Tax Day gold lull occurs most years

For most individual tax return filers, April 15 is the annual deadline to send in their personal federal income tax forms. In general, those who are getting refunds like to send in their tax forms quickly. On the other hand, those who have to write a check to the Internal Revenue Service often wait until close to the due date to send in the return with payment.

The April 15 tax deadline also affects the numismatic industry. My company’s experience over several decades is that there is almost always a lull in public demand for numismatic and precious metals items starting about a week before April 15. This lull usually ends about a week after that date. In conversations with dealers across the country, this same pattern also happens to most dealers.

There was an exception to this pattern of a mid-April lull in 2013. From the U.S. COMEX close on Thursday, April 11, to the close on Monday, April 15, the price of gold fell 10.8 percent (from $1,564.25 down to $1,395) and silver dropped 14.6 percent (from $27.69 to $23.65). This sharp drop in prices led to a huge wave of buying in the United States as well as in nations around the world.

As was revealed later, massive quantities of gold and silver were sold on paper contracts on April 12 and April 15, concentrated in specific times so as to guarantee that the contracts would be sold for the absolute lowest possible price. Such sales were not done by parties who were looking to realize the maximum possible selling prices. In my judgment, these sales were made for no other purpose but to deliberately suppress gold and silver prices.

In April 2011, the pattern also did not hold. On April 8, the COMEX closing silver price was $40.60. At the end of trading on April 27, the spot price had risen 16.7 percent to $47.40. Gold only rose about 2 percent over that period.

What the 2011 and 2013 events prove is that there is a risk in assuming that a general pattern will repeat consistently. It also demonstrates the difficulty in trying to time the market.

The most important reason to own physical precious metals like gold and silver is for what I describe as “insurance.” By buying and holding gold and silver against the risk of a major decline in the future value of paper assets such as stocks, bonds and currencies, any time is the right time to make a purchase. Yes, markets may dip somewhat from the time you make your acquisition. But, as the U.S. government is learning and will learn to its dismay, he who owns the gold makes the rules. Owning physical gold and silver could someday provide great insurance benefits.

Patrick A. Heller was the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He owns Liberty Coin Service in Lansing, Mich., and writes “Liberty’s Outlook,” a monthly newsletter on rare coins and precious metals subjects. Other commentaries are available at Coin Week. He also writes a bi-monthly column on collectibles for “The Greater Lansing Business Monthly.” His radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing.