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11.3.2019 - Free Investment Newsletter Bookmark

Is this Real?
There’s been some buzz lately about Gold and Silver Eagles possibly dropping in premium value. Why? Well, that’s a good question.
A few years back, some of the big wheels at the US Mint were at a conference and one of the topics of the conference was the amount of fake Gold and even silver eagles that are showing up around the world. Yes it’s a problem.

For the most part the fake silver eagles are fairly easy to spot, but the really well done Gold Eagles are pretty hard to distinguish from the real thing. They take a blank of Tungsten and they copper plate it, then they gold plate over that. Depending on the sophistication of the people stamping the coins, they can be pretty darned good fakes.
That said, there’s been a rash of Silver Eagle “Proof” coins that are showing up to be frauds. It’s easy to see why, as none other than our friends in China are selling these fake proof coins for about 3 Dollars US, while a true authentic proof might sell for 35 to 45 dollars.
By the way, what’s a “proof” coin? Well Proof coins, are known for their polished appearance, with frosted devices and mirrored fields, which are manufactured specifically for collectors. These coins are produced in relatively low quantities and are considered more beautiful and more valuable than their standard counterparts. Often they’re produced “ahead” of a new production run, and might use different dies and strikes than the standard coins. They may be easily recognized by their special packaging and smooth appearance, which is achieved by using specially polished blanks when striking the coin.
So you might look at a really beautiful one ounce “proof” silver coin, and pay the big premium for it as a collectors item. Then, one day you go to sell it and you find that it’s nothing more than a fake. Ouch.
About 20 years ago the Canadian Royal mint started to release some of their coins with a very interesting 3 D hologram on them. It was a dual purpose operation, one to enhance the intrigue of the coin and secondly to thwart counterfeiting. Most fly by nights didn’t/don’t have the tooling technology to reproduce such things.
Enter big brother. After that meeting of Mint officials, they started kicking around the idea of redesigning the “reverse” ( or back) side of both the Silver Eagle and the Gold Eagle. On the surface they said that the current design has run for 35 years and it simply needs a make up refresh.
But maybe there’s more to the story. Uncle Sam and his banker buddies truly hate the idea of you holding anything of value that they can’t track and tax. If you and I meet up in the parking lot of a local eatery, and you offer to sell me 20 Gold Eagles for the proper amount of money and we do the deal, Uncle Sam doesn’t know that he sold them or that I now own them. They hate that.
This is from Coin World: The U.S. Mint is moving ahead with plans to redesign the reverses of the silver and gold American Eagles for 2021 to accommodate the use of anti-counterfeiting technology at the production stage.
Treasury Secretary Steven Mnuchin has given the Mint the green light to replace the designs, which have appeared on the coins since their release in 1986.
“We are planning a redesign of the American Eagle Silver and Gold coins in honor of the 35th anniversary of the American Eagle program. The details of this redesign will be announced in the near future. There is currently no plan to redesign the American Eagle platinum or palladium coins,” said Todd Martin, acting chief for the Mint’s Office of Corporate Communications.

The redesigned reverses will be introduced first on bullion releases dated 2021. The anti-counterfeiting measures will be introduced later on the Proof and other collector versions.
“Since the early days of the Republic, the Mint has been very sensitive to the threat of counterfeiting,” Martin said. “We have made progress in developing state-of-the-art anti-counterfeiting measures for bullion coins, and are prepared to implement changes that will enhance the security of the gold and silver bullion coin program.”
Martin said Mint Director David J. Ryder “has assembled an anti-counterfeiting interdisciplinary team within the Mint that is researching and reviewing both overt and covert options to enhance the protection of our bullion products. In addition to improving anti-counterfeiting measures, we are reaching out to educate and inform the numismatic community and consumers about potential counterfeits, thus ensuring continued confidence in our bullion products for years to come.”
Enter CUSIP. Okay what’s a CUSIP? Glad you asked.

In July 1964, the New York Clearing House Association approached the American Bankers Association to develop a way to improve operating efficiencies across the industry by developing a standard method of identifying securities. The Committee on Uniform Security Identification Procedures (CUSIP) was created to work on this issue.
This resulted in the establishment of the CUSIP system and in 1968 the CUSIP Service Bureau was formed to administer the system. Over the years, the organization's core competencies in securities identification and data management and strong relationships with industry stakeholders positioned it as a catalyst for innovation. As coverage expanded to include new financial instruments and geographies, CGS emerged as the overarching entity for all CUSIP offerings.
So, as we speak, CUSIP has indeed started working with a few of the mints to classify gold and silver coins, bars, bullion etc with identifying numbers. Now things get interesting.
The Question of the day is this. Is the Mint going to actually micro engrave Identifying CUSIP numbers on their redesigned “anti-counterfeiting” design on these coins???? No one has given me a straight answer.
If they’re simply going to do a hologram, or some form of micro engraving that would be hard to duplicate, that’s one thing. I’m all on board with that. But if they’re going to sneak CUSIP numbers on these coins, that’s a whole different animal. Why? They can be tracked.
Part of the allure of the precious metals is the privacy they give you. Like my example above, if I buy 10 gold coins from you, no one’s the wiser. You got your money, I got my gold. But, if these coins come from the mint with CUSIP numbers engraved on them, they can be tracked from the manufacturer, to the wholesaler, to the dealer and ultimately to the retail buyer. Uncle Sam would know what you own.
That right there is a big deal to me and just about everyone in the metals arena. But let me take this full circle. Would premiums on the coins you currently possess actually lose value because they don’t have this new “anti-counterfeiting” design on them?
My feeling is yes and no. In other words, IF they simply come out with some form of exotic hologram or what have you, that makes counterfeiting harder, then yeah, I suppose they’ll carry a bit more premium than coins that don’t have that advantage.
BUT, if they go ahead and put CUSIP numbers on individual coins, then I believe the premium for coins that are not adulterated with the ID would be worth considerably more premium. I know I’d pay an extra buck a coin to buy something with no tracking feature on it.
So the real question is, are they going to put CUSIP numbers on the coins or not? I do NOT know. I haven’t been able to find anyone at the Mint willing to tell me if that’s part of the plan or not. So, I wouldn’t be in any sort of panic what so ever concerning some of the “doom” talk I’ve heard lately about these redesigns.
As soon as I’m sure I have a true answer as to yes or no, I’ll let you all in on it. But for now, my “Guess” is that the first runs will not have any ID numbers on them. Time however will tell. Just a heads up.
The Market:
It is now “in your face.” They aren’t even hiding it any more. The Feds have pushed the upwards of 650 billion dollars into the bank in the last two weeks, and then just for ha-ha’s, they cut rates again.
The market continues to hit all-time high after high. Oh and just for more laughs, the ECB started their QE program on the first, and the Bank of Japan says they think they have room for more stimulus over there.
It’s a globally coordinated money printing spree of epic proportions. And, as you can see, a significant amount of it is falling into the stock market.
This is really quite astounding. No matter how ugly the economic reports, nothing matters. We saw the Chicago PMI fall the most/fastest in 38 years. We went up. GDP is 1.9%. We go up.
Oh and what about that jobs report Friday? Do you really believe 128K jobs were created? Well, not so fast. The BLS’s “birth/death” MODEL, added 274,000 to Fridays number. Jobs where there’s no proof they exist. No tax receipts, nothing. Just an equation that says they “should be there.” Take out the BLS injections and we didn’t gain 128K jobs, we lost 146K jobs.
And what did the market do over such baloney numbers? It went up. Way up. Record high up.
What’s worse is that it will probably go up more. As long as they’re gifting the banks with ¾ of a trillion dollars in “liquidity,” this market will continue to move up.
I don’t know how high. When we came into this year, we had just come through a “mini” crash of about 20% from December. A bounce was certainly in the cards, but it was my opinion that the earnings, and the economic numbers wouldn’t be enough to sustain us and we’d roll over at some point into a hefty sell down.
HAHAHAHAHAH. I must have been smoking Drano. Roll over? Sell down? Not with this Fed. Not with Mario Draghi. Not with Kuroda, not with umpteen billions to print and rates to slash.
This market is the ULTIMATE game of musical chairs. It’s going up and up and up, and we all know that one day, something will happen and everyone’s going to try and get out at the same time. I don’t know what it will be. A nuclear accident? A shooting war with Russia or China? A major bank that does fail despite the Feds?
I don’t know. It could be all the above. Yet until that something does happen, they’ve programmed this market to go higher. It’s terribly hard to buy stocks in this market, knowing in your gut that it’s only “up here” because it’s rigged. Yet what’s the choice? Do nothing and watch it keep going without you?
One could say, “okay we’ll hunt for some cheaper value stocks.” Nope, they’re not cheap any more. One could say that they’ll simply use call options, to lessen their entry cost load, and that’s fine. But you’ll still be wondering “will I wake up Monday or Tuesday or Wed, to a limit down futures market because something finally broke?” It’s a real fear.
I can’t give advice, I’m not a broker. I’m not registered. I’m simply someone that’s been in the trenches for 25 years. But my opinion is that to play in this market one needs to use small positions. We’re ten years into this engineered market/economy bounce from the 08 crash. They’ve used every trick in the book to get us here. That’s not organic, that’s rigged. Can they keep it going for ten more years? I don’t suspect so, but then again, I didn’t expect to hit all time highs again this year.
I will say this, the higher this market goes, the more I like gold and silver. Consider some gold and silver Eagles like we mentioned in the general commentary. When this bubble does meet its pin, G &S might be the only saving grace.
Lean long, use small positions, and...pray.

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