Record-Setting Demand for Precious Metals in 2015. Take Advantage in 2016!

By Jon Swyers

U.S. Mint Shatters Records Again in 2015

The U.S. Mint had another year of record setting sales of American Eagle bullion coins. In 2015, the U.S. Mint sold 47,000,000 ounces of Silver Eagles. The previous record from 2014 was 44,666,500, and this represents the third year in a row of breaking the record of the year before. In 2015, the mint broke the 2014 record as early as November 30th, with a full month to spare.

On the gold side, the U.S. Mint shattered 2014 production figures. In 2014, the U.S. Mint produced 524,500 total ounces of American Gold Eagle bullion coins (1 oz, 1/2 oz, 1/4 oz & 1/10 oz included in these figures). For 2015, sales skyrocketed for American Gold Eagles. The U.S. Mint produced 801,500 ounces of American Gold Eagle bullion coins in 2015, a staggering one-year increase of 52.8%! This number would have been higher if not for the U.S. Mint selling out of gold over the summer.

Platinum was a different story for the U.S. Mint in 2015. There were no Platinum Eagles produced by the U.S. Mint in 2015, although demand for platinum has remained high worldwide. This means premiums on other platinum products such as Canadian Maple Leaf coins and platinum bars have gone higher and can have long delivery delay times. The jury is still out on whether or not the U.S. Mint will produce Platinum Eagles in 2016.
Precious Metals Have Survived the FED Rate Hike

The most heavily debated and anticipated financial news this year came to pass two weeks ago. The FED finally raised interest rates for the first time in almost a decade! This was a long anticipated move and was heavily debated because much of the economic data to support this move was not consistently positive. The FED had two targets to increase interest rates:

• Unemployment at 5%
• inflation near 2%.

While we have technically hit those numbers, it sure doesn’t feel like a recovery. There is a lot of debate about what those targets really mean for the economy due to the dramatic changes over the years in how both unemployment and inflation are calculated.

With advance notice of a rate hike coming (most experts believed a rate hike would happen in December almost as early as November 1st) the precious metals reacted as we expected. Precious metals dropped across the board over much of the months of November and December. An increase in interest rates is traditionally bad news for precious metals. It makes other traditional and secure ways of saving more attractive because they now pay better guaranteed returns than they did with lower rates (Certificates of Deposit, bonds, etc.)

The precious metals market declined in advance of the rate hike, and we braced ourselves for an even larger drop once the hike had been officially announced on December 16th. Precious metals hit their low for 2015 on December 17th, the day after the rate hike. However, the day after that, they bounced right back and have stayed in range ever since. This means much of the loss in the metals market due to the rate hike was already priced into the market.

No huge drop from the rate hike came. This, in my opinion, is strong evidence of a bottom in precious metals.

Economic Growth has been Stagnant

Ever since the FED stopped the bond buying program (QE3) at the end of October 2014, there has been little to no growth in the stock market.

End of QE3: October 31st, 2014 - 17,390.52
Day after Rate Hike: December 18th, 2015 - 17,124.78
Net Movement: -265.74 (-1.5%)

GDP growth, the best measure for improvement of the U.S. economy, has missed most of its targets during this period as well. 2015 will be the 10th year in a row where GDP is set to grow less than 3% on average.

 
Further, roughly 40% of U.S households live paycheck to paycheck. Add it all up, and the recovery doesn’t feel so real.

What does all of this mean to you?

It is clear physical demand for precious metals is at an all-time high and economic recovery has not been the success that it has been portrayed to be. So, why aren’t precious metals prices higher?

There are many reasons for this, but the most important one is the U.S. dollar has been strong compared to other world currencies. Unfortunately, that’s not saying much given its competition right now. The European Central Bank recently approved even more negative interest rates and an expanded bond buying program (similar to QE here) through March 2017. The U.S. Dollar cannot continue this strength for long as economic policy and QE programs have not led to economic recovery. Inflation looms.

This has created a buying opportunity at low prices for precious metals that most experts did not think we would see. Take advantage of this unique time in the market to add precious metals as your wealth protection. There may not be a better time than right now.

You can reach us by phone at 800-831-0007, or send us a quick email to take advantage in 2016.