Answering Your Questions18th June 2019
By Money Metals News Service
Perhaps the most interesting development in the bullion markets right now is that dealer premiums continue to fall. The markup above the metals’ market price has never been more favorable for buyers.
Although retail precious metals investors are still net buyers, we are still seeing a fair amount of selling metal back to dealers.
Some gold and silver bulls are frustrated with the stagnant price action. Both metals have been trading range bound for several years now. Seemingly every move upward in price has turned out to be a false start, and some people are worn out.
Other investors are less concerned about holding safe-haven assets now that Barack Obama is out of office, Donald Trump has moved into the White House, and confidence in the economy is higher in general.
How much lower do you think premiums will go?
Except for a short-term rise in premiums late last year, premiums have been moving gradually lower since 2016.
To answer whether or not premiums can go even lower from here, it is possible selling pressure could increase and push premiums further down. Our belief, however, is that it is not likely.
There are some very good reasons to own gold and silver. And these factors are likely to return to prominence in the months and years ahead. Federal budget deficits are on the way back to a trillion dollars or more starting this year. Price inflation, which has largely been absent for years, is starting to rise. The FOMC is expected to once again start lowering interest rates very soon.
What do you know about the City of Los Angeles’ lawsuit against Lear Capital?
Los Angeles City Attorney Mike Feuer has sued Lear for promising transparency and no hidden fees, but “despite these promises, Lear Capital preys upon trusting and inexperienced customers across the country, in particular the elderly.”
Feuer’s page on www.lacityattorney.org offers more detail:
“The myriad of unfair and deceptive practices our lawsuit alleges – preying upon elderly and inexperienced investors, misleading consumers about often astronomical transaction fees, threatening that its legal department will ‘eat [consumers] alive’ if they go public, sometimes wiping out huge chunks of life savings in the process – must stop,” said Feuer. “Customers need restitution and Lear Capital must be held accountable for its alleged wrongdoing. And if the company doesn’t like it, ‘tough luck’ – the very response it allegedly gave at least one customer who complained.”
“There is one kind of confiscation you can be 100% sure to avoid — the kind done daily by dealers selling so-called “rare” coins.”
They even claim that rare coins are immune from confiscation by the government.
The most common bit of blarney is that the client should move fast to buy some coin (which is, in fact, not particularly rare or desirable) at a huge premium to its melt value because swarms of collectors will pay even more to get their hands on it.
Over the years we have also had to give plenty of bad news to people who got taken for a ride. The “rare” coins they purchased don’t command much premium and are often actually worth far less than they paid.
Keep it simple. Stick with bullion coins, bars, and rounds that are bought and sold at prices near their actual melt value.
The Money Metals News Service provides market news and crisp commentary for investors following the precious metals markets.
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