Welcome to Money Metals Exchange's weekly market wrap podcast. Helping precious metals investors during these treacherous times. Now, here's this week's market wrap with commentary and analysis from the fastest growing precious metals dealer in America, Money Metals Exchange.
Welcome to this week's Market Wrap Podcast, I'm Mike Gleason.
Well, precious metals are managing to put on some gains this week even as downside pressure hits commodity and equity markets. Geopolitical tensions centering on Russia and Ukraine, along with concerns about waning global economic growth, weighed on stocks and some commodities – copper, especially.
Over the past few days, the copper market has been hit with something akin to panic selling, largely on concerns over softening demand from China, the world's biggest copper consumer. Copper prices are down more than 5% for the week. They are down 13% for the year and sitting at four-year lows.
As with precious metals, actual supplies of copper are tight in relation to demand. The potential for production to increase or even be sustained at current levels is in serious doubt given the state of the mining industry. A recent Barclays analysis showed the costs of producing copper are as much as 87% higher than they were in 2007, even as market prices are in the same general range. Higher mining costs pinch profit margins and often cause mining companies to reduce their output while shifting production to higher-grade ore bodies.
Perhaps copper is close to putting in a wash-out bottom near these levels. Copper certainly represents an interesting hard asset investment opportunity here. And Money Metals Exchange now offers both copper bullion rounds and copper pennies. Our exclusive copper rounds feature Money Metals' iconic “Don't Tread on Me” design, just like our popular silver rounds.
Our new option for copper stackers is Lincoln copper pennies minted in 1982 and earlier. That's because from 1909 through 1981, pennies contained 95% copper. In 1982, the Mint started phasing out copper pennies and began producing pennies made primarily of zinc in order to cut down on costs. By 1983, all newly minted pennies contained 97.5% zinc, with only a thin layer of copper coating.
Even after the recent plunge in copper prices, the actual melt value of a copper penny is still about double the face value – and we are selling these copper pennies for roughly melt value. Now to be clear, copper is certainly no substitute for gold and silver. But buying copper in this form is a great value – and at a minimum you should have some copper bullion to supplement your barter kit.
Eventually, copper prices will recover. Copper pennies could be worth three, four, or five times face value in the years ahead – maybe more. A pre-1965 silver dime is currently worth a little more than 15 times face value, that's the melt value and before the premium is factored in.
Silver dimes and copper pennies are both handy for making change in barter transactions. Or you could hold copper pennies along with other hard assets just for inflation protection and profit potential. Who knows, maybe the beaten-down base metal copper will turn around and outperform gold and silver from here.
Well, speaking of gold and silver, gold prices are rallying strongly this week, especially today. Gold broke to a six-month high on Thursday and appears poised to soon challenge the $1,400 level. Gold prices currently trade at $1,384 per ounce, up more than 3% on the week.
Silver is also showing some gains, though the white metal hasn't yet broken out to new multi-month highs. As of this Friday morning recording, silver trades at $21.62 an ounce -- good for about a 3.4% weekly gain – most all of that coming from the advance we've seen so far this morning.
We'd like to see some leadership from silver to confirm that a new cyclical precious metals bull market with legs is underway. The ratio of the silver price to the gold price remains near the lows of last year. From a longer term perspective, silver is relatively depressed versus gold. An ounce of gold now sells for about 64 times an ounce of silver. Historical precedent and a consideration of the ratio of gold to silver in the Earth's crust both suggest the gold-to-silver ratio can move closer to 20 to 1, and probably lower, as silver makes up ground.
Silver has a lot of ground to make up, which means there's lots of potential for metals investors to profit by favoring silver over gold at these levels. Silver now also looks cheap relative to the other white metals, platinum and palladium. Both platinum group metals are roughly flat for the week after having put in significant gains since February. The technical pictures still look strong for the intermediate-term, with the palladium market looking at the possibility of new record highs sometime this year.
Well that will do it for this week's Market Wrap Podcast, thanks for listening. This has been Mike Gleason with Money Metals Exchange reminding you that remain fully committed to getting you the most value for depreciating dollar…with speed, with accuracy, and with top notch service. Have a great weekend everybody.
Thank you for joining us for this edition of the Money Metals Exchange Weekly Market Wrap. Be sure to come back next week, and don't forget to subscribe to our weekly podcast through iTunes. For answers to all of your questions, or to discretely and securely buy or sell gold or silver coins, bars, and rounds, call 1-800-800-1865. Our knowledgeable and no-pressure specialists are standing by between 7:00 a.m. and 5:30 p.m. mountain time, Monday through Friday. Visit us at www.MoneyMetals.com or call 1-800-800-1865.
About the Author:
Mike Gleason is a Director with Money Metals Exchange, a precious metals dealer recently named "Best in the USA" by an independent global ratings group. Gleason is a hard money advocate and a strong proponent of personal liberty, limited government and the Austrian School of Economics. A graduate of the University of Florida, Gleason has extensive experience in management, sales and logistics as well as precious metals investing. He also puts his longtime broadcasting background to good use, hosting a weekly precious metals podcast since 2011, a program listened to by tens of thousands each week.