Mike Fuljenz's Blog

Numismatic News & Precious Metals Market Commentary

2010 Was Another Busy Year for Mike Fuljenz

Nationally-known rare coin dealer and precious metals expert Michael Fuljenz, is an award-winning numismatic author, frequent interview guest on radio and TV news and personal finance programs, and a community leader in his hometown, Beaumont, Texas.  He hosts an award-winning, regularly-scheduled program about coins and precious metals on Newstalk 560 KLVI radio.

It was another busy year for Mike Fuljenz.  In addition to numerous local news media interviews in the Beaumont and Houston press, he was quoted in the Los Angeles Times, CBS Money Watch and Fox Business Network.  He also won another five national excellence awards for his books, newsletters and consumer education efforts; continued his national service on the Board of Directors of the influential Industry Council for Tangible Assets; and became President of the Diocese of Beaumont Catholic School Board.

Here are some of his many accomplishments in 2010.

  • Received awards from the Numismatic Literary Guild (NLG) for his assistance in a series of important on-going investigative stories by The Examiner newspaper in Beaumont about traveling “hotel buyers” in the Southwestern United States who often offered the public only pennies on the dollar for valuable gold coins and jewelry.
  • Authored an important, NLG award-winning new book about historic U.S. gold coins, Indian Gold Coins of the 20th Century. (Former New York Times columnist and NLG Executive Director Ed Reiter remarked: “I don’t know of anyone who has won as many NLG awards in different categories.”)
  • Served as gold coin price coordinator for The Insider’s Guide to U.S. Coin Values 2011 published by Dell a division of Random House Publishing.
  • As official coin and bullion dealer for the National Rifle Association, he was a keynote speaker at the NRA’s Freedom First Financial Seminar, and authored a feature story for the American Rifleman magazine, “President Theodore Roosevelt: Champion of Guns and Gold.”  Fuljenz also was a sponsor of the NRA’s Eddie Eagle Gun Safety Program for children.
  • As featured speaker at their annual banquet, he helped the Salvation Army in Beaumont kick off the organization’s national Christmas kettle collection campaign by donating and placing a $1,400 gold coin in a kettle.

Precious Metal Commentary for December 20, 2010

Metals Market Commentary
December 20, 2010

Gold Looks To Close 2010 With About A 25% Gain Marking 10 Straight Years Of Rising Prices As Goldman-Sachs Projects Prices Near $1700 in 2011

Gold fell slightly last week, mostly due to a rising dollar, but every time gold falls new buying comes in. With just 10 days left of trading in 2010, gold and other precious metals seem certain to close 2010 with a major gain of 25% or more, a record 10th straight year of rising gold prices. This morning (Monday), gold recovered to $1382, starting with Asian buying. Chen Xin Yi, an analyst at Barclays Capital in Singapore, said that “buyers realize that prices are not going to correct very much.” Long-term, there is no other way for gold to go than up: Miners aren’t finding enough new supply and demand keeps rising. Meanwhile, silver performed much better than gold last week, up nearly 2%. Spot silver is back over $29 an ounce.

Gold 52 weeks ago (December 21, 2009): $1105.50

Gold’s average price during 2010: $1220.47

Gold’s London low for 2010: $1058 on February 5

Gold’s London high for 2010: $1431 on December 7

ETFs Keep Fueling New Gold and Silver Demand

As of last Friday, gold in exchange-traded funds (ETFs) grew to a record 2,113.2 metric tons, while over 15,000 tons of silver are held in silver ETFs as of last Friday. There are now 10 major gold ETFs and several vehicles for trading in paper silver and platinum. These products did not exist a decade ago, when gold was mired at $255 per ounce. In fact, Bloomberg published a fascinating article over the weekend, all about the hatching of the idea of gold ETFs early in this new century, when gold was still ultra-cheap.

In 2002, there were already some quite arcane and quirky Wall Street securities like “wine futures,” which represented shares of stock in a particular future vintage of wine – so the new leaders of London’s World Gold Council, an industry trade group, wondered why gold bullion could not become a tradable security in America. After all, Australia had pioneered the way, launching the first gold ETF in 2003.

The first U.S.-traded gold ETF, called SPDR (“spider”) Gold, started trading November 18, 2004, when gold was $442. After 30 days, the fund accumulated $1.3 billion, making it the fastest-growing ETF in history. Gold rose 58% in the 18 months after SPDR Gold started trading, reaching $700 in May 2006.

The setting up of gold and silver ETFs seems like a simple thing, but it took a long while to get regulatory approval of a gold contract on Wall Street. Now, major institutional investors like the Texas teacher’s pension fund and the University of Notre Dame, as well as billionaire hedge fund managers like John Paulson, Laurence Fink (Black Rock) and George Soros, own gold ETFs as a key part of their portfolios.

The chief investment officer for Notre Dame, Scott Malpass, explains why he moved into gold. At first, he was a gold skeptic, but he began buying into SPDR Gold after Lehman Brothers collapsed in 2008. The Notre Dame fund was worth about $5.5 billion last year, when it started acquiring gold. The school holds about $65.8 million in gold as of September 30, barely 1% of its assets, according to SEC records. Without ETFs as a “paper gold” alternative, perhaps these new gold buyers would not yet own gold.

More of Wall Street’s “Big Names” Praise Gold as a Part of a Balanced Portfolio

As World Bank President Robert Zoellick has said, “Gold is the yellow elephant in the room.” More and more big names on Wall Street are inviting the yellow elephant into the corporate board room, as well:

According to Bloomberg, Byron Wien, vice chairman of Blackstone Advisory Partners LP, says that he is recommending that institutional portfolios put 5% of their assets into gold. He says he’s meeting some resistance to that idea: “People think it’s just another bubble, or it isn’t real,” he said. Wien says he sees gold at $1,500 within two years, although “any potential price gain is less important than having a safety net. I’m recommending gold as a kind of insurance policy against calamity in financial assets,” said Wien.

George Soros famously called gold a bubble earlier this year, at Davos, but he hasn’t sold his gold yet. Maybe he was just trying to talk down the price to make another buy. As of September 30, 2010, SPDR Gold was the Soros Fund’s largest single holding, according to a filing with the SEC. The Soros Fund acquired five million shares in iShares Gold Trust, the SEC filing shows. On November 15, in a speech in Toronto, Soros said, “The current conditions of actual deflationary pressures and fear of inflation is pretty ideal for gold to rise.”

Analysts at Goldman Sachs forecast last week that gold will rise to $1,690 within 12 months. They cited fundamentals of supply and demand: Last year, investment demand overtook jewelry as the biggest part of demand for the first time in 30 years. To meet that demand, mining companies have explored places that don’t make much economic sense, in order to feed new demand. That pushed global gold production to a seven-year high in the first half of 2010, according to GFMS, but the industry’s average cash cost to produce an ounce of gold rose 17% in that digging orgy, as mining companies chased marginal deposits.

Gold is rising (or at least maintaining a strong floor in the $1380s) despite a spectacular rise in the U.S. dollar over the last two months, fueled by the European debt crisis. That means gold is rising in terms of all currencies, not just the dollar. As governments keep devaluing their currencies, it doesn’t really matter if the dollar rises to the euro. What matters is that gold keeps rising in terms of all printing-press paper.

In Europe, Moody’s downgraded Ireland’s debt five notches, from Aa2 to Baa1, last Friday and warned that Ireland’s financial fundamentals could deteriorate further. Ireland’s current credit rating is now just three notches above “junk” status. That will undoubtedly raise Ireland’s credit costs. This situation hit home last week when Moody’s threatened to issue a “negative outlook” on U.S. Treasury securities – a downgrade from its current “stable outlook.” This could potentially lead to a bond rating cut within 12-18 months. In the last month, U.S. Treasury bond yields have risen significantly, mostly over concerns that trillion-dollar annual deficits will become permanent and that our debt burden is spinning out of control.

In an official Treasury report issued last week, we learned that two nations in Asia own about $1.8 trillion of our debt (as of October 31). China controls $906.8 billion and Japan’s owns $877.4 billion in dollars. What if they sold a good share of that debt to buy gold? The dollar would tank and gold would soar.

2011 Top Rare Gold Coin Picks UNDER $25,000 (Part 2)

This week we are posting our second rare gold coin predictions for 2011. More predictions will be released in the weeks that follow. Predictions are not guaranteed and are just our best educated guess or opinion.

  1. MS-66 $2 ½ Indian Gold Coins (up 10-25% in price)
  2. MS-63 Type II $20 Liberties (up 10-25% in price)
  3. MS-66 Type III $20 Liberties (up 10-25% in price)
  4. MS-64 1912 & 1914 $2 ½ Indian Gold (up 10-25% in price)
  5. MS-65 1912 $2 ½ Indian Gold (up 10-25% in price)
  6. MS-65 $3 & $5 Indian Gold (up 10-25% in price)
  7. MS-66 $10 Indian Gold (up 10-25% in price)

In the opinion of the Publisher, all statements made herein are believed to be reliable, truthful and accurate to the best knowledge of the Publisher. However, the Publisher disclaims and is not liable for any liability or losses, which may be incurred by anyone relying on information published herein. You are encouraged and advised to independently verify all representations made herein before making investment or collecting decisions. The collectible coin market is speculative and unregulated and recommendations are meant for those who are financially suited for the risks and holding times involved. Past performance is not a guarantee of future results. The Publisher, its principals and representatives do not guarantee a profit, nor do they guarantee that losses may not be incurred as a result of following any recommendations in this report. Readers should not look at this report as giving legal or investment advice. Reproduction of quotation of this report is prohibited without written permission of the Publisher.

Gold buyers and sellers should beware of shady dealers – latimes.com

Beware of “Stupid Statements” About Gold, Cautions Veteran Dealer Mike Fuljenz

“With gold in the news these days, you hear more and more uninformed commentators saying increasingly silly things about a market they don’t really understand and have never studied,” cautioned veteran gold and rare coin dealerMichael R. Fuljenz in his weekly precious metals market commentary issued today, October 12, 2010.

Fuljenz, President of Universal Coin & Bullion, Ltd. (www.universalcoin.com) said gold’s “bullish trend is strongly in place due to the dollar’s rapid decline to most other currencies,” and gave recent examples of what he labeled “stupid statements about gold in the mass media.” Here are three of them.

One television critic said, “After all, you can’t spend gold at the grocery stores.” Fuljenz noted: Can you spend stock certificates in a store, or Certificates of Deposit? (Don’t forget the penalty for early withdrawal.) Can you trade dirt (“real estate”) for goods in a store? Nearly everything we own — stocks, bonds, CDs, real estate and commodities, including gold — must first be exchanged for cash in order to qualify as a “medium of exchange” in a normal store or other retail operation.

A stock analyst said, “Gold is clearly a ‘bubble’ market, ready to pop.” Fuljenz noted: Historically, bubbles are based on greed, the “greater fool” theory of selling a rapidly rising investment in order to make a quick killing. Most gold investors are buy-and-hold savers (hoarders), who are buying gold based on fear for the global economy, not greed to make money quickly. As John Roque said to CNBC’s Jim Cramer in late September, gold is generally 1.5 times the S&P 500, which is now at 1165, making a fair gold price $1,750. In 1980, gold was six times the S&P 500.

The CPM Group issued a statement claiming, “If gold were only used for industrial and ornamental use, its price would be $600.” Fuljenz noted: That’s like saying if gold weren’t known as money in every major society for the last 6,000 years, it wouldn’t cost so much to fill the cavities in our teeth. Gold’s price is not solely based on jewelry or industrial applications. It is based on its role as “shadow currency” in a world that is devaluing the intrinsic value of all paper currencies, since printing is a “no-cost” solution.

The entire Metals Market Commentary issued every Tuesday by Fuljenz is available free online atwww.universalcoin.com/buying-gold/metals-market-commentary.html.

Fuljenz is a respected, award-winning numismatic book author and newsletter writer, receiving nearly three dozen awards since 1986 from the Numismatic Literary Guild, a nonprofit organization that annually recognizes outstanding journalism on the diverse subject of money from ancient to modern. He also was recently honored for his expert assistance in an on-going series of investigative “seller beware” stories about traveling gold buyers in five Southeastern states. One of the so-called “hotel buyers” offered only $60 for a rare U.S. gold coin actually valued by independent experts at $10,000. Fuljenz provided the coin for the news media investigation.

For additional information, contact Mike Fuljenz at Universal Coin & Bullion at (800) 459-2646.