August Gold Rush

  • The U.S. Mint’s either-or proposition
  • It’s on! Gold Rush
  • Addison Wiggin raises some what-ifs
  • Rebel Capitalist on the Government Put
  • Not finished with Big Tech stocks
  • Time’s ticking for TikTok
  • Apple’s cash stash and R&D spending
  • A reader defines D.C.… Gold dips: not low enough?… National Park quarter mystery… And the year of the bat

“Just last week, the Mint urged Americans to spend their pennies, nickels, dimes and quarters because the pandemic has… slowed the pace of coin circulation nationwide,” says an article at Bloomberg.

More today on The Great Coin Shortage of 2020 as Bloomberg reveals a document the U.S. Mint sent round “to companies authorized to buy coins from the Mint.”

Accordingly, the document indicates staff at its West Point, New York, facility will be limited in order to staunch the spread of COVID-19. Because of which, “the facility is no longer able to produce gold and silver coins at the same time, forcing it to choose one metal over the other.”

A real dilemma…

The Mint document reads: “We believe that this environment is going to continue to lead to some degree of reduced capacity as West Point struggles to balance employee safety against market demand.”

So for the first time ever, the Mint is asking coin dealers to offer 10–90-day guidance on demand. “That will allow [the Mint] to decide what products to make, as some are more labor-intensive than others,” Bloomberg reports. “If the Mint decides to make 1/10th of an ounce of gold, for instance, it must cut production of American Eagle silver coins.”

Perfect timing? “The reduced allocations are… coming just as investors are clamoring for precious coins,” Bloomberg concludes.

Gold Telegraph, for one, is reading the tea leaves…

Gold Telegraph

Also putting the pieces together, our founding editor Addison Wiggin, who says…

“Let’s play with a hypothetical,” says Addison. “Let’s say we have another wave of lockdowns in various geographic locales.”

If Charm City — where our firm is headquartered — is any indication, that’s a valid hypothesis as Baltimore’s mayor toys with shutting down restaurants, bars and gyms… again. (The decision to close school for the fall semester is, by the way, already in the can.)

Financially speaking: “Institutional traders get spooked — still speaking hypothetically — and start selling stocks. The hoi polloi see the numbers tanking in their 401(k)s. And so on.

“We know what happened during the initial lockdown,” Addison continues. “February and March of 2020 account for seven out of 10 of the largest single-day point losses in the Dow Jones ever.”

Sorta jaw-dropping…

Dow? Ow!

When you see it in black and white — ouch. So Addison raises the question: “What if bad news causes this still jittery market to drop 20% again?”

To wit, he recalls some central bank shenanigans: “Back in the Crisis of ‘08 we often referred to the ‘Fed Put’ — a friendly, colloquial term describing the Fed practice of buying mortgage-backed securities to put a floor in the market.”

Today?

George Gammon of The Rebel Capitalist Show suggests: “It seems… the Fed Put has expired and has been replaced by a Government Put.

“The whole U.S. economy is so tied to asset prices,” George continues. “So now the only entity to prop up the market is going to be straight government spending.”

Addison unpacks that further: “What that means is not just bank reserves, but that means a direct M2 money supply — cash to folks like you and me — and an increase in velocity, the speed at which ‘getting and spending’ happens.”

Stimulus checks, anyone?

“Whether [the Government Put] will continue to work, or not, is anybody’s guess,” Addison says. But it “could be the butterfly that unleashes a hurricane on the other side of the planet.”

Gulp… So now what?

George says: “With the Government Put there is already a huge tailwind for gold in general. I don't even worry about the price of gold,” he continues. “I don't even look at the price.”

Furthermore, he adheres to Jim Rickards’ rule of thumb; Mr. Gammon allocates 10% of his portfolio to gold. “When I get an extra hundred grand… $10,000 goes into gold.

“I think if you look at everything… the M2 money supply, the velocity, the deficits,” George says — even if the price of gold does go down — “I'll happily buy more and just wait until I think [gold’s] expensive… which probably is going to be a long bull run from now,” he concludes.

[Ed. note: See tweet above: “THE RUSH TO PHYSICAL IS ON!”

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To the market today, where gold’s hanging out at $1,985 per ounce. For the other commodity we regularly follow, oil’s up 2% to $41.08 for a barrel of West Texas Intermediate.

We’ve picked on the Dow a little today (see above… and below), but the Big Board’s rallied 223 points to 26,650 while the S&P 500 Index is up 26 points to 3,297. And the tech trade is still in play with the Nasdaq up 1.45% to 10,900.

The major economic number of the day — the ISM Manufacturing Index — shows PMI is up almost two points over June’s number to 54.2 in July. Recall, a number over 50 indicates expansion of the manufacturing segment of the economy.

“The growth cycle continues for the second-straight month after three prior months of COVID-19 disruptions,” says the ISM’s chair Timothy Fiore. “Among the six biggest industry sectors, Food, Beverage & Tobacco Products remains the best-performing industry sector.”

Fourth of July revelry? Interesting…

“Investors aren’t finished with [Big Tech] stocks just yet,” says our chart-loving analyst Greg Guenthner.

“Semiconductors streaked to new highs to finish the month,” he notes. “Household-name stocks like Apple and Facebook followed their lead, posting new all-time highs last week as well.”

The upshot?

Dow Part II

“The Nasdaq once again extended its summer lead over the Dow industrials during the final week of July trading,” says Greg. “Any way you slice it, tech is still king in this market.”

Speaking of Big Tech…

The TikTok narrative is unfolding minute by minute: As the fate of the video-sharing app remains up in the air, here’s a primer in headlines, from Friday to the present…

Tik Tok

So why exactly is TikTok in Trump’s crosshairs? Oh, you know, *air quotes* “national security concerns.” Officially speaking, the fear is that the Chinese-owned company is handing over user data to the People’s Republic of China.

(Dave says: “Apparently only the NSA is supposed to be able to do that?” Bazinga!)

We wonder if the real reason Trump has it out for TikTok is because that’s how a number of people secured tickets to his ill-conceived Tulsa rally… and then the place was half-empty.

Or this: Facebook’s Zuckerberg railed against TikTok when he testified for Congress last week, pretty much denouncing the company as un-American. A case of protesting too much? Zuck has a long-standing history of launching copycat apps… if the original refuses to sell to him.

We almost wonder then if someone got the president’s ear and said, “Hey, if you kill TikTok completely, it’s only gonna empower Facebook with its own TikTok knockoff. You don’t wanna do that, do you?”

Enter the company that put the “M” in MAGA stocks… we’ll see how this story resolves.

For an under-the-radar story, our technology expert Ray Blanco says: “Apple keeps investing heavily in future technology.”

When AAPL issued its quarterly numbers last week, the mainstream oohed and aahed about its revenue for apps and devices.

But here’s what caught Ray’s eye: Apple spent a record $16.2 billion on R&D in its 2019 fiscal year, and the company’s on pace to blow that figure out of the water in 2020 by an additional $2 billion.

Ray says: “As we learned a few months ago, some of that R&D spending might end up including satellite high-speed internet access as the company team of satellite experts works on this ‘top secret’ project.

“As I heard the company’s conference call,” Ray continues, “it felt like the elephant in the room no one was talking about.

“What’s Apple’s next big winner?” asks Ray.

“Is it a hardware product like augmented-reality glasses? Is it Project Titan, the drive to build a smart Apple car? Is it Apple-Fi disrupting the wireless market and beaming high-speed internet to Apple devices around the globe?”

Ray would bet on all three… and why not? And with a cash hoard of $200 billion, Apple “has more than enough… to engage in huge projects like funding a satellite mega-constellation once it comes up with a plan to do so.

“So stay tuned,” says Ray. “The company that changed everything looks to be on track to do it again.”

A self-described “cautiously quiet conservative” says: “In reference to Friday’s episode of The 5 here’s a slightly more 'mature' definition of politics…

“Breaking down the word: Poli (i.e., many) and tics… meaning bloodsuckin’ parasites! At last, Washington defined!

“I also would warn caution about any early presidential forecasts since conservatives are rightfully concerned that voicing dissent is a health hazard.

“Love The 5… and cheers to keepin’ it real!”

Another reader says: “Gold at $1,974… so much for your advice.”

The 5: Huh? We’re not following. The only thing we can think of is our caution last week that gold might consolidate; in which case, we said buy the dips. So… gold didn’t dip enough? With projections for gold skyrocketing, now’s the time to buy — regardless.

And a sharp-eyed reader comments on the 2020 quarters Dave featured Friday: “Is it possible that the park in American Samoa – with the bats – has no name on the coin? It says only ‘National Park.’

Fancy Coin

The 5: Good catch. After a little digging, however, we learned the name of the national park in American Samoa is (underwhelmingly) National Park of American Samoa.

But you got me why the U.S. Mint featured the fruit bat instead of another American Samoan species… the lovely kingfisher, for example.

Bird

Courtesy: NPS.gov

Scratch that. The bat’s perfect… for 2020.

Best regards,

Emily Clancy
The 5 Min. Forecast

P.S. There’s still time to capture the run to $2,000 or $3,000 gold. But at $1,985 today, it’s a race against the clock. Follow this link to learn what Hard Assets Alliance can do for you.

Full disclosure: We bought a piece of the firm last year, so we’ll collect a small cut once you fund your account. But we made that investment in part because we’re so impressed by what Hard Assets Alliance has done for people like you since its launch in 2012.

Emily Clancy

Emily Clancy

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