Welcome to SurvivalBlog’s Precious Metals Month in Review, by Steven Cochran of Gainseville Coins, where we take a look at “the month that was” in precious metals. Each month, we cover the price action of gold and examine the “what” and “why” behind those numbers.
What Did Gold Do in March?
Gold started March on pretty good footing, having gained over 3% in February. However, better than expected economic data in the early part of the month soon sent the dollar and stocks soaring and gold falling below $1200 an ounce on expectations that the Fed would certainly hike interest rates at their March meeting. Prices recovered sharply after the rate hike, though, because Yellen sounded like she didn’t want to raise rates again anytime soon.
Precious metals put in a strong performance to end the quarter. Palladium was in first place on the Barcharts YTD Futures chart by far, ending the first quarter $115.50 higher, a gain of 16.89%. Silver earned the #2 spot, posting a 13.42% gain for the quarter. Gold ended the first quarter 7.61% higher, gaining $87.90 an ounce, while platinum continued to sink into the middle of the pack, with a 4.03% gain.
Factors Affecting Gold This Month
The European establishment was panicking ahead of the March 15 elections in the Netherlands, as right-wing radical Geert Wilders’ anti-immigration Freedom Party (PVV) was expecting to win. Voter turnout was high, due to frightened Dutch voters not wanting to see a Nexit (Netherlands exit from the EU). This caused the PVV to fall short of victory, but they did ride the total collapse of the Socialist Party to second place. This makes Wilders the opposition leader in Parliament, giving him plenty of power to prepare for victory in the next election.
The next big battle for the anti-EU movement in Europe will be French presidential elections in April. Marine Le Pen, leader of the far-right National Front, has been polling well. If she wins, she pledges to dump the euro and put France back on the franc as well as seal the nation’s borders against immigration, even if it means a “Frexit” from the European Union. If France does follow the UK out of the EU, the entire thing will collapse, and the euro will basically be a new German deutschemark.
A report released in late March said that global populism is at its highest levels since the 1930s, and that populism will have a greater effect on world economies than any fiscal or monetary policy this year. Since this will be bad for international corporations, the establishment naturally sees this as a Very Bad Thing.
March was a very busy month for the real bad guys, as terrorism spread from the Middle East to other targets. Over a three-day period in France, a letter bomb sent to IMF headquarters in Paris injured one; a man shouting “Allah u Akbar” slit the throats of two men; and a gunman shot and seriously wounded three police officers before being shot dead by two soldiers at a Paris airport.
The worst terrorist incident in Europe last month was the Westminster attack at the British Parliament. Criminal-turned-Islamist Khalid Masood drove a rented SUV through a crowd on Westminster Bridge, killing four and wounding at least 49 others before crashing into the security fence around Parliament. He exited the car with two knives and murdered an unarmed policeman before being shot dead.
India witnessed three bombings, four gun attacks, and an assassination in March, leaving 23 dead and at least 36 injured.
Wedding Season In India
Gold imports spiked in India in March, as the nation’s one billion Hindus celebrated spring festivals and the spring wedding season shifted into high gear.
It’s A Brexit
British Prime Minister Theresa May pulled the trigger on Brexit on March 20, beginning the countdown on two years of “divorce negotiations” with the EU. With no idea what will happen, European markets will remain volatile, with safe haven runs on gold possible at any time.
On the Retail Front
Recent spikes in precious metal prices are impacting sales at the U.S. Mint, leading us to wonder if the low mintage of the 2017 American Silver Eagle will make it a “key date” for those who collect the bullion coin every year.
In news about upcoming designs, the Mint revealed that five WWI commemorative silver medals, one for each branch of the military, will be released next year to honor the 100th anniversary of America’s entrance into the “War to End All Wars”. These will be in addition to the 2018 WWI commemorative silver coin.
This month’s changes in central bank gold reserves seems to point out that the agreement to cut oil production is starting to bite in the Persian Gulf oil monarchy of Qatar. They sold 4.3 metric tons of gold in March. Brunei, another small Muslim oil producer, sold 0.1 metric tons (100 kg) of gold.
Argentina continued selling its sovereign gold reserves as its economy continues to crater, sending five metric tons out the door.
In the “win” column, we once again find Kazakhstan, which added another five metric tons to the vaults in March. Jordan is a new face in the market, purchasing 5.6 metric tons of gold last month. Apparently they are moving to protect their economy in case the war in Syria spills across the border. Naturally, Russia was a buyer again in March, to the tune of 10 metric tons.
Lawrie Williams predicts that Russia’s gold reserves may surpass China’s this year, if Moscow’s buying binge continues. It should, since the Kremlin is buying domestic gold production that is blocked from export by international economic sanctions.
Moe Zulfiqar thinks he’s figured out the reason for all this central bank gold buying: diversification away from fiat money that will lose its value during “competitive devaluation” (currency wars) between the U.S., EU, UK, Japan, and China.
Michael Lombardi at the Lombardi Letter says, don’t be surprised if silver doubles in price this year.
SRSrocco Report is also anticipating a big move up for silver, as more institutional investors move into the market.
It’s expected that silver is going to need to come from existing stocks, as newly-mined silver production is falling as copper and zinc mines reduce output or close altogether. More than half of the world’s silver each year comes as a by-product from mining industrial metals, such as copper.
And speaking of silver mining, this video on the Top Silver Producing Countries in the world will probably surprise you.
CME and Thomson Reuters resign from the London Silver Fix only 2-½ years after winning the contract.
Doug Casey says, “If you think inflation is low, take a look at your candy bar.” Instead of raising prices, companies are shortchanging you on the amount of product in their packages.
Peter Schiff looks at the returns of holding $3,500 in cash for 50 years, compared to buying $3,500 worth of gold 50 years ago. (I think we all know how that turns out.)
SRSrocco Report reveals the information about another reason for manipulation of the international gold market in the 1970s, that most people don’t know about.
Plans for the Texas Gold Depository continue to move forward.
More states are scrapping sales tax on precious metal purchases, which is always a good thing to see.
Thanks to the Mexican version of the Freedom of Information Act, hard money advocate Guillermo Barba has received the actual inventory list of the 7,265 gold bars the Bank of Mexico holds in vaults at the Bank of England. While most of the Mexican central bank’s gold has been leased out (maybe multiple times?), this is the first time a central bank has provided the serial numbers for any of the bars in its gold reserves.
Bloomberg notes that the international Too Big To Fail banks have been fined $321 billion since the global financial crisis. The sad part is, these banks made far more than that in illegal proceeds and just consider the fines part of doing business.
Economist Albert Edwards warns of “Volcker II, Monetary Boogaloo,” if Fed follows through with planned pace of rate hikes.
With no Federal Reserve policy meeting in April, Janet Yellen and her crew will be relying on press interviews and speeches to move the markets. Stocks seem to be running out of steam, as the Trump Rally fades. Clashes between hard line conservatives and more corporatist Republicans over the plans to repeal and replace Obamacare have Wall St worried that the deregulation and tax cuts promised by the Trump Administration may be delayed.
Anxious stock markets on both sides of the Atlantic, plus increasing terror attacks in Europe, should give gold a safe haven demand boost. April 23rd is also the first round in the French presidential election, where anti-EU/anti-immigration candidate Marine Le Pen has a good chance of winning. This has establishment types even more worried than they were over the Dutch or Austrian elections. If Le Pen wins and pulls France out of the EU, the whole thing will collapse.
Our favorite treasure story this month comes from the Holy Land, as a stash of 1,400 year-old bronze coins were found in Israel, in the newly-discovered ruins of a Christian settlement that served as a rest stop for pilgrims traveling to Jerusalem. Archaeologists believe the coins were stashed in a secret hole in the wall of the building by terrified Christians fleeing an invasion by the Persians in 614 AD.