Page 25 – Blanchard and Company

Gold Rises After Fed Rate Hike as Inflation Sizzles at 40-year High

Posted on July 27, 2022May 22, 2025 by Phoebe Wehrman

The Federal Reserve hiked interest rates by .75 basis points Wednesday afternoon, pushing the Fed fund rate to 2.25-2.50%. This marks the fourth-rate hike by the central bank this year. Yet, as CPI inflation ratcheted to another fresh 40-year high at 9.1% in June, it is evident that the Fed is losing its battle in the fight against inflation.

Spot gold climbed after the Fed announcement, recently changing hands at $1,737 per ounce. Gold has been gaining in recent days, climbing from a recent low of $1,693 on July 20. Long-term investors saw the retreat under $1,700 an ounce as an excellent buying opportunity, especially as the weakness in the U.S. dollar means you get more gold for your dollars right now.

In today’s post-meeting news conference, Federal Reserve Chairman Jerome Powell stated he doesn’t believe the U.S. economy is in recession. However, investors may be wise to take this analysis with a grain of salt, given the central bank’s insistence that 2021 inflation would be “transitory.”

Second quarter gross domestic product (GDP) data is due out on Thursday. A negative reading would fulfill the “rule of thumb” definition of a recession, which is: two consecutive quarters of negative GDP growth. In Q1, the U.S. economy shrank by 1.6% and the Atlanta Federal Reserve gauge has projected an economic decline of about the same amount for Q2.

In today’s economic environment – with the stock market firmly in a bear market and inflation at 40-year high – it reminds us that there are things we cannot control. However, investors should focus on what they can control, including portfolio allocations that protect and hedge your hard-earned wealth.

With the S&P 500 down 15% year-to-date, and the U.S. Government Fixed Income Index down 10% year-to-date, gold is one of the best performing asset classes of 2022, with a 4% decline.

Holding gold today is once again providing proven support to your portfolio – reducing overall draw-down levels and providing diversification against non-correlated paper assets. Economists are forecasting renewed weakness in the U.S. dollar later this year, as the Fed faces the reality that it will need to pull back on rate hikes to support the weak economy. And that will open the door for gold to power sharply higher, especially as inflation remains at red-hot levels.

Indeed, Goldman Sachs recently raised its year-end gold price target to $2,500 an ounce. For long-term investors, the current levels in gold offer an attractive buying opportunity. If you are considering increasing your allocation to gold, now is the optimal time to enter before the next powerful up leg in gold prices.

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Do You Know Your Great-Great Grandmother’s Name?

Posted on July 27, 2022May 22, 2025 by Phoebe Wehrman

Answer quickly: what are your great-great grandparent’s names? If you don’t know, you aren’t alone. The reason I ask is that when you get to a certain age in life, some people begin to consider their legacy and how they will be remembered throughout the generations of your family that will come after you.

We live in an era where time moves fast. In a few short decades, we’ve seen the introduction of the Internet, Google, iPhones, texting and all sorts of technology that has sped up our lives.

For tangible asset investors, building a numismatics portfolio is an opportunity to slow down time, to assemble a collection of rarities that represent our nation’s history throughout time measured in hundreds of years, as opposed to nanoseconds. It is an opportunity to build a legacy that can be treasured by your children, your grandchildren and your great-grandchildren.

When Blanchard places a significant rarity with a collector, they became not only an investor but a preservationist of American history and safe keeper of the beginning of our nation’s monetary system. These legacy investments not only preserve and increase wealth, but also preserve and honor United States history.

Here’s a snapshot of a few of the flagship rarities we’ve placed in 2022.

The 1794 Flowing Hair Dollar

The 1794 Flowing Hair Dollar was the first dollar coin issued by the newly established United States federal government and represents the beginning of the American monetary system.

The 1808 $2½ Capped Bust (Quarter Eagle)

Collectors call the 1808 $2.50 Capped Bust a “stopper coin.” (Stoppers are the coins that present the greatest difficulty in completing a set.) From the day this Quarter Eagle was minted it was a rarity, with only 2,710 coins produced. The few collectors who are fortunate to own this 1808 Quarter Eagle have the most sought-after coin to complete their set.

The 1848 $10 Liberty Proof

Only two of these coins are known to exist. One is not available for private ownership and is safely ensconced at the Smithsonian, as a highlight of their National Numismatic Collection. The coin Blanchard placed has an impressive pedigree and had previously been part of the John J. Pittman Collection, one of the most famous numismatic collections of all time. The $10 Liberty Head No Motto was minted from 1838-1866.

Leaving your legacy: it’s personal

Perhaps one of the best aspects about building a collection of tangible assets to pass down to your loved ones is that it’s personal. Numismatic collections are unique and one of a kind. They represent not only significant wealth and value – but also United States history, your passions and, ultimately, are a reflection of you and your hand-picked choices over time. Hand-picking coins for your heirs allows you to leave your signature on your estate in a much more meaningful way than passing down a brokerage account.

Another benefit of leaving your legacy through a numismatic collection is the private transfer with little to no paperwork. Owning rare coins or gold bullion is a simple and private method to transfer wealth to whomever you choose. If you have a bank safe deposit box or a home safe, you can simply leave instructions or inform your family where to find and retrieve your coins or bullion. Simply put, whoever holds it, owns it.

Blanchard continues to make numismatic history with its flagship placements. We can help you build your legacy too, and help you create a collection that your great-great grandchildren can appreciate. Anyone is capable of building a long-lasting collection of significance, no matter your budget. If you’d like to explore options to meet your personal goals, risk-tolerance level and budget, please contact a Blanchard portfolio manager today.

It’s the Dollar, Stupid

Posted on July 25, 2022May 22, 2025 by Phoebe Wehrman

The 1992 presidential campaign slogan, “It’s the economy, stupid,” reflected the Democratic contender’s view that the Republican incumbent was out of touch with the economy. Bill Clinton ultimately did prevail against George H.W. Bush in that contest.

Investors today may be wondering why gold isn’t performing better – especially with inflation at 40-year highs and a potential recession looming on the horizon. With all due respect and no insult intended, we gently remind investors “It’s the Dollar, stupid.”

The rising U.S. dollar has been a weight on gold throughout 2022 – as the greenback climbs to its highest level in decades. Aggressive action from the Federal Reserve to hike interest rates to combat inflation has sent the U.S. dollar soaring against all the major currencies including the Japanese yen, the British pound sterling and the euro.

Measuring dollar strength

The key measure economists use to gauge the dollar’s strength is a basket of currencies that includes our major trading partners like Japan and the Eurozone. Using that measure, the U.S. dollar has climbed to a 20-year high, while the U.S. dollar spot index itself has climbed 12.6% this year.

What’s more, recently, the yen slid to a 24-year low against the U.S. dollar and the euro retreated to parity – or a one-for-one exchange rate – the first time since 2002.

For U.S. investors, this makes gold look cheap.

For foreign buyers of gold, however, the precious metal has become extremely expensive. In fact, this year, the price of gold – priced in Japanese yen hit an all-time record high.

While gold is down about 6%, priced in U.S. dollars, the commodity sector remains the best performing asset class of 2022. This year, all five equity asset classes registered double digital declines, yet the Bloomberg Commodity Index posted a 13.4% increase through mid-July.

What does this mean for you? For precious metals investors, the recent retreat in gold prices means you will receive more gold for your dollars if you buy precious metals now.

Looking ahead, the Federal Reserve may be forced to abandon its aggressive interest rate hike campaign if the U.S. economy falls into recession. That could open the door for the U.S. dollar to pull back and for gold to climb in the second half of this year. Indeed, Goldman Sachs recently raised its year end gold price target to $2,500 an ounce. For long-term investors, the current levels in gold offer an attractive buying opportunity. If you are considering increasing your allocation to gold, don’t delay, economic conditions are changing rapidly in today’s marketplace.

Three Reasons the U.S. Mint Produced This Odd Denomination

Posted on July 15, 2022May 22, 2025 by Phoebe Wehrman

Three-cent pieces were first produced in silver in 1851 to help smooth the simple act of buying a postage stamp, which cost three cents at the time. The odd denomination was also seen as a solution for merchants to easily make change for some of the foreign coins that were still legal tender in our country.

Then, the Civil war broke out. The war impacted nearly every aspect of American life during its tumultuous years, including the economy. To protect against the economic turmoil that the war created, Americans of means began hoarding silver coins – including these silver three-cent pieces.

After the war ended, silver coin hoarding continued. The simple act of making change, or purchasing those three-cent stamps proved challenging.

To combat these problems, Congress passed legislation in 1865 that authorized the production of three-cent pieces comprised of 75% copper and 25% nickel.

James B. Longacre, the Chief Engraver of the U.S. Mint, designed the new Nickel Three-Cent piece to mimic the look and appearance of a silver coin. The Nickel Three-Cent piece featured a color that was more white than brown. Longacre also chose to enlarge the size of the Nickel Three-Cent piece over the existing three-cent silver coin (there had been complaints the silver coin was too small).

Nickel Three-Cent pieces were minted from 1865-1889 at the Philadelphia Mint. Over 30 million Nickel Three-Cent pieces were produced in that 24 year period. After 1889, the Treasury melted down millions of them to create the new five-cent Liberty Head Nickels.

Collectors today remain intrigued by this odd denomination coin – especially around the years in which only proofs were struck: 1877, 1878, and 1886. Other dates including 1883, 1884 and 1885 are represented by tiny mintages of 4,000, 1,700 and 1,000 respectively.

Given the Treasury’s melting campaign and limited mintages of some years, these odd Nickel Three-Cent pieces create unique opportunities for collectors who aspire to own coins from the post-Civil war period in our country.

Will the Fed Be Humble and Nimble When It Comes to Recession?

Posted on July 11, 2022May 22, 2025 by Phoebe Wehrman

The Federal Reserve launched onto center stage this year when it delivered its biggest interest rate hike in decades to combat surging inflation. While U.S. interest rates are rising now, the central bank kept interest rates at zero percent coming out of the Covid crisis.

In fact, while inflation climbed steadily higher in late 2021 into early 2022 – and you were paying more for everything from gas to groceries – the Fed sat on the sidelines. Indeed by the time the Fed first hiked interest rates in March 2022, the Consumer Price Index had already hit 8.5% – well above the Fed’s stated target of inflation at 2%.

Many believe the Fed simply kept monetary policy too loose, for too long – and the 40-year high inflation is now the result.

The Federal Reserve is tasked with a so-called “dual mandate” to pursue both maximum employment and price stability. It uses its monetary levers (including raising and lower interest rates) to help achieve those goals.

Coming out of the Covid crisis, the Fed repeatedly said it expected inflation to be “transitory” – yet a variety of factors conspired to extend inflation’s presence (Russian war in Ukraine, supply chain issues and more). As the economy recovered from the Covid recession, the Fed made a choice to favor its goal of maximum employment and stated a willingness to allow inflation to exceed its target to help ensure that all Americans who wanted jobs could find them.

Yet, many believe the Fed made an inflation policy error and the central bank was just simply late to attack the red-hot trend of rising consumer prices. Now, higher prices have already become entrenched in the economy.

The Fed has already made one mistake this year. Are they set to make another?

The Fed is currently on a path to sharply raise interest rates to try to tamp down interest rates, but that means it could cause another economic problem: a recession.

Some on Wall Street are wondering if the Fed will indeed be “humble and nimble” when it comes to raising interest rates as Fed Chair Jerome Powell stated in January. Will the central bank recognize the economic pain a recession will levy on Americans who are already facing 40-year high inflation levels? Or will the Fed continue on their path and cause a recession.

Gold is expected to begin a new advance in the second half of the year, fueled by worries about recession and the on-going high inflation environment. The Federal Reserve has created a unique economic brew that we haven’t seen since the 1970’s – economists call it “stagflation” or a period of weak economic growth and high inflation.

While you can’t control the Fed or the economy, you can take action to protect and hedge your investments in these extraordinary times. Gold is the best stagflation performer since 1973 with a 12.8% annualized return, according to a Gold Hub investment update.

“Real assets do well during stagflation, with commodities both fueling and feeding off inflation, while gold has tended to benefit from the elevated risk environment, rising inflation, and a lowering of real interest rates. Gold’s strong returns come despite a stronger US dollar typically seen during stagflation,” Gold Hub said.

Goldman Sachs recently raised its year end gold price target to $2,500 an ounce. The next leg up in the gold market appears to be right around the corner.

Gold Loves Bad News

Posted on July 1, 2022May 22, 2025 by Blanchard Admin

Unfortunately, many investors today see plenty of bad news no matter where they look.

Consequently, more people are considering how an investment in gold can buoy their portfolio. For this reason, it is important to understand the nature of gold during periods of economic uncertainty. Research published in the Journal of Banking & Finance offers some answers.

The researchers explored a 30-year period spanning 1979 to 2009. Their findings reveal one simple truth: “gold loves bad news.”

However, their work also underscores some of the unseen characteristics of gold in a crisis. These are three key takeaways:

Gold Tends to Work Best as a Haven in Developed Countries

The researchers note that “gold was a strong safe haven for most developed markets during the peak of the recent financial crisis.” However, the effect is less pronounced in emerging markets. Despite this difference the researchers conclude that gold “has the potential to act as a stabilizing force for the global financial system by reducing losses when it is most needed” because the haven effect is present not only in the US but also in Eurozone markets. The researchers also offer one hypothesis that might explain the reduced safe haven effect in emerging markets. They suggest investors likely liquidate their emerging market investments during periods of declining performance and purchase equities in developed markets instead.

The Word “Haven” Is Frequently Misunderstand

The word “haven” and “hedge” are sometimes used interchangeably. The differences between the two, however, are considerable. The researchers explain that a hedge is an asset that is negatively correlated with another asset in the same portfolio on average. This description is different than a haven asset which is also negatively correlated with another asset in a given portfolio but only in certain periods like a downturn. What this distinction tells us is that the two words represent two different periods. A hedge relates to the long term, while a haven relates to the short term. When forming an investment selection, it is important to be aware of this difference when an asset is labeled as either a hedge or a haven.

Specific and General Uncertainty Have Important Distinctions

Most market uncertainty can be classified as either “specific” or “general.” Specific uncertainty emerges from a narrowly defined event. In contrast, general uncertainty refers to any uncertainty that is not connected to one particular event. This difference matters because the researchers focused their study on gold movements during periods of general uncertainty. They learned that a rise in general uncertainty often increases investor interest in gold. However, when this uncertainty becomes extreme, gold has a higher probability of moving in the same direction as equity markets.

The evidence is clear…gold plays a valuable role in a portfolio designed to weather the unforeseen and periods of uncertainty. Investors should take the time to understand the nuances of gold’s performance during downturns in equity markets. The country, the duration, and the type of uncertainty are all important factors.

Gold Delivers on Its Enduring Status as a Safe-Haven

Posted on June 27, 2022May 22, 2025 by Phoebe Wehrman

Using a baseball analogy, 2022 threw Americans a lot of curve balls that no one was expecting. We’ve seen gasoline rocket above $6 a gallon, mortgage rates soar from 3% last year to 6% today and the stock market tumble over 20%. Everyday goods simply cost more with inflation at a 40-year high. The cryptocurrency market collapsed – with Bitcoin falling from over $67,000 in late 2021 to just over $17,000 last week.

Amidst the market turmoil, gold has delivered as a solid safe-haven investment – and is one of the year’s best performing asset classes.

Gold is up about 1% in late June – and is holding up vastly better than other assets classes which are down a staggering 20% to 70% from their peaks.

This is a reminder of why allocating a portion of your portfolio to gold pays off. Investors who own gold have seen more stability in their portfolio, with less drawdowns than those without gold exposure. Gold is acting as a store of value to protect your wealth.

With the S&P 500 now officially in a bear market, Wall Street analysts are warning the stock market rout could still get worse before it gets better. Société Générale issued a research note this week stating that if the Federal Reserve fails to tame inflation an economic recession could push the S&P 500 down another 33%.

And what about gold? Increasing your allocation to gold now is an option to preserve and protect your wealth.

One of the factors holding the gold market steady right now – is the strong U.S. dollar. Gold and the dollar often trade inversely – so the current strength in the dollar is a headwind for the precious metals. The U.S. dollar index is up around 9% year-to-date.

However, eventually the dollar rally will stall and “that is when the gold price will take off,” Will Rhind, founder and CEO of ETF provide Granite Shares told Barron’s.

Indeed, earlier in June, Goldman Sachs released a new report stating: “We expect a rebound in emerging market gold demand in the second half of the year. In the absence of a large liquidity shock, we view current gold price weakness as a good entry point.”

Do you have cash on the sidelines ready to go to work? Preserve and protect your wealth with gold. Goldman Sachs issued 3- and 6-month targets at $2,100 and $2,300, respectively. In 12 months, the bank expects gold to reach $2,500.

Precious metals are an insurance policy that has consistently paid off for investors in all types of market cycles, and we are seeing that happen again today.

Investors Relearn the Meaning of “Hedge”

Posted on June 23, 2022May 22, 2025 by Phoebe Wehrman

Crypto was supposed to be a hedge against uncertainty, inflation, and bear markets. However, in 2022 alone, Bitcoin has lost more than half of it’s value. Does cryptocurrency have the staying power of an investment class?

These losses are not restricted to Bitcoin. Solana, Etherium and Litecoin have all experienced massive drops year to date. This fall in value across cryptocurrencies has been sobering for investors who long believed blockchain technology would deliver stability and gains over the long-term.

Ipek Ozkardeskaya, an analyst with Swissquote remarked that “it is now clear that Bitcoin trades parallel to the risk assets, rather than [as] a safe haven.” He continued, “Bitcoin is still not the digital gold, it’s more of a crypto-proxy for Nasdaq.”

While plummeting cryptocurrency prices have dominated recent headlines there is another, less discussed reality taking hold. After more than a decade, Bitcoin and other similar currencies have failed to generate the broad based appeal so many expected. The crash in values in 2022 likely signal that cryptocurrency will not reach the heights so many anticipated.

In the meantime, investors are rediscovering the value of tangible gold in the current setting of inflation, uncertainty, and global tensions. This renewed interest comes from the widely held belief that gold presents about one quarter of the volatility seen in cryptocurrency, and stocks. As a result it seems that Bitcoin may not graduate from it’s current status as a speculative asset.

This is a problem for cryptocurrencies because its independence from traditional equity and bond markets has always been part of its appeal. The current market, however, is proving something different; cryptocurrencies appear susceptible to the same factors that are currently driving down stocks.

Moreover, these influencing factors are unlikely to improve any time soon. The US government has a long way to go before taming inflation and the war in Ukraine shows no end in sight. At the same time, supply chain woes are still hampering many businesses across the globe. Resolving these systemic problems will almost certainly require the start of a new economic cycle. This process will take time.

Consider that The National Bureau of Economic Research (NBER) has still not formally declared that the US is in a recession. The NBER currently defines a recession as a decline in activity across the economy for a period of several months. This drop in activity includes employment, industrial production, real income, and wholesale-retail sails. The bottom line: We are almost certainly in a recession now, but we are at such an early stage of it that it has not even been formally declared yet.

No one can predict what will happen with cryptocurrency in the coming quarters or years. What we do know is that in the last thirteen years it has fallen short of expectations. Bitcoin has not yet ushered in a new era of blockchain dominance and may never. Gold, in contrast, continues to enjoy worldwide demand and reduced volatility amid uncertainty.

The Gold Dollar: An Early American Currency Workhorse

Posted on June 20, 2022May 22, 2025 by Phoebe Wehrman — 1 Comment

Throughout the history of civilization, gold has served as money – longer than any other material. In the early days of our union, the American government worked to create a gold dollar as a unit of currency. Indeed, as early as 1791, Secretary of the Treasury Alexander Hamilton first called for a one-dollar denomination gold coin. Yet, it took our young nation 58 years to actually mint the one-dollar gold coin.

Finally, with the Act of March 3, 1849, Congress authorized the production of the gold dollar and they were minted from 1849 through 1889.

The $1 Liberty Head gold coin is a special rarity and an outstanding example of pre-1934 gold U.S. coinage. There are three gold dollar types and Type 1 reveals the smallest diameter of any United States coin minted to date. In 1854, the design was updated to a feather headdress on the female, which is called the Indian Princess Head (Type 2). In 1856, the type was changed again to increase the size of the head (Type 3).

All three types were designed by Mint Chief Engraver James B. Longacre, who also designed the Indian Head cent and two-cent coins.

In the early years of its minting and up until he Civil War, the gold dollar was widely used in everyday commerce. That’s why most specimens you will find today show evidence of wear. Just imagine what these coins minted were used for – a knapsack, wool socks, a belt, a comb, soap, matches, a handkerchief, a harmonica, food, medicine or even whisky.

Once the Civil War began in 1865, however, amid the economic destruction of the war, gold dollars nearly vanished from circulation. Gold did not circulate widely again in much of the country until 1879.

Collectors today often seek to acquire one from each of the three different gold dollar design variations. Generally speaking, the scarcest is the Type 2.

Collecting gold dollars can be an exciting goal – though it will give collectors a challenge. Some of the harder coins to source include Charlotte and Dahlonega mint coins, with 1855-D, 1856-D, 1860-D, and 1861-D seen as prime rarities. From the Philadelphia Mint coins the important date is the 1875, of which just 20 Proofs and 400 business strikes were minted.

One numismatic strategy to acquire gold dollars is to build a type set. One could consider acquiring a gold type set, which would include the major design types from the mid-19th century forward: three types of gold dollars, Liberty Head or Coronet quarter eagle and Indian quarter eagle, $3 gold, Liberty Head half eagle, Indian head half eagle, Liberty Head $10, Indian $10, Liberty Head $20, and Saint-Gaudens $20 gold coins.

Historically, one of the best ways to invest in rare coins is to build a set. Often sets become more valuable than the sum of the individual coins. If you are interested in starting a set or are looking for an elusive coin to complete a set, contact a Blanchard portfolio manager today for guidance. Over the past 40 years, we have helped clients build simple and elaborate sets to help meet their financial goals. We can help you too.

Gold and Gold Bugs

Posted on June 16, 2022May 22, 2025 by Blanchard Admin — 1 Comment

In March 1933, the Federal Reserve Bank of New York could no longer honor its commitment to convert paper money to gold and FDR declared a banking holiday. FDR issued an Executive Order requiring all Americans to surrender all gold owned by them to a Federal Reserve bank and prohibited the private holdings of all gold coins and bullion. President Roosevelt ordered Americans to sell their gold back to the government, or face jail time and fines.

It was only 40 years later, thanks in large part to the advocacy of our company’s founder, Jim Blanchard, that the right of private citizens to own gold was restored. Through their National Committee to Legalize Gold, Jim and his wife Jackie held public demonstrations where they brandished bars of gold, daring the feds to arrest them.

Blanchard hired a WWI-style biplane to fly near President Nixon’s second inauguration with a banner that read “LEGALIZE GOLD!” prompting the Secret Service to scramble a military plane to tail the pilot and warn him off course (intended to be directly over the inauguration). All three national network TV news programs commented on the banner that night, and the story was picked up by all the wire services.

The Blanchards also held “Gold Tea Parties,” during which they carried pro-gold banners around and either dumped paper money into bodies of water or set it on fire, depending on the surroundings.

President Ford was persuaded to legalize gold after seeing a television commercial of Blanchard, who held a bar of gold and asked, “Why can I not own this?”

“G-Day,” as Jim Blanchard called it, finally arrived, and December 31, 1974 made history as the first day of legal gold trading in America.

Thanks to Jim, the gold bug who wouldn’t quit, you can own gold today. It is your right!

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