver has gone totally mainstream.

Precious metals are an incredible long-term investment appropriate for everyone’s portfolio. That importance is greater now than ever because of the actions of the Federal Reserve.

Supplies of silver have been getting tight for at least a year now. The Internet movement to buy silver only lit the fuse to the powder keg that the Federal Reserve built.

Precious metals should never be viewed as a short-term investment. Buying gold and silver bullion should be viewed as a vital portion of the long-term storage of your wealth.

Editor: What’s your outlook for silver over the next few years?

David Zanca: It’s incredibly positive, based on the massive increase that is taking place in the United States paper money supply.

The sleeping giant has been awakened. We are seeing new silver buyers coming from all areas of the country, all levels of income and all levels of wealth.

Yet, this is not just new investors. We are seeing this from long-term investors and high net-worth individuals that have that same frustration and concerns. They are trading out of dollars, out of bonds, out of CDs, out of money market funds, out of stocks they’ve sold, out of land they’ve sold and buying gold and silver bullion.

Many high net-worth investors tell me that they don’t trust the stock market right now. Bonds don’t pay anything, CDs don’t pay anything. Land, well, property ownership can be complicated.

Investors are concerned about a rapid rate of inflation.

They have no vehicle to protect themselves against that inflation other than physical gold, silver and rare coins, which have proven to be one of the absolute best hedges against inflation over time.

As long as the government continues to print money – there will be this intense demand for precious metals. The gold and silver that we are placing now may likely never come back to the market.

Editor: How can a new investor reach you or another portfolio manager at Blanchard?

David Zanca: Call 1-800-880-4653.

Editor: This was an enlightening interview. Thank you for your time.

David Zanca: My pleasure. 

Blanchard is the nation’s largest and most respected tangible assets investment firm. Blanchard is family owned and has served clients for over 40 years.

Blanchard has deep roots in gold’s history in America. It was in 1933 that President Franklin D. Roosevelt prohibited private U.S. citizens from owning gold. Decades later, Blanchard’s founder, Jim Blanchard, rose to prominence as a supporter of American’s right to own gold in the early 1970s. Jim Blanchard gained national attention when he arranged for a biplane to tow a banner proclaiming “Legalize Gold” over President Richard Nixon’s inauguration in January 1973. His lobbying efforts were a success and, after more than 40 years, Congress once again legalized private ownership of gold bullion effective Dec. 31, 1974.

Once the gold restrictions were lifted, Jim Blanchard founded the company in 1975 and helped build it into one of the nation’s largest and most respected tangible asset investments firms.

Want to read more? Subscribe to the Blanchard Newsletter and get our tales from the vault, our favorite stories from around the world and the latest tangible assets news delivered to your inbox weekly.

You bought Bitcoin because it was private. Now you have to check a box on page one of your IRS tax forms and show the government you have holdings.Pile of gold Bitcoin with white background

What’s next from regulators?

Well, it turns out that central banks are going to create their own digital currencies! And not use Bitcoin.

Yes it’s true.

In recent months central banks have become increasingly engaged in digital currencies. They know they run the risk of becoming irrelevant if they don’t control digital payments – so they are working to create their own.

Central banks don’t want to cede control of the digital currency world to Big Tech firms – like the Facebook offering Diem (formerly known as Libra). Here are just a few examples of how central banks are getting into the digital currency action.

Central Bank Digital Currencies (CBDC) projects are going forward all across the world. Here’s a few examples:

  • The Bahamas launched its CBDC, called the Sand Dollar, in late 2020. The Sand Dollar is a digital currency issued by the Bahamian central bank for use across the country via an app.
  • The Bank of England is creating a settlement service to support a CBDC. It awarded Accenture a $200 million contract to build out a new payments service.
  • The Bank of Japan appointed its top economist to oversee research on developing that nation’s CBDC.
  • China is testing its digital yuan. China recently gave away $3 million of its digital currency, the e-yuan, through a lottery to its citizens. “Winners will receive a so-called “red packet” via an app containing a maximum of 200 yuan of the digital currency. A hundred thousand of these red packets will be distributed,” according to a Dec. 6, 2020 CNBC article. Those who receive the digital yuan can spend it on JD.com’s online shopping platform.
  • Sweden is testing the e-Krona.

 Don’t expect the Federal Reserve to be far behind.

Where does that leave Bitcoin?

Former Trump advisor Gary Cohn told CNBC he thinks the world will have a global cryptocurrency that is not Bitcoin.

“In my view, [Bitcoin] is not scalable, is not secure, is not decentralized, is not a currency, and remember, many central banks, starting now with the Chinese one, the Swedish, but even the eurozone, are starting to think about creating a central bank digital currency,” Nouriel Roubini, a professor of economics at NYU’s Stern School of Business said. “Once you have a central bank digital currency, every individual can use an account with the central bank to do payments.”

Legendary investor and Quantum Fund co-founder Jim Roger says if cryptocurrency succeeds in being used as money, instead of primarily for speculation, governments will intervene, making it illegal in order to stop its use.

For this reason, “I believe that the [value of] virtual currencies represented by Bitcoin will decline and eventually become zero,” Rogers said. “It is hard for us to move money without the control of the government. The government wants to know everything. Controllable electronic money will survive, and virtual currencies beyond the influence of the government will be eliminated.”

Central banks are now getting into the digital currency game. Does that spell the death knell for Bitcoin? Maybe. The experts warn that it might and Bitcoin could go to zero.  

The evidence is building that if you’ve invested in Bitcoin, the time is right to liquidate, take your profits (while you still have them) and move to gold. Or, at the very least, scale down on your Bitcoin position.

You can then shift those profits into the other asset that central banks around the world continue to buy and hold – physical gold.

Gold. It’s in the midst of its own historic bull run – it’s an intrinsic store of value, a safe haven during crisis and a true hedge against the U.S. dollar and inflation.

We hope this Bitcoin article series has been useful. If you have questions, comments or would merely like to discuss this topic, please call a Blanchard portfolio manager today at 1-800-880-4653.

Part 1: Bitcoin Captures Imagination of Future Space Tourists

Part 2: Bitcoin at All Time Highs – What’s Next?

Want to read more? Subscribe to the Blanchard Newsletter and get our tales from the vault, our favorite stories from around the world and the latest tangible assets news delivered to your inbox weekly.

Bitcoin climbed nearly 40% since the start of 2021 – breaking through the $40,000 mark. That was followed by a quick 10% slip the last two days, falling below the $32,000 level. This highlights the wild volatility of cryptocurrencies. Bitcoin physical coins on American flag background with dollars

The escalating, hyperbolic, surge in Bitcoin has all the markings of a FOMO rally. That’s a term otherwise known as the ” fear of missing out.”

Yes, FOMO is running on full steam.  

Are you thinking of investing in Bitcoin now?

Before you do, consider this.

“Bitcoin crashed hard in 2018, losing about 80% of its value. Investors still don’t really know why,” according to a Dec. 17, 2020 Bloomberg article.

There’s an excellent chance that the Bitcoin boom is at a euphoric top. See the chart below.

Investors who buy into any market mania at this point in the cycle – often lose it all.

We’ve seen this before. And, no doubt we’ll see it again.

Tulip bulbs in 1637 in Holland. The South Seas bubble in 1720. The Dot.com bubble of the 1990’s which saw U.S. tech stocks crash 80% by October 2002. And the U.S. housing bubble which saw home prices nearly double from 1996 into 2006 and then crash in value by over 30% leading to the Great Recession of 2008.

Bitcoin market cycle image

 

 

 

 

 

 

 

 

 

 

 

 

 

What lies ahead for Bitcoin?

No one really knows.

Yet, we do know that smart investors take profits. There is an old market adage: “You can never go broke taking a profit.”

It’s not a true profit however, until you liquidate the position, sell it and get your money.

Don’t fall prey to recency bias

It is very common for investors to assume what has happened recently will continue to happen in the future.

Psychologists call this “recency bias.” It refers to the phenomenon where an individual more easily remembers recent events, compared to something that occurred in the past.

If you own Bitcoin right now, it could be easy to allow recency bias to impact your investing decisions. Beware. Simply put, the recency bias makes it easier for you to remember Bitcoin’s blistering rally in the first few days or 2021 versus the 2018 Bitcoin crash – where it lost 80% of its value.

Here’s the rub. Investors often mistakenly rely on recency bias to make investing decisions.

Don’t assume Bitcoin will continue to rise in value simply because it was soaring a few days ago.

There’s fear of missing out. There’s greed – hoping the price will go higher. There’s recency bias. None of these emotionally driven investing decisions usually work out well for investors.

It’s time to liquidate some or all of your Bitcoin position and move to gold. Take those profits as a gift – and turn them into something that can never disappear into thin air, get hacked, or crash to zero.

While there may be wild predictions for how high Bitcoin can climb, beware. There is still a significant lack of understanding on how the technology actually works, or how it could ever be used in commerce. And there are over 2,000 other cryptocurrencies – which means Bitcoin might not even be the right horse to bet on in the race.

Check back soon for our final installment in our Bitcoin series –where we will dig deeper into the regulatory environment which may trap investors in the future. And the solution that central banks see that could render Bitcoin useless. Please leave a comment or question below – we value your opinion!

Missed Article 1? Read it here: Bitcoin Captures Imagination of Future Space Tourists

We’d love to hear your comments and questions about Bitcoin below. Our portfolio managers are experts in the tangible assets field and are available to answer your questions and discuss the market outlook for gold and Bitcoin ahead. Please call Blanchard today at 1-800-880-4653.

Want to read more? Subscribe to the Blanchard Newsletter and get our tales from the vault, our favorite stories from around the world and the latest tangible assets news delivered to your inbox weekly.

 

What do an NFL player’s salary and paying for a hotel on Mars have in common?Bitcoins sitting atop paper money

The unlikely answer is Bitcoin.

Tech billionaire Elon Musk recently said any future economy on Mars could run on cryptocurrency.

But wait…will that cryptocurrency be Bitcoin?

No sir.

In fact, Musk suggested it could be the cryptocurrencies Dogecoin or Marscoin.

Many people don’t realize how many digital currencies there are!

As of January 2020, there are over 2,000 cryptocurrencies, Investopedia says.

That begs the question, if you are investing in crypto, how can you be sure you are betting on the right horse?

If you’ve been intrigued by Bitcoin and have even invested in it, you aren’t alone.

Everyone wants in on the action – even pro football players.

Russell Okung, a Pro Bowl tackle for the Carolina Panthers, tweeted back in May 2019 that he wanted to be paid a portion of his $13 million salary in Bitcoin.

While sports franchises do go to great lengths to keep their stars happy, this didn’t fly. “NFL players are paid in U.S. dollars,” a league spokesman said. However, Okung decided to convert 50% of his $13 million salary into Bitcoin.

Similarities and differences between gold and Bitcoin

For gold investors, it’s true. There may seem to be similarities between gold and Bitcoin. There are also important differences.

Scarcity

Gold. The physical metal has true scarcity – it is a physical commodity that must be mined from the ground. Eventually, we will run out of gold to mine, although when that will happen is still up for debate.

“While the growth in mine supply may slow or decline slightly in the coming years, as existing reserves are exhausted, and new major discoveries become increasingly rare, suggesting that production has peaked may still be a little premature,” Hannah Brandstaetter, a spokesman for the World Gold Council told BBC. As of now, the below-ground stock of gold reserves is currently estimated around 50,000 tonnes, according to the US Geological Survey.

Bitcoin. Scarcity has been one of the big drivers behind the recent speculative rally in Bitcoin.

Currently, the Bitcoin programmers have set a limit on the number of Bitcoins that can be mined at 21 million. But, unlike gold – there is no true scarcity.

“It’s possible that Bitcoin’s protocol will be changed to allow for a larger supply,” according to Investopedia. There’s nothing to stop the programmers from picking a new arbitrary number in the future.

A hedge against the U.S. dollar

Gold. Some gold investors are attracted to the metal’s proven diversification value and a hedge against the devaluation of the fiat currency. In the current era of Federal Reserve money printing, this is a legitimate concern.

Gold is an excellent choice to hedge against the U.S. dollar – as it is a proven store of value – with central banks and governments around the world recognizing that value. All major governments around the world themselves own tons and tons of gold.

Bitcoin. There’s no proof that Bitcoin will be a store of value, or that in fact governments won’t outlaw its use in the future – so it’s difficult to definitely say you can hedge against fiat currency with Bitcoin.

Privacy

Physical gold and rare coins offer investors the unique benefit of privacy. Indeed, many trust attorneys and retirement planning professionals recommend bullion and rare coins as an efficient and discreet method of transferring wealth to the next generation.

Bitcoin. Not so much anymore. The U.S. government is getting involved and they now ask you a question on page 1 of the 2020 U.S. Individual Tax Return.

The IRS wants to know:  

“At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest, in any virtual currency?”

Page 1 of IRS tax form indicating question about Bitcoin purchases

 

 

 

 

 

 

“When you sign the form, it’s under the penalty of perjury,” Ryan Losi, a certified public accountant at PIASCIK, a tax firm told Yahoo Finance. “The IRS is just gathering the data, changing the forms to expressly say you did or didn’t, and setting the trap, so in the coming years, the hammer can come down.”

Physical ownership

When you invest in gold, you take physical ownership. You can hold the gold in your hands. You can store it in your home safe or a safety deposit at a bank. Or, you can even elect to add physical precious metals to your IRA accounts.

Bitcoin. There is no physical ownership of anything. In fact, people have lost their Bitcoin to hackers, crooks and even by simply losing their Bitcoin private keys. Here’s just one story:

“A person in Switzerland had saved his Bitcoin private keys in a USB drive which he bought in 2009. In 2016, he transferred the file containing these private keys to his personal computer as the USB was on the brink of breaking. He thought he would buy another new USB and would save the files. However, before he could buy a new one and the software of the personal computer crashed and now, he had no back up of those private keys. The lost keys had the value of around $40000,” coinnounce reported.

Bitcoin isn’t real.

There’s no doubt there’s a speculative mania unfolding right now. But, remember the Tulip Bulb Mania in Holland in 1637. It is, of course, one of the most famous asset bubbles and market crashes of all time.

They were just tulip bulbs – just like you’d buy at your local garden center. Yet, “at the height of the bubble, tulips sold for approximately 10,000 guilders, equal to the value of a mansion on the Amsterdam Grand Canal,” Investopedia says.

Surely there are many predicting that Bitcoin will continue to climb in value. But, is this just hype?

Nouriel Roubini, a renowned professor of economics at NYU’s Stern School of Business, told Yahoo Finance in late December that Bitcoin and other cryptocurrencies have no place in retail or institutional investor portfolios. He stated that Bitcoin is not a stable store of value, it’s not an asset and has no intrinsic value.

Others warn that the Bitcoin boom may not hold up for much longer.

 “For all the reasons it’s a strong developing asset class, it may fail,” Gary Cohn told Bloomberg last month.

Cohn served as President Trump’s first National Economic Council chief, holding the post until April 2018, spearheading the successful effort to roll back taxes. Prior to that, Cohn served as president and chief operating officer of Goldman Sachs for 26 years.

Cohn explained the Bitcoin “lacks some of the basic integrity of a real market.”

What’s your next move?

If you’ve invested in Bitcoin, you’ve likely made a significant profit. Given the uncertainty of what may lie ahead – including Bitcoin potentially crashing to zero, it may be worth considering cashing out of your crypto position – or taking a portion of those profits and turning them into a proven store of value – like physical gold.

Check back soon. We’ll continue to analyze the environment for Bitcoin and present our findings. Learn more about the government’s regulatory appetite to get involved in the crypto marketplace. And we’ll look at what central banks are doing now regarding digital currencies and what that could mean for Bitcoin ahead.

We’d love to hear your comments and questions about Bitcoin below. Our portfolio managers are experts in the tangible assets field and are available to answer your questions and discuss the market outlook for gold and Bitcoin ahead. Please call Blanchard today at 1-800-880-4653.

Want to read more? Subscribe to the Blanchard Newsletter and get our tales from the vault, our favorite stories from around the world and the latest tangible assets news delivered to your inbox weekly.

By David C. Zanca, Senior Portfolio ManagerThree gold bars sitting atop financial documents

Winter follows fall, and summer follows spring.

The seasons of nature act as a leading indicator for what comes next. After the leaves drop from the trees in September and October and the temperatures fall – winter follows. After months of snow and shorter days, warmer temperatures and longer days announce the arrival of spring.

In the economic realm, employment and consumer spending are considered leading indicators. These important data points signal whether the economy will grow or shrink in the months ahead.

Since the 2008 financial crisis, a leading indicator emerged for the price of gold. The indicator offers a perfect and obvious timeline.

What is this leading indicator for the price of gold, you wonder?

Let’s take a look at this chart of the price of gold from the St. Louis Federal Reserve. The red circles highlight key Fed actions we will describe below.

FRED Chart Gold Fixing Price from 2008-2020

 

 

 

 

 

 

 

 

Fed Began QE1 in December 2008

In response to the Global Financial Crisis, the Fed announced a new program called Quantitative Easing (QE1) in late November 2008. The Fed stated it would purchase up to $600 billion in mortgage backed securities and agency debt.

Quantitative easing is a policy by the Fed in which they buy government bonds, corporate bonds and other assets in an attempt to inject liquidity into the economy and stimulate economic growth.

What did gold do? Gold bottomed just prior to this announcement at $731.50.  By November of 2010 gold climbed to $1375 per ounce. 

Fed Began QE2 in November 2010

In early November 2010, the Fed revealed it would purchase $600 billion of longer dated treasuries, at a rate of $75 billion per month. QE2 was announced in November 2010 and ran until June 2011. 

What did gold do? During QE2 the price of gold soared from $1,375 to nearly $1,900.

Fed Began QE3 September 2012

In mid-September 2012, the Fed signaled it was launching yet another round of quantitative easing known as QE3. This new round included an open-ended commitment to buy $40 billion agency mortgage-backed securities per month in an effort to improve the labor market.

What did gold do? From a summer 2012 low around $1,600, gold climbed to nearly $1,800 in the fall of that year.

December 2015: First Fed rate hike in nearly a decade

Fed interest rates sat at 0% from December 2008 until December 2015.

In a historic move the Fed attempted to begin a new trend toward higher interest rates with a 0.25% basis point increase in the Fed Funds rate to 0.25-0.50%. In fact, at its December meeting, the Fed stated it planned to raise interest rates four times in 2016.  

The stock market reacted violently to the removal of its punch bowl – and the Dow plunged over 2,000 points.

Investors knew the truth – the Fed would not be able to sustain interest rate hikes and begin to remove liquidity from the financial system.

What did gold do? In December of 2015 gold bottomed out at $1,070 per ounce.  Gold began to climb in value right after the rate increase as the stock market plunged. Within a few months, the Fed backed away from its claims of continued interest rate hikes. Gold rose $300 per ounce over the next four months.

Bottom line: Zero percent interest rates have become an ingrained and integral part of our financial system, which allows the stock market bubble to perpetuate.

March 2020 – Fed’s emergency COVID actions

The Fed unleashed a historic and unprecedented round of monetary actions in March 2020 aimed at stemming the economic reaction to the COVID pandemic. The Fed slashed interest rates to 0% once again, announced new corporate bond purchases and printed trillions of new dollars throughout the year.

The Fed became both the buyer of last resort and the seller of last resort through emergency actions that ultimately devalued the fiat currency and pushed the U.S. dollar index lower by 10% last year. Overall, the Fed expanded its balance sheet by nearly $3 trillion in 2020 to a record $7.4 trillion.

What did gold do? Gold rallied to a new all-time record high at nearly $2,070 per ounce in 2020 – fueled by the Fed’s massive money printing, QE policies.

What is the number one leading indicator for gold?

It is easy to conclude that it is Federal Reserve quantitative easing policy.

The timeline we’ve discussed today reveals a direct connection between the Fed’s loose monetary policy and quantitative easing and a steady rise in the price of gold.

What’s next for gold? Heading into 2021, the Fed and the government appear poised to deliver more of the same – 0% interest rates and more quantitative easing.

Congress passed a new COVID emergency stimulus bill in December, which simply means more quantitative easing. Many expect more emergency stimulus in 2021 as well.

Using history as our guide, these forces will drive gold higher and higher in the months ahead. These Fed policies act as a leading indicator for gold and signal higher prices ahead. The Fed has already stated it won’t even consider raising interest rates in 2021. Do you own enough?

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Inflation is coming. Are you ready?

Listen to what these three luminaries said about inflation:

  • Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man. – former president Ronald Reagan
  • In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. – former Federal Reserve Chairman Alan Greenspan
  • Inflation is taxation without representation. – Milton Friedman, Nobel Prize winning economist.

You can’t hide from inflation

Have you thought about what inflation could mean for your accounts in 20 or 30 years?

With average inflation, over 20 years, prices historically have doubled.

Everything you buy today – in 20 years will cost twice as much. Will you be able to maintain your standard of living when that happens?

And, that’s only if inflation stays at the low levels that we’ve seen in recent years. That’s not likely.

If – as experts believe – inflation picks up significantly due to the monetary policies from the Federal Reserve, in combination with skyrocketing debt levels and a weakening U.S. currency – prices could double or even triple much sooner than 20 years.

Peering into the future – the debt dilemma

The COVID pandemic in 2020 triggered massive government spending which sent the national government debt spiraling higher to new record highs above $17 trillion. Alarm bells are going off – yet policymakers just spend more. The ballooning government debt is out of control and exposes are nation to a dangerous economic future.

How high could our nation’s debt go?

Right now – it’s on a vertical climbing path – straight up.

“By the end of 2020, federal debt held by the public is projected to equal 98 percent of GDP. The projected budget deficits would boost federal debt to 104 percent of GDP in 2021, to 107 percent of GDP (the highest amount in the nation’s history) in 2023, and to 195 percent of GDP by 2050,” according to the non-partisan Congressional Budget Office (CBO).

Here’s what else the CBO said: “High and rising federal debt makes the economy more vulnerable to rising interest rates and, depending on how that debt is financed, rising inflation. The growing debt burden also raises borrowing costs, slowing the growth of the economy and national income, and it increases the risk of a fiscal crisis or a gradual decline in the value of Treasury securities.”

Hard assets will soar

As government debt continues to climb, inflation will grow and the value of hard assets like physical gold, silver and real estate will soar.               

Looking back to early 1980 – when consumer inflation surged to nearly 15 percent, what did gold do? “Gold more than kept pace, hitting a then-record $666.75 an ounce after a fifteen-fold rise over the previous decade,” according to a Reuters article.

Gold is already in the midst of a historic bull market – up 24% this year – with a new all-time record high. The experts predict even higher prices ahead in 2021 – with $3,000 an ounce forecast. In the coming years, gold is set to soar.

Inflation hurts stocks

Investing in stocks is riskier than any point in history – especially for those looking to preserve their nest egg.

Here’s what billionaire investor Warren Buffett wrote about inflation in his classic piece for Fortune magazine in 1977: “The arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislatures. The inflation tax has a fantastic ability to simply consume capital. … If you feel you can dance in and out of securities in a way that defeats the inflation tax, I would like to be your broker — but not your partner.”

Stocks fall (or plunge) during rampant inflation because it reduces how we value future income – as inflation eats away at that future value. A stock’s price is a risk-adjusted value of a company’s future cash flow – and inflation reduces that to fall in value.

Stocks are not the answer in an inflationary environment. Inflation destroys stock market wealth and breeds fear among stock investors.

Inflation can cause interest rates to skyrocket

History is quite clear on what inflation does to interest rates – it sends them shooting higher. In fact, we saw double-digit interest rates in the early 1980s.

With inflation raging as high as 11.6% in 1980, Fed Chair Paul Volcker took action.

He raised the Fed funds rate to nearly 20% — which sent 30-year mortgage rates to a high of 18.63% in 1981, according to data from the Federal Reserve Bank of St. Louis. How could you ever buy a house with mortgage rates that high!

These double-digit numbers may sound unbelievable. But, it wasn’t that long ago – only 40 years. You bet it could happen again – and in fact the Fed is creating the environment for that now!

Inflation: what happens to your money in the bank? 

Rising inflation also severely impacts any money you have sitting in the bank.

While you may get a tiny amount of interest from a CD, savings or money market account, the growth of inflation overtakes that interest – meaning your actual money, the purchasing power of it – is falling in value. Inflation destroys the value of your money.

You can protect your accounts against inflation

Inflation is a deadly, scary and corrosive economic force. And, the government and Fed are setting this country up for another bout of severe inflation in the years ahead.

There are ways you can protect your financial future, even in an inflationary environment.

You need to buy assets that rise in value – as inflation climbs – and that is exactly what gold does.

Here’s what one of Donald Trump’s top economic advisors during his 2016 presidential campaign said about gold.

  • Historically, gold has always been a safe haven against inflation and a safe haven in times of political instability. – John Paulson, billionaire hedge fund manager

Protect your assets with gold

The U.S. economy’s instability is like a ticking time bomb. Are you looking for a way to protect your savings and investments?

Owning physical gold and silver is a time-tested, historic hedge against inflation. It’s a simple solution that can protect your financial future. Do you own enough?

 

If you have questions about how inflation could impact your investments, or your financial future – please contact a Blanchard portfolio manager. We can also provide customized recommendations on tangible assets best suited for your personal circumstances, goals and investing time-horizon.

Read Part 1 of our inflation series here:

Are You Prepared for the Inflation Tax?

Read Part 2 of our inflation series here:

Inflation and “Good” Money

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In early societies items like shells, beads and even clay tokens were used as money.

Ancient societies then advanced to using precious metals including bronze, gold and silver as the basis for their monetary systems.

What defines “good” money?

The key element that is essential to good money is something that maintains its purchasing power over time.

Whether it’s a shell or a dollar bill, good currencies retain their value against a basket of consumer goods over time.

That’s important – because inflation – or the steady increase in goods and services has climbed higher over the past 50 years.

Figure 1 below represents the Consumer Price Index for city dwellers for items in U.S. cities.

FRED CPI chart

 

 

 

 

 

 

 

 

There’s no getting around it – prices of everything simply rise over time.

If you think inflation won’t impact you, we’d like to walk you through some important charts to reveal what is happening in today’s unprecedented times and how inflation and decreased purchasing power could severely impact what you can buy in the future.

Declining purchasing power

When the currency you are paying for your goods and services falls in value – and prices rise – you can buy even less with the same dollar.

Figure 2 shows the U.S. Dollar Index. Note its spotty performance over time – and how the value of the U.S. dollar plunged lower throughout 2020 (shaded in yellow on right side). 

FRED Trade Weight Chart

 

 

 

 

 

 

 

 

Gold and silver are currencies too.

Central banks around the globe still hold and actively purchase gold for their vaults. Why? Because it is a currency. Precious metals have recognized value in every corner of the globe.

Figure 3 below shows the value of gold. Note especially the sharp rise in value over the past 20 years. Gold hit new all-time highs in 2020 and many firms forecast more new all-time highs next year as well.

FRED Gold Fixing Price Chart

 

 

 

 

 

 

 

 

Gold is in rising or bull market.

Why is gold rising?

One of the drivers of the bull market in gold are policies from the U.S. government – that includes Congress, the Treasury and the Federal Reserve.

Chart 4 below shows the U.S. national debt – which hit a new all-time record high in 2020 –above $27 trillion!

FRED Federal Debt Chart

 

 

 

 

 

 

 

 

You’ve heard about our record levels of government debt, right?

You can see the most recent debt statement from the Treasury here – yes, over $27 trillion.

That’s one big credit card bill.

Sadly, as we mentioned last week – foreigners no longer have the appetite to buy as much of our Treasury debt. Foreign buyers used to hold more than half of outstanding U.S. Treasury debt.

Now, the Federal Reserve has had to step in and buy Treasury debt.

If this reminds you of a pyramid scheme – you wouldn’t be too far off.

This is how it works. Congress spends the money. The Treasury issues debt like 30-year bonds, 10-year notes and 1-year T-bills to pay for the spending.

If foreigners and Americans don’t buy enough of this debt in the weekly Treasury auctions – the Federal Reserve steps in and buys the debt.

How does the Fed pay for the debt? With its newly printed money.

In fact the Fed has printed over $1 trillion in new money in 2020 to purchase Treasuries, according to USA Today.

It’s just like when someone moves personal debt from one credit card to a new 0% APR card, runs up the bill on that one then does the same thing over again. The government is just moving the debt around and it doesn’t actually get it paid off.

If this worries you, you aren’t alone.

These policies set the stage for dramatically higher inflation ahead here in the United States – while the value of our dollar decreases with ever-more money printing.

Why are investors turning to gold and silver today?

It’s simple. The purchasing power of precious metals is rising.

Consider this.

In 1921 a 1 ounce silver Morgan Dollar would put about half a tank of gas in a car.  Today that same Morgan dollar would FILL your gas tank!  A paper dollar bill today barely would put enough gas in the car to get you from the gas station to the grocery and back home.

The purchasing power of gold and silver is increasing, while the value of fiat – or paper money – is decreasing due to rising government debt and money printing.

What’s in your portfolio?

Many American investors and savers have limited currency diversification – meaning the majority of your assets are held in the U.S. dollar – through stocks, bonds and savings accounts.

Yet, very few savvy investors would hold a portfolio with 100% exposure to a single stock. Yet, in essence – when you hold a portfolio with just one type of money – U.S. dollars – you are in fact doing just that.

Here’s what one economist says:

“There is a lot of heated debate about governments’ inability to keep the money safe. But many investors/savers nevertheless have one-sided exposure to their own country’s money. The US is the most extreme example of that, with a large proportion of investors only holding USD assets.

This is odd (and different to how investors handle currency risk in emerging markets). Very few prudent investors would hold a portfolio with 100% exposure to one stock. But at the same time, they are happy (or not sufficiently concerned) about holding a portfolio with just one type of money, such as dollars. This is a particularly risky proposition in a time with historically large fiscal deficits, and increasingly experimental monetary policy,” said Jens Nordvig, founder & CEO at Exante Data Inc.

The time is right to increase your diversification to gold and silver.

Precious metals are commonly known as hedges against inflation. And, these tangible assets will benefit from the skyrocketing government debt. The current environment makes gold and silver important choices to protect a portfolio.

What are you doing to protect your financial future?

Follow Our 3-Part Series

Read Part 1 of our inflation series here:

Are You Prepared for the Inflation Tax?

Check back next week for the third installment of our inflation series. We will discuss how much debt our country could have in the future, what will happen to hard assets, other assets and interest rates and what happens to your money in the bank?

Looking into the Crystal Ball for 2021David Beahm Blanchard CEO

It’s that time of year again.

This is when investment firms begin to roll out their forecasts and projections for 2021.

Degussa recently unveiled its 2021 outlook report. Their take on gold? Look for gold to climb to $2,500 an ounce by mid-2021, they say.

“It appears that the savvy investor has quite some reason to expect that interest rates will remain very low in the foreseeable future, simply because overall indebtedness has become too high. Central banks are unlikely to withdraw their support for the economies and financial markets in particular,” the analysts said.

Here’s another. The Wells Fargo Investment Institute released a report on Nov. 25 stating: “our projection through year-end 2021 calls for gold prices to hit a new all-time record high.”

A weaker dollar, low real interest rates and government deficit spending should support gold prices, the Wells Fargo strategist said.

With these bullish gold forecasts as a backdrop, you may be wondering why gold fell last week.

It’s simple. The stock market remains divorced from the economic realities – just as it has throughout much of 2020’s wild ride.

Premature optimism

Investor risk appetite surged last week. While COVID vaccine optimism drove stocks higher, safe haven assets including the U.S. dollar and gold weakened. Indeed, three pharmaceutical companies have now developed successful COVID-19 vaccines, with AstraZeneca the latest company to report positive findings.

Yet, the manic stock market action reveals frothy sentiment and on-going divergence with underlying health and economic situation.

Vaccines could eventually end the COVID pandemic. But the economic impact will be with us for years to come. Consider this.

One hundred thousand small businesses closed permanently. Over eleven million Americans remain out of work. It’s not just small businesses that shut down. Big companies like luxury department store Neiman Marcus, JC Penney, Pier 1 Imports, Hertz, Brooks Brothers and Ruby Tuesday filed for bankruptcy this year.

Despite the positive vaccine news, it still could take up to six or seven months before there are enough vaccines for the entire American population. And, the big question remains – will Americans take the vaccine?  Would you?

As COVID infections now rise exponentially throughout the United States,  America leads the world with the highest number of infections at over 13 million, according to Johns Hopkins University. COVID vaccines are unlikely to be widely available until summer 2021 – and the economy still faces severe distress. This isn’t over yet.

Frothy sentiment gauges – red warning flag

Key sentiment surveys reveal that the stock market ebullience is poised for a fall.

The widely watched Investors Intelligence U.S. Advisors’ Sentiment Report saw the number of stock market bulls climb to 59.6%, just below the extreme level of 60%. That marks a 3-year high.

The last time stock market bulls registered a reading this high was August 2020 – right before a 10% crash in the S&P 500.

Fed’s cure leaves big hangover

Big picture, the Fed’s prescription for the COVID crisis this year – printing trillions of new dollars out of thin air – leaves behind a severe hangover that no vaccine can cure.

The Fed’s policies continue to devalue our dollar – there’s no cure for that. Inflation is coming. Count on it.

Gold: the building block for a strong portfolio

Despite the recent pullback, gold remains 17% higher on the year – that’s still stronger than most major assets.

Looking ahead, gold is one of the key components of building a balanced portfolio designed to provide stability and long-term growth.

Once the current stock market mania subsides, investors will pile into gold again – as investors look for an asset which is a proven hedge against the debasement of fiat currency, has a reliable track record of producing returns and an asset that can be owned outright with no government liability. Lastly, because the world gold supply is limited – gold has nowhere to go but up – over the long-term.

I would like to personally wish you and your loved ones a very happy and safe holiday season. Here’s hoping for a less chaotic 2021!

Best,

David

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With the U.S. dollar index down 10% this year and inflation stirring, it’s a great time to diversify with blue chip rare gold.

A generation ago, it was common to find rare coins, collectible books, art masterpieces and extensive wine collections only in the homes of the wealthy upper class.

Today, investor movement toward alternative stores of value has exploded.

In fact, middle class investors want in on these smart money tangible investments too – as a method to diversify their portfolios, protect their assets and grow their wealth. Interestingly, technology plays a part in opening access to these asset classes to middle class investors.

For example, there are start-up companies that now allow investors to buy small portions (shares) of art masterpieces, or a wine investing platform that allows you to invest in wine without having to store it yourself.

So why the rush into alternative assets?

Inflation is pushing investors into alternative stores of value.

Zero interest rates mean bond investors lose money on their investments after inflation. Even worse, the U.S. dollar index has tumbled 10% in 2020 alone. This comes as “real concerns around the longevity of the U.S. dollar as a reserve currency have started to emerge,” wrote Goldman Sachs analysts in a recent research note.

The Federal Reserve is devaluing the U.S. dollar by printing trillions of new dollars this year alone, as it pumps unprecedented amounts of cash into the economy.

While the pandemic rages on in 2020, the precious metals and rare coin sector is glittering. Gold hit a new all-time high above $2,000 an ounce earlier this year. The rare coin values index hit new all-time highs throughout the summer months. Indeed, history shows us we are just at the starting point. We are on the cusp of a new multi-year bull market in rare coins, thanks to building inflation pressures.

Gold is off its highs but is still up 23% for the year. Silver is up 34%. That compares to a 5% gain in the S&P 500 index and a 0.80% yield on U.S. Treasury notes.

Simply put, investors are turning to alternative stores of wealth like numismatics, gold bullion, cars, art, sports memorabilia, wine and whisky because inflation is on the rise and the U.S. dollar is weakening.

The Fed let the inflation genie out of the bottle

In order to have inflation you must have a huge amount of money that has been created out of thin air by the Fed.  Of course, the Fed has already done this. Never before in history has there been so much excess cash sloshing around in the U.S. financial system.

Second, you need that money to change hands and the faster it changes hands, the more inflation rises.  If you look at the following chart from the St. Louis Federal Reserve, you see that the velocity of money has never been lower. The velocity of money simply means the number of times one dollar can be used to purchase final goods and services included in GDP.

FRED chart

Money velocity is going to change. As you can see, the drop off in 2020 has been huge and quick.  That can go the other way as well. 

For investors, now is the time for you to prepare for wealth storage and preservation.  Because if you wait, it could be too late.

Some may ask, if inflation is an increase in money and credit beyond the growth requirements of the economy, then why don’t we see inflation, or hyperinflation, today?

Step one is increase the money supply as much as you can.  Of course, we have witnessed that over the last several years with the massive Fed money printing.  What we have not seen is the turnover of that money.  Once that increases, inflation will move upwards very quickly. 

Inflation starts slow, but then heats up fast

Think about inflation as the oven you just turned on to 500 degrees.  At first you can put your hand inside and feel a little heat.  Ten minutes later it is 500 degrees.  It happens very slowly at first. Then very fast.  Well, the oven has been on for a long time and the Fed just keeps turning the oven up.  Its warm right now but it will be too hot to touch in the very near future.

The Fed has set the stage for a new bull market in rare coins. We are on the cusp of that now.

Here is another chart – the PCGS Key Dates and Rarities Index from 1970-2019. This shows you how significant the 2001-2008 rare coin bull market truly was. Today, we are in the early stages of another rare coin bull market just like we saw begin in 2001.

PCGS3000 chart key dates and rarities index

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rare coin market tightens as investor demand grows

Here at Blanchard, 2020 has seen numismatic investor interest shift from mid-level rare coins, to ultra-rarities. Indeed, the high end of the rare coin market is tighter than its been in over a decade.

Not long ago, clients had their pick of coins in the $10,000 to $30,000 level.  Now, coins in that price range have become nearly nonexistent and those that are located are placed immediately.

For instance, CAC graded rarities are extremely scarce and hard to come by right now. That compares to this same time last year, and we could source almost any coin with a CAC sticker.

Here are some rare coins that are on the cusp of a multi-year bull run that we’ve recently sold. We can’t keep them in inventory – they sell as soon as we are able to source them.

  • 1854-O $20 Liberty
  • 1907 $20 Saint GaudensFlat Edge High Relief HI FLT
  • 1866-S $20 Liberty
  • 1931-D $20 Saint Gaudens
  • 1920-S $10 Indian
  • 1907 $10 Indian Wire Edge
  • 1911-D $2 1/2 Indian
  • 1863 $1 Gold Deep Cameo

Weaker dollar, rising inflation impacts all alternative asset classes

It’s no surprise the ultra-rich still favor alternative stores of value.

The results of the 2020 Knight Frank Luxury Investment Index revealed that ultra-high net worth individuals, or those with a net worth of over $30 million, continue to favor cars, wine, coins, rare whisky and art as an investment. And those categories outpaced luxury investments (like stamps, colored diamonds, watches and handbags) over a 10-year period.

The report found that rare coins are up 175% in past decade.

How are other assets classes doing now?

In a Knight Frank Luxury Investment update last week, the firm found that the art market has been reined in by COVID-19 and the classic car sale market has also slowed.

The top end of the art market has been particularly badly affected by the pandemic.. According to a report by analyst Clare McAndrew, published by Art Basel and UBS, gallery sales dropped by 36% in the first half of the year compared with the same period in 2019.

Meanwhile, the auction market for classic car sales has downsized. “In terms of [classic car] prices you could probably say the market has plateaued for now,” says Dietrich Hatlapa of HAGI.

Meanwhile, in 2020 the rare coin market is red hot. Numismatics offers you the best alternative store of value among tangible asset collectibles.  

We are in the early stages of rare coin bull market

Remember, in 2001-2008 coin values went up by a lot. We are in the beginning of that phase now.

How do rare coins fit into your financial picture?

Blue-chip rare gold is the place to park your dollars right now.

Look for proof gold, early gold, early silver, branch mint gold, high reliefs, and world-class rarities. It’s a great strategy at the right time. Independent research confirms it. Professor Lombra’s data is solid, and the findings are very clear: allocate toward high-end rare coins. If you haven’t read the report, please read the details now.

Why you should consider blue chip rare gold now

Sadly, the decline of a once-great economic power is well underway.  This pandemic has only increased the fall…

The government has killed the golden goose and, in an attempt to hide the obvious, it is devaluing the U.S. dollar, fast. This ultimately will lead to inflation.

It’s Economics 101.

Inflation is on the way. Right now, gold and rare coins are in the beginning of what could prove to be the strongest bull market for gold and rarities on record. In all likelihood, there are years of growth ahead in these markets.

The Great Inflation period from the 1970’s and early 1980’s shows us when inflation becomes institutionalized, collectibles that tend to appreciate in value the fastest are those that are portable and private – like numismatics.

In late 1970’s values of collectible stamps and coins rose at a rate of 20 percent a year on average.

Looking ahead, there is no end to future inflation in America. Our country has created a noose around our economy’s neck. The long-term outlook is for continued debasement of the U.S. dollar’s buying power.

To strategize for such a time, it becomes prudent for you to develop a game plan based upon solid information. We will say it again: blue-chip rare gold is the place to park your dollars right now.

If you need assistance identifying and sourcing coins, please call a Blanchard portfolio manager today. Inflation is a clear and present danger to our economy and your future wealth. Yet if you act now, you can protect your wealth in a proven asset class – numismatics. We are happy to answer any questions you may have and can guide you through the process to identify what coins are best suited to help you meet your long-term financial goals.

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