Somebody

I have fallen into a recent e-mail correspondence with someone I assume is a reader of our weekly Tuesday e-newsletter only. His topic is gold. He doesn’t like gloom and doom. He thinks Pat Heller’s contribution to the e-newsletter is not balanced and too political.

In my response, I thanked him for his interest and his input and I pointed out that Heller is a very popular part of the weekly e-newsletter. He also has had the distinction of being right.

Heller correctly forecast the near collapse of the U.S. banking system last year and its impact on gold and silver prices and bullion coin demand. His warnings were so sound I received a thank you from someone who is active in the Canadian financial industry. He congratulated me on Heller’s work and said he shared the e-newsletter contents with various other people around Canada.

I began reading Coins magazine in 1967 and Numismatic News in 1969. Then as now there could be no mistake that collectors are pro gold and pro silver. They want to own some of each.

In my early days, much of this reader interest took the form of grabbing and saving every silver coin that could be found in circulation and advocating the legalization of gold ownership, which in the 1960s was still illegal.

With every upward fluctuation in the precious metals, interest in them spiked.

In those 42 years, I have seen the upward spike followed by declines. It happened to silver after 1968, 1974 and 1980. Gold joined the pattern when it became legal to own on Dec. 31, 1974, though there was a free market in Europe that was avidly followed beforehand.

After the 1980 spike, there was a long decline both in terms of gold and silver prices and in duration. It was only in 2001 that a long-term bottom was reached.

Through it all, collectors remained pro gold and pro silver. Numismatic News wanted gold to be legalized and when it was has since recommended ownership in the form of the coins in the collections of readers.

This paper supported the creation of gold and silver U.S. bullion coins in 1986 and in subsequent years the platinum Eagles and Buffalo gold pieces.

The paper has been consistent. I was running stories in 2001 telling readers that the low of that time might be a good point to start buying, but there wasn’t exactly a spike in reader interest in them as a result. This interest has simply built slowly over time until we have reached the present point.

Numismatic News has never advocated putting all assets into precious metals – just those that their owners can afford to lose.

But we here remain pro gold and pro silver.

At some point, there will be another downturn. When it will occur is the open question.

However, the world’s central banks have adopted policies where they will do everything to prevent inflation from falling below 2 percent per year. That means over the long term gold’s price can go only in one direction, corrections aside. From the collector perspective, that doesn’t sound like gloom and doom to me.