Move on over gold and silver. There’s a new American Eagle coin on the block.

For the first time, the United States Mint began offering a one-ounce American Eagle Palladium bullion coin in late September. The new coin is designed to offer investors an easy and cost-effective way to invest and hold physical palladium.

Those investing in precious metals are well aware of the value and properties around gold, silver and maybe even platinum. But, palladium? What is this under the radar metal?

Here are 3 things you might not have known about palladium:

1. Palladium is a precious metal and industrial metal.

Palladium is used widely in pollution control devices for gasoline powered cars and trucks. That makes the new American Eagle a great diversification tool in the precious metals arena.

2. Palladium is the biggest gainer in the commodity universe in 2017.

The price of palladium surged an incredible 34% (through Oct. 7) since the start of the year. That’s more than double the return of the S&P 500 this year. Palladium demand is forecast to rise to 10.13 million ounces in 2017, surpassing the 10 million ounce mark for the first time since 2014. That means the new one-ounce palladium American Eagle arrived at the right time. There is huge interest in palladium investment.

3. The price of palladium scooted past platinum recently for the first time since 2001.

Last week, spot palladium hit a high at $946.00 an ounce. That compares to $921.00 an ounce for spot platinum. Demand has been rising for palladium, while demand for platinum (jewelry and components for diesel powered vehicles) has slid. See current spot prices here. That means current prices of the new palladium American Eagle coin could be a bit rich.

Investing Moves

Should you snap up this new palladium coin? From a diversification perspective, palladium investment is a smart move. Just as you diversify your equity portfolio from large cap stocks to international stocks, with a few value stocks and dividend stocks thrown in the mix. The broader diversification you have in the physical precious metals arena, the better.

Patience could be a virtue. For coin investors who’d like to add palladium to their portfolio, consider this. Sometimes when a market rallies excessively, it becomes overstretched, overvalued and vulnerable to a snap-back correction. That could be the case now for palladium, according to well-respected metals consultancy CPM Group.

• “Platinum near rock bottom, palladium on the edge of a cliff,” the CPM Group report said.

“Quite often the prices of these metals run ahead of their fundamentals and that could be the case with palladium. If there is a decline in prices the fall could be sharp be-cause of the nearly unilateral fashion in which this market has performed in recent years. There have been a lot of

new investors that have entered this market, attracted by the healthy and sustained rise in prices. . . Many of these investors are likely to leave the palladium market just as quickly as they got into the market,” the report said.

Platinum Buy Spot

In the meantime, current levels may offer one of the best buying opportunities in platinum seen in years.

Platinum is another precious metal that benefits from both industrial demand and investment demand, and also has a long history of being used in coins for currency. Platinum and palladium are widely used in industrial applications including automobile manufacturing.  Both of these metals exhibit qualities, such as durability, resistance to corrosion and catalytic properties that make them heavily used in industry.

Learn more the benefits of investing in physical platinum here.

Investors can and should diversify their tangible assets portfolio through diversification across metal types by purchasing of a mix of silver, platinum, palladium, and gold coins and bars. Right now, platinum, may offer an excellent long-term buying opportunity. Platinum bullion U.S. Eagles, produced by the U.S. Mint, are minted in a variety of denominations.

Contact Blanchard today at 1-800-880-4653 and a portfolio manager can identify investments that are the best fit for you.

Today, more than ever before, we value technology. The more advanced and sophisticated a piece of technology is, the more we respect it. In his book Technopoly: The Surrender of Culture to Technology, author Neil Postman writes that we live in “a peek-a-boo world, where now this event, now that, pops into view for a moment, then vanishes again. It is an improbable world.” He continues that “it is only now beginning to be understood that cultures may also suffer grievously from information glut, information without meaning.” Though penned a quarter-century ago, these worlds hold particular relevance today as people navigate an ever-expanding labyrinth of investment products like cryptocurrency, ETFs and other digital offerings. His ideas prompt new questions for today’s investor; Does the novelty of an investment’s technology drive real or perceived value?

Many investors pursue outsized gains by seeking early investment trends. As a result, many investment products leverage their unique technological characteristics to position themselves as an emerging trend. When these products market themselves as bold, new alternative investments, people become transfixed by the notion that they’re standing at the doorway of “the next big thing.” In reality, however, the value will ultimately be determined by the underlying methodologies which are often as hollow as the investor’s misplaced value in the technology.

A study of fund returns and total net assets of more than 7,000 mutual funds from 1993 to 2014 illustrates the faultiness of placing value on the technological underpinnings of trendy investments. Researchers Jason Greene and Jeffrey Stark separated the collection of funds by sifting out those that included trendy terms. What did they find? As one journalist explained, “As you might expect, they found that mutual fund families attempt to attract assets by launching ‘trendy’ funds.” The biggest problem, however, is the performance.

The “trendy” funds “under-perform over their first five years compared to non-trendy funds, with the trendiest startup funds underperforming the least trendy startup funds by an average of 1.03 percent per year on a risk-adjusted basis.” Adding to this problem are larger fees (expense ratios). The “trendy” funds had a fees that were, approximately 0.20 percent higher than their non-trendy counterparts on average.

Meanwhile, investments like gold bullion, have enjoyed regular price appreciation over the decades because they exemplify the timelessness of an asset that doesn’t need to leverage an emerging technology as a selling feature. Rater, gold, in all its simplicity, is in stark contrast to tech-heavy products like P2P funds, cryptocurrencies, and smart beta ETFs. Demand for gold is not subject to the whims of technology or fads that inevitably fade. Instead, gold is a global currency that has roots which run deeper than the hot trend.

It’s ironic that the trendiness which propels an investment product is also often the agent of its demise. The reason for this dynamic is simple: a new, flashier trend takes the place of the last one. This phenomenon is in keeping with Postman’s assertion that unquestioned trust in technology serves “to make people believe that technological innovation is synonymous with human progress.” Question the trend.

Americans rack up highest debt levels in history

Debt levels are rising. Not only at the government level, but the personal level too.

American consumers recently hit an alarming milestone.

Even though the economy is growing, the labor market is supposedly strong, cash-strapped Americans are taking on more debt than ever.

• Americans now have $1.021 trillion in outstanding revolving credit debt (mostly credit cards), according to the latest report by the Federal Reserve.

That is the largest amount of debt in history.

Meanwhile, the U.S. government sailed past the $20 trillion mark with our federal debt. Right now, policymakers in Washington D.C. are busy proposing legislation that would remove the debt ceiling limit for Congress.

In essence, that would give Congress an ultimate blank check, or a credit card with no credit limit.

Why all this debt is so scary

1. This debt is slowing us down
2. Higher interest rates will eventually mean the U.S. government must spend more on interest payments and less on services for its citizens

Even if Americans or the government never pay off their debt, they still have to pay the interest on that debt each month.

Are You Prepared For Tomorrow’s Debt Problem?

Even though the Federal Reserve has edged interest rates slightly higher over the past couple of years, they are still very low. Low rates benefit anyone who is paying off debt. But, once interest rates go higher, that means interest on your debt goes higher too.

Why does this matter? At some points interest rates will go up, and perhaps significantly.

Higher rates mean a larger portion of the government’s outlays must go toward debt repayment. That means less for the Social Security and Medicare payments, military, roads, education, and whatever other services the government spends money on.

How low is low?

• Right now, the federal funds rates stands at 1.00-1.25%
• That compares to a “normal” rate of around 4%.

Looking at the U.S. 10-year Treasury yield (the rate most mortgages are based off), before the 2008 global financial crisis, yields were much higher.

• Right now: U.S. Treasury yields 2.26%
• In June 2007, the 10-year yield stood at 5.31%.
• In January 2000, the 10-year yield stood at 6.82%.
• In July 1996, 10-year yields registered a 7.09% reading
• In November 1994 a high was seen at 8.16%.

Debt to GDP ratio

Once government debt levels climb above 90% —that, in and of itself, weighs on economic growth prospects, according to Carmen Reinhart, a professor at Harvard Kennedy School and Kenneth Rogoff, an economist at Harvard University.

The U.S. has already blown past that mark. Debt to GDP ratio stands at 103.1 as of the second quarter, according to the St. Louis Fed.

The U.S. (and other major advanced economies) are already struggling with slow growth for a multitude of reasons. The debt only compounds the problem.

What this means for you

Gold can’t be devalued like paper currency. The Fed can’t “print” more gold any time it’s looking to juice up the economy. Gold is a true, time-honored store of value recognized in every country around the world. There’s many reasons to own gold, and high and rising debt levels may just be another one.

 What do you think about the debt problem? We’d like to hear your thoughts.

When predicting investment growth people often look to the current president for clues. Traditionally, people have believed that the political affiliation of the person occupying the oval office drives movements in the financial markets. Is this assumption well-founded?

Today’s world bears little resemblance to that of our founders. Simply out, there are more moving parts. As a result, the office of the U.S. President, while powerful, wields far less influence than many realize. As one writer for The Atlantic astutely observed, “the president controls one branch of the government, the federal government accounts for merely one-fourth of GDP, and today the U.S. economy is merely a slice (albeit a big slice) of multinational companies’ revenue pie.” The revelation that the president has diminishing control over the financial world has been extended to the broader economy.

“Presidential economic records are highly dependent on the dumb luck of where the nation is in the economic cycle,” explains The New York Times. They continue, “even in areas where the president really does have power to shape the economy – appointing federal reserve governors, steering fiscal and regulatory policy, responding to crises and external shocks – the relationship between presidential action and economic outcome is often uncertain and hard to prove.” This message has particular relevance today because the Federal Reserve is facing a $4.5 trillion balance sheet.  

In October, the Federal Reserve will begin the process of reversing the quantitative easing measures taken at the dawn of the global financial crisis. Doing so means gradually reducing the long-term Treasuries and the mortgage-backed securities that comprise much of the $4.5 trillion taken on to ease the strain on the financial system. The process will take years, not months. Meanwhile, other central banks around the world are gradually removing similar support measures. Certain aspects of the market have responded. For example, bond prices have dropped.

However, despite this momentous move, we may learn, once again, that policy has a limited impact on long-term financial market movements, especially gold. As we discussed in a previous post, the correlation between interest rate movements and the price of gold is weak despite long-standing conventional wisdom that they’re linked. Gains occur over the long-term. While policy may influence prices, such events are likely to be short-lived. Interestingly, the illusion of the policy-driven market is due, in part, to investors responding to such policies rather than the directives themselves.

While gold investors may take the Federal Reserve’s news as a signal to alter their holdings the fact remains: markets largely drive themselves while policymakers ride shotgun. In fact, it could be argued that gold is even more resilient than other assets to the policy mandates of the U.S. government. Since 2000 the price per ounce of gold has regularly exceeded the growth of the S&P 500. In truth, impactful changes to an investor’s holdings often, though not always, occur over a much wider period of time. This greater horizon is necessary for a major shift to unfurl. The takeaway: smart investing is long-term investing.

Russian born Vitalik Buterin is a promising youth. From a young age he displayed incredible aptitude for math, economics and even programming. He excelled as an academic. Eventual he became a recipient of the Thiel Fellowship, a grant of $100,000 offered to bright scholars. The selection rate for this privilege is less than 1%. Buterin used his grant to develop a project called “ethereum”, an open-source blockchain currency that sometimes goes by the name “ether.”

His work represents another step in the growing trend of cryptocurrencies, the most famous of which is bitcoin. Many investors are beguiled by the perceived security and modernity of such currencies. As solutions like ethereum have arisen to the mainstream more developers have incited initial coin offerings (ICOs) to fund the underlying systems needed to create new cryptocurrencies. With an ICO, early backers receive a percentage of cryptocurrency in exchange for capital. More programmers are joining the ICO party. In fact, we’re witnessing an average of 20 ICOs per month in 2017. This fervor illustrates a central problem with cryptocurrencies and ICOs; the excitement stems from novelty rather than reliability.

How reliable can a form of currency be if it’s easily upended by something as weak as a death hoax? In late June of this year several sites posted a story about Buterin’s untimely death in a car accident. The article was a complete fabrication. However, what happened next was very real. A flash crash sent values into free fall. Ethereum plummeted from $290 to just 10 cents. All it took was a rumour from a few unreputable bloggers. Eventually, Buterin squelched the news by posting an up to date picture of himself online.

With incidents like this in mind it’s easy to see why recently The People’s Bank of China announced that it will freeze all fundraising through ICOs. Part of this decision comes from a distrust of anonymous transaction systems that can be used to finance terror or exchange illegal goods on the black market. This decision also caused bitcoin and ethereum to tumble. ICOs appear to be less about bringing a revolution to the world of currency and more about bringing money to the pockets of founders. TechCrunch reported that “Chinese companies had raised $383 million from 105,000 investors during the first half of the year.” The real money rests with the people creating the offering, not the broader public.

Meanwhile, gold continues to offer a solution even the brightest Thiel Fellowship recipient cannot conjure. The metal is not subject to the whims of online pranksters, electrical impulses or opportunistic ICOs. Ethereum emerged from the pages of Buterin’s white paper and because it’s a construct on one person’s theorizing, it is subject to the same flaws that plague all ideas still in development. Gold, however, offers a tangibility that transcends code.

Even the most dedicated cryptocurrency investors would have to concede that volatility alone remains a problem. Even if one is “sold” on the future of cryptocurrency as an ongoing form of payment, the fact remains: it’s wildly unpredictable. As Bloomberg reported, “an asset that rises and falls 20 percent in a day doesn’t make for a good medium of exchange with which to buy coffee.”   

Stocks in the US started last week off with a bang, as the three benchmark stock indices all rallied on Monday amid lessening tensions with North Korea.

As mentioned in last week’s article, there was a significant amount of market apprehension about the events that could take place over the weekend, i.e. a missile attack. However, Emini S&P 500 futures gapped up Sunday evening by approximately 5 points as the possibility of a North Korean missile strike dwindled over the weekend. The strong Emini S&P 500 futures rally continued throughout the night and into Monday’s trading session.

The S&P 500, and the Dow Jones Industrial Average both rallied into the close on Monday to settle at fresh all-time highs, with both indices closing more than 1% in the green.

Although Monday’s rally seemed to lose a little bit of momentum mid-week, bids started flowing into the market again on Friday as prices began to drift towards new all-time highs.

For the week, the Dow Jones advanced the most with over a 2% gain. The Nasdaq 100 and S&P 500 both closed around 1.4% higher.

North Korea ended up shocking the world by actually firing a missile over Japan early Friday morning. There was an initial knee-jerk reaction to the launch that sent S&P futures about ten points lower, but investors clearly used the sell-off as an opportunity to add to their long positions after they digested the news.

The Dow Jones went on to make its 39^th record high of 2017 on Friday, along with the S&P 500. Although the Nasdaq 100 didn’t make a new record, it still closed largely positive.

“In general, and the markets have kind of figured this out, geopolitical events are fairly short lived. You have to be careful of them and they will create stress moments in the market, perhaps corrections, but they don’t tend to last,” said Matthew Peron, head of global equities for Northern Trust Asset Management which oversees about $1 trillion in assets.

This certainly seemed to be the case with North Korea. Strong gains in the stock market, especially after the missiles were fired, confused a lot of investors due to the amount of fear and uncertainty that was priced into the markets in weeks prior.

The last thing market participants expected was for stocks to rally after North Korea finally tested their missiles after weeks of threats.

Most of the market’s gains were powered by a solid rally in technology stocks. Nvidia Corporation (NVDA), gained 5.9% on Friday alone amid analysts price-target upgrades, which contributed to a significant portion of the Nasdaq’s spike. Similarly, Advanced Micro Devices (AMD) was up 2.2% on Friday which boosted both the S&P 500 and the Nasdaq.

Although there was a brief surge in safe haven assets immediately after the North Korean missiles landed near Japan, the flight to safety didn’t last.

Gold for December delivery was trading around $1,325 per ounce on Friday after declining almost 2% for the week. However, given that gold just made a new YTD high only one week ago, slight declines are not too alarming.

Since 1975, Blanchard has successfully helped over 450,000 clients invest wisely in precious metals and rare coins. Our team of experts are always here to help you make the right investment decisions and capitalize on opportunities in the precious metals market.

Call us today at 800-880-4653