Between Fed and Congress Aid, Precious Metals Are Heading Higher

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	Why Gold’s Plunge Proves It’s A Safe Haven Asset
	Gold is often seen as a safer bet for investors and Thursday’s plunge in prices, as global stock markets drop, shows that investors have taken refuge in what the precious metal has to offer: cash . . . . Myra P. Saefong

Last week the Federal Reserve threw the kitchen sink at the coronavirus crisis to prevent a liquidity disaster. Congress is adding an additional $2 Trillion at the economic rescue package, while many major countries around the world are writing blank checks to save their economies.

Let me start with what our Federal Reserve is doing to keep liquidity in the financial system.

The following is exactly what the Federal Reserve Bank did last week:

March 15: Fed cuts its interest rates by 100 points to a range of zero to 0.25%

March 15: Fed buys $700 billion of U.S. Treasury debt and “agency” mortgage bonds, or assets with government backing; its bond buying programs could be boosted by $1.5 trillion.

March 17: Fed invokes section 13(3) of the Federal Reserve Act to provide a backstop for a key source of short-term funding for big businesses. According to Bank of America, the Fed could buy $4.5 trillion in corporate bond debt.

March 18: Another 13(3) program to supply key dealers of securities on Wall Street with up to 90 day loans at ultra-low cost to jump-start trading again and boost liquidity across financial markets.

March 19: The Fed sets up $30 billion to $60 billion worth of U.S. dollar swap lines with nine central banks in Asia, South America, and Europe.

March 20: The Fed again uses its crisis-era powers to roll out another new program to help rescue the municipal-bond from soaring yields.

March 20: The Fed and five other major Central Banks moved together to bolster their global funding efforts by moving to daily 7-day U.S. dollar funding facilities.

On March 20, the Fed ramped up to a stunning $1 trillion in daily liquidity for the balance of March, split between a morning and afternoon borrowing facilities.

Congress has been negotiating over a $2 trillion economic emergency relief package. This legislation will help our country deal with the effects of the coronavirus, which will cause massive unemployment and the possibility of an economic recession. The bill is being held up by Democrats, who argue that Republicans are prioritizing corporate industry over American workers in the legislation. Further complicating matters, there are now five GOP senators in self-quarantine or isolation, and under current rules can’t vote. With the U.S. still negotiating a deal, central banks and governments around the world last week announced a wave of stimulus measures aimed at bolstering economies and calming harried financial markets.

The volatility in the world’s financial market which is being caused by concerns over the coronavirus continues to worsen. Last Friday, Gold closed at $1,484 per ounce, down $32 for the week. During the week, Gold made a new 2020 low of $1,450 on Monday and rallied $34 per ounce by Friday. Some of my clients can’t understand why Gold has declined over the past month, considering the future economic unrest. Gold appears to be behaving the same as it did in 2008, during the financial crisis. During the month of October 2008, Gold initially dropped from $903 to $712 per ounce, a $191 decline. Then, Gold rallied back in six weeks, reaching $880 per ounce and, within a year, was trading over $1,200 per ounce.

In the past month, as the coronavirus became a serious pandemic, the Dow Jones average (DJIA) moved from 28,992 on February 20th to 19,173 on March 21st (lowest level in over three years). The DJIA declined an extraordinary 33.8% during the past month, a sign of the financial market’s concerns of the effect on the economy that the coronavirus will have. During that same month, Gold has declined from $1,644 per ounce to $1,484, a decline of $160 (10%). The primary reason Gold declined is the lack of liquidity in the world’s financial markets. Massive margin calls have been issued and investors need money, so they’re selling everything. I believe the past month’s trading demonstrates why Gold is considered the best safe haven investment in times of financial turmoil.

Hopefully, within the next three months, the coronavirus will be in our rear view mirror, but what about the trillions of Dollars, Yen, Yuan, and Euros that are being printed and given away? Within the next month, I believe the government actions on giveaways will be passed and committed. At that time, market analysts will provide a revised estimate of U.S. and world debt, and it will be scary. Right now, we have an extraordinary opportunity to protect our assets by adding to our Gold and Silver holdings at a great price.

Today: This morning as the world’s equity markets dropped, Gold finally decided it was the investment of choice. Gold held around $1,500 in overnight trading, then in Europe started moving higher as our Federal Reserve put more money into the system. At this point in time, Gold has reached a high of $1,550 per ounce.

On Friday a precious metal investor spent $6 million to buy 10,000 June Gold 100-ounce options at the $1,800 level. That $6 million bet gives the investor the option to buy one million ounces of Gold at $1,800 per ounce in June 2020. Gold would need to be over $1,806 by June for the options to be profitable. I really hope this investor makes a profit.

Silver reached a 12-year low last Wednesday of $11.60 per ounce, based on concerns of the economic effects of the coronavirus. Silver closed last Friday at $12.35 per ounce, down $2.12 on very active trading. Last week, Silver was under attack, as the equity and commodity market investors are struggling to increase their liquidity to cover margin calls and losses. Silver is now trading at an unbelievable Silver-to-Gold ratio of 120-to-1.

Many popular physical Silver investment products are in short supply, as many of the world's mints are backordered or closed; the Canadian mint announced on Friday it was closing. Premiums on 1 ounce .999 Silver Eagles, Maple Leaf, Trade Units as well as junk 90% U.S. Silver coins have increased, but are available.

Today: Silver rallied with Gold this morning, moving back to the $13 per ounce level. Physical Silver investment products are still in short supply, as demand grows.

You may have heard about the California Safer at Home Order due to the coronavirus. Our company, since we work with Precious Metals Commodities and providing immediate cash for our clients in this time of need, falls under the classification of a Financial Institution. We are considered an essential business and are allowed to remain open. If you need money and need to sell any precious metals or rare coins, we will provide shipping labels and immediate payment upon receipt.

Since we are open for business, we have made many serious changes in company policies to keep our staff safe. We are cutting our staff down to an as needed basis on premises while others work remotely. Employees in the office are practicing social distancing, sterilizing their areas regularly, and keeping at least six feet apart from each other at work. Right now, all our employees are being paid. At this time, we are not allowing clients to visit our office, but our shipping providers continue to make pickups and deliveries. We are shipping/receiving packages and payment for our clients and vendors. Please call with any questions. We will update any client if there is a change. We would appreciate your patience and understanding during this time.

We continue to update prices on popular Gold and Silver bullion coins as we make new purchases. Premiums on many of the popular Silver bullion items have increased. Still many bullion products are showing Out of Stock, and we closed down the prices due to the high volatility in the precious metal prices. We have limited inventory of many of the popular rare coins and bullion items, so please call our office for updated prices.

As a friendly reminder, if you have placed an order with Mint State Gold and typically have your orders sent to your workplace, please confirm that your workplace will be open at the time of delivery. If you would like to make any changes to your shipping address during this period please call us, toll-free, at (888) 454-0444 or reply to this email.