May 2022 - Week 3 Edition
Gold Holding Ground on Strong Dollar
Gold is now flat for the year but that’s only because the U.S. dollar is soaring. The U.S. Dollar Index (DXY) is up 8.7% so far this year and +15.7% in the past 12 months. Gold remains at an all-time high in euro-terms, where energy prices are soaring much faster than in the U.S. Oil prices are also soaring again at home, with crude oil up 10.3% in the past week (and +71.6% in the past year) to $113.58 per barrel, but energy prices are up two to three times faster in Europe than in America.
The Passing of Naomi Judd Brings Back Memories of My Grandfather
The passing of Naomi Judd on April 30 brought back memories of my grandfather, due to her and her daughter, Wynonna’s, song, “Grandpa, Tell Me ‘Bout the Good Days.”
In 2017, my wife, Karen, and I heard Wynonna at one of her fine Christmas shows, where her “Grandpa” song got me thinking about my first interest in rare coins, sparked by my own grandfather, nicknamed “Red” Lievens for the color of his hair. When I was growing up in Louisiana, by the time I was 7, “Red” began giving me an uncirculated silver dollar every time I scored an “A” on my report card – and also for every birthday and holiday. (He got uncirculated silver dollars at face value from the bank until 1965.)
Before that, my parents put a silver quarter (now worth over $5) under my pillow for each tooth I lost – hence my fascination with the “Tooth Fairy Index” as a current measure of inflation in America.
From my childhood, I was intrigued by the design on Grandpa’s old Morgan dollars, so I set out to learn more about them. This inspired me to pursue the path I’m still following – rare coins as both a hobby and a career of endless joy and satisfaction. Grandpa taught me that coins made of precious metals carry a real “heft,” which implies they would always “trump” paper money of equal face value. Sure enough, dollar bills from the 1960s are still worth $1, but uncirculated Morgan silver dollars are worth a whole lot more – about $60 apiece at the present time.
Naomi Judd’ song, “Grandpa, Tell Me ’Bout the Good Old Days” won a Grammy Award in 1987 for “Best Vocal Performance by a Duo or Group.” It was a #1 Country hit and gave voice to America’s longing for the kinder, gentler way of life they’d known in days gone by. Here are the complete lyrics:
Oh, grandpa, tell me 'bout the good old days
Sometimes it feels like this world’s gone crazy
Grandpa, take me back to yesterday
When the line between right and wrong
Didn’t seem so hazy
Lovers really fall in love to stay
Stand beside each other, come what may
Promise are really somethin' people kept
Not just somethin' they would say
Families really bow their heads to pray
Daddies really never go away
Oh, grandpa, tell me 'bout the good old days
Grandpa, everything is changing fast
We call it progress, but I just don't know
And grandpa, wander back into the past
And paint me the picture of long ago
Oh, grandpa, tell me 'bout the good old days
The silver dollars I got from my grandfather were part of those old values – coins whose worth was real, not just symbolic like the paper dollar. Merle Haggard said the same thing in, “Are the Good Times Really Over?”
I wish a buck was still silver.
It was back when the country was strong…
...Is the best of the free life behind us now,
And are the good times really over for good?
Another country singer I know, Larry Gatlin, had a hit song back in 1979 called “All the Gold in California,” when gold was rising rapidly in price. He recently said he should have followed the recommendations of his financial advisors to purchase gold when it was about $300 an ounce in 1979. Instead, he said, “I bought horses and cows and cars and guitars and a lot of other stuff … Now, gold is about $1,900 an ounce while the horses are dead, the cows are dead, the cars won’t run and the guitars are, well, just guitars. The bad news is, I didn’t buy gold. The good news is, I now own gold and I’m going to buy even more.”
In the end, the silver dollars my grandfather gave me had the desired effect: I studied diligently in order to earn more A’s – and more silver dollars. If you have children, grandchildren, or other youngsters special to you, follow my grandfather’s example by giving them something with intrinsic value when there’s a reason to celebrate. You can’t get silver dollars for $1 at the bank, but they still make great incentives for rewarding “A” grades, and they might well increase in value a lot faster than today’s dollars in a bank.
Come to think of it, Grandpa Red deserves a great big “A” on any heavenly report card of his life!
Inflation Alert! The “Tooth Fairy Index” is Up 45% Since 2019
We all have our favorite market indicators. At coin shows, I like to watch for tennis shoes and pizza boxes. When the coin market is “hot,” dealers are on their feet all day, so they often wear comfortable shoes at their booths, and more order out for pizza instead of a two-hour lunch. When it comes to inflation, there are many indicators, but a real “family-friendly” inflation index I like is the “Tooth Fairy” index, and the poll is quite accurate.
Based on a scientifically representative sample of 1,000+ parents of children ages 6-12, the poll is taken in January and published in February. The margin of error is only +/- 3%. It is sponsored by the Delta Dental plan – for obvious reasons, to promote dental hygiene – but the results are quite amazing.
Here are the results of their last four polls, taken before, during and after – hopefully – COVID:
The infusion of cash from the Federal Reserve was so strong in the two COVID years that the Tooth Fairy gave double-digit increases in both years for a combined 45% gain ($3.70 to $5.36) in the last three years. In the same three years, gold gained about the same amount, rising from $1,287 to $1,820, or +41%.
According to Delta Dental, “The newly disclosed value of a lost tooth has more than quadrupled since the inception of the Original Tooth Fairy Poll® when the value of a lost tooth was $1.30.” That was 1998, when gold was $287, so gold has grown 7-fold in 24 years while the Tooth Fairy index us up 4-fold.
“As a welcomed visitor into most homes around the country, the Tooth Fairy continues to bring fun and excitement to kids’ oral health care awareness. In fact, 1 in 5 parents share that the Tooth Fairy was one of their child’s favorite surprises during the pandemic,” said André Richards, Assistant Vice President of Delta Dental Plans Association. “With this year’s Delta Dental-sponsored national poll reflecting double-digit growth in Tooth Fairy giving, perhaps the Tooth Fairy is experiencing the effects of rising inflation, along with being very generous.”
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