Prediction:
Gold Will Rise in '09 By David L. Ganz, Numismatic News
December 22, 2008
Predicting
the future is what newsletter writers, pundits and seers do
for a living. For the past 43 years, I had the best part-time
job, ever: writing this "Under the Glass" column
dedicated to covering the entire numismatic field. Last year,
I did a "Seer" column with a number of predictions
about the coin market and some other things of interest to
our community.
In looking through my clips, the first reference
I can find to this line of work is an article that I wrote
on these pages in May 1971, entitled "The unmasking of
a seer." It was never a regular feature of this column,
though I did it from time to time, but starting around 1980,
I regularly did a feature once each year for the other periodical
magazine.
Historically, I've spent a lot of time in
the "Seer business" when it comes to market analysis.
I've always, for example, predicted the price of gold, silver,
platinum with varied degrees of success. The same is also
true of my famous predictions for 1881-S silver dollars in
MS-65 condition, something I view as a bellwether of the marketplace
as a whole.
Less accurate is my plea for Indian Head cents
to be given their fair recognition and representative pricing.
(Okay, finding a 1906 Indian Head cent in pocket change in
1960 changed my life - and yours).
As my own life has changed and evolved, I
became an elected official serving first as mayor of my community
(fourth-largest in New Jersey's largest county, Bergen) for
seven years, and subsequently during the past six years as
a county commissioner or supervisor known as a Freeholder.
My interest in politics went from local concerns
to national predictions and some very close calls on presidential
races in this century (mostly accurate but finally off by
only a couple of electoral votes).
So, for the 28th consecutive year, I've brought
out the Ganz Crystal Ball to offer you a window to the future.
For the next couple of minutes, you can check out my scorecard
in the seer business from last year - a respectable .650 average
- compare it with some whoppers from years past, and see what
I believe the future holds.
When I quote my seer record - it usually is
50 percent or better - I am reminded that great players like
Ty Cobb (.367 lifetime batting average) couldn't master his
craft six times or more in 10 chances. May being a seer isn't
so bad after all.
As many readers know, in real life I am a
lawyer, so take a lawyer's cautionary note: everything that
I write should be viewed with a grain of salt. My track record
in predicting precious metal prices is pretty dismal - though
not this year - zoo monkeys tossing darts might do as well.
But on some compelling hobby and other issues, my overall
track record borders on the semi-skilled. Recently it has
been better than in years past.
No one has suggested I give up my day job
as a lawyer and local political figure (except for the local
voters who voted for the other guy in the 2005 mayor contest).
(I didn't predict it, but I was re-elected this past November
as a Freeholder, obtaining a record 171,000 votes).
This seer business is actually tough and takes
a lot of research, twice. The first is the datum necessary
to read the tea leaves of the future; the other is checking
on what happened in the past. Both are time consuming, but
also a lot of fun. I hope you enjoy the Swami's musings as
much as the seer enjoys writing them.
In gearing up for this year's article, I drew
on a 2006 visit Kathy and I made to the Oracle at Delphi.
That journey was incredible and took us around 120 miles North
of Athens - three hours by tour bus. I can almost imagine
the soft glow of the Oracle. Sit back now and let's predict
2009:
1. Gold. Spot as of this writing is $802.
My belief is that the compelling market realities will cause
a shift of more than 17 percent in the next 12 months (by
December 2009); that is, gold will rise above $938.
All of the traditional rules seem to be broken,
but gold is an asset of last resort and in tough economic
times like these, is traditional storehouse of value should
be a winner. We'll see.
2. Silver. Silver is now $10.16, or half of
what it was (more or less) in March. Silver has industrial
and commercial uses, and my guess is that this inexpensive
metal has a run up of at least 25 percent during the year.
So that there is no misunderstanding, that means that silver
will exceed $12.70 during the year.
My real target is higher, but I can afford
to play it safe. That means I can tell you I really think
that silver will go above $15 an ounce, but who can argue
with someone who says a 25 percent return on investment is
what's being predicted at a minimum.
3. Platinum. Today, spot price for platinum
is $827; it has fallen $1,400 in the course of just a couple
of months. Since one of the major industrial uses of platinum
is for catalytic converters for automobiles - a pollution
impediment - I look at the debacle concerning Ford, Chrysler
and GM and say platinum is going to stay depressed but will
move $50 an ounce to $877 or more this coming year.
As a percentage, this is a little more than
6 percent - but look at other vehicles for return and see
how it compares. Platinum isn't a bad bet.
4. Next Mint director. My vote goes to Reed
Hawn, the Texas collector and political activist. Ed Moy,
current director, has a five-year statutory term, but it is
likely that he will depart in the spring. It won't even take
the president's request; it will happen on a much lower level.
Many other directors with long term Senate
appointments have had to interrupt their tenure to move on.
Among them, William Brett (1954-1961), who left when JFK took
office; Eva B. Adams, director 1961-1969, who left shortly
after Nixon took office (and the Philadelphia Mint opened);
and Mary Brooks, who succeeded her (1969-1977), who departed
as Jimmy Carter took office.
Then came Stella Hackel Sims (1977-1981),
who departed as Ronald Reagan entered, and Jay Johnson, appointed
by President Clinton in May 2000 and departed mid-2001 as
George Bush nominated his Mint heads.
5. End of the cent. The economy, stupid! The
powers that be are going to look at saving a few bucks and
in the end are going to decide that in these economic times,
symbols do matter, and the cent will be safe, again, for a
little while at least.
6. Mint will produce less. A large number
of cents and other denominations aren't in circulation. About
$10.5 billion, or $93.75 per household, is sitting idle, according
to Coinstar, which hosts coin-counting kiosks in grocery stores,
banks and other locations.
Bet those coins continue to get turned in
at record rates; that inevitably means that the Mint will
be producing fewer coins.
7. ANA politics. Presidential contest this
year is between Clifford Mishler and Patty Finner, both of
Iola, Wisconsin. It's a small town - I lived there once (1973-74)
and this is one instance where there may be some real campaigning
(perhaps at the new Crystal Café). My prediction of
the end result: Mishler, in a close race.
8. Coin market. It will hold its own against
the national economic trend and change upward by more than
5 percent. Compare that to the Dow, Standard and Poors or
even farmland.
9. 1881-S bellwether silver dollar. Priced
now on Dennis Baker's NumisMedia MS-65 at $185, the price
will go over $200 in 2009. That's a modest 8 percent. In 2006
it was valued at $152. It's simply time.
Well, that's it for this year. See how these
predictions work out by checking out these pages same time
next year.
How the Seer did with predictions
for 2008
1. Political predictions. First, California
will retain the traditional winner-takes-all electoral block.
The Democrats will take the White House in a close (state-by-state
votes for electoral vote) contest, widespread popular vote.
No Supreme Court challenge this time. My guess is 391-157.
California kept it, Dems won, vote was 365
to 173. Three full points!
2. Gold is on the way to $1,000 an ounce and
will reach it in November, 2007 and December, 2008, a 13 month
window. But once $800 an ounce was breached, my crystal ball
says a run on $1,000 is likely. As this is written (Thanksgiving,
2007) gold's price is $803 an ounce. That's a 24 percent increase.
Watch for it.
Gold briefly topped $1,000 on March 17. Bingo.
1 point.
3. Silver, now at $14.66, will rise to $16
or more in the next 13 months.
Silver did hit $16 and then some, topping
out at $21 on March 17th. I am starting to look like I have
a real crystal ball.
4. Watch for platinum to rise to over $1,600
an ounce in the next 13 months.
Platinum went to over $2,300 an ounce on March
4 and stayed above $1,000 until early September. It was a
nice ride.
5. Congress is going to try and give up on
- or abdicate - its constitutional responsibilities in setting
weight, size and composition of the nation's coinage - but
will retain rights to name the coin and define its design.
Oddly, it will pit Ds versus Rs - with the Democrats willing
to sign rights over to the Mint, in evident violation of Article
I, Section 8 of the federal constitution - which gives Congress
non-relegable power over the nation's coin and currency.
They tried but the bill, H.R. 5512, made it
in early May in the House, but could not pass the Senate.
Half a point.
6. Watch for hearings and a vote on elimination
of the cent and the nickel - on the faulty logic that it costs
more than a cent to produce the 1-cent coin and nearly a dime
to produce a nickel, when overhead is added in.
Woulda, shoulda, coulda, mighta, nope. The
Mint will back a compositional change - they've expected it
for a while - but the Seer notes that they also favor giving
administrative authority to make the change.
7. Law suits and administrative hearings are
likely to occur over the use of the word "Mint"
in 2008, now that regulations have been issued to clarify
that in the U.S. Mint's view, no one but they or another lawful
government facility can use the word "Mint" in advertising.
The Mint has trademark status on the phrase
"U.S. Mint" and a host of other product names including
"U.S. Mint Proof Set", "UNcirculated set",
and so forth. Watch for (1) the law suit an (2) the suit to
cancel the trademarks on the basis that they are longstanding
generic names that have lapsed with common usage.