Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
Eye Opening Currency Charts – Why Precious Metals Are Falling - 23rd May 19
Netflix Has 175 Days Left to Pull Off a Miracle… or It’s All Over - 23rd May 19
Capitalism Works, Ravenous Capitalism Doesn’t - 23rd May 19
The Euro Is Bidding Its Time: A Reversal at Hand? - 23rd May 19
Gold Demand Rose 7% in Q1 2019. A Launching Pad Higher for Gold? - 23rd May 19
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

U.S. Treasury Secretary Makes Sad Admission about Coinage Devaluation

Currencies / Fiat Currency Dec 02, 2015 - 06:15 PM GMT

By: MoneyMetals

Currencies

Traders are bidding up the U.S. dollar and dumping metals as they become more convinced that the Federal Reserve will raise interest rates at its next meeting. Janet Yellen and company have been talking about raising rates for the better part of a year, though. All talk and no action so far.

Will they finally hike or keep crying wolf? We'll find out when the Fed meets on December 15-16.


In the meantime, the long-dollar trade is getting crowded. Bullish bets on the U.S. dollar in the futures markets have more than tripled since last month, according to Scotiabank. The U.S. Dollar Index now trades right near the 100 level, matching its high point in March. The buck may encounter some technical resistance in this area. If it pushes through, momentum could accelerate to the upside.

On a fundamental basis, dollar strength is little more than the flip side to weakness in the euro and other major currencies. In order for Eurozone officials to weaken the euro, they have to do it against its main counterpart, the U.S. dollar.

Obama's Treasury Secretary Admits the Cent Isn't Worth a Penny Anymore

Recent weakness in precious metals prices is being confirmed by weakness in base metals prices. Last week, zinc prices fell to new lows for the year, while copper fell to its lowest level since 2009.

Copper has historically played a minor role in the monetary system. Its primary use has been in pennies. Until 1982, the penny consisted of 95% copper. Today, the penny is 97.5% zinc (with just 2.5% copper for plating). The U.S. Mint switched to zinc because it is a cheaper metal. After decades of inflation eroding the value of a cent, it no longer made economic sense to mint pennies out of copper.

Even though copper prices are now more than 50% off their all-time highs, a copper penny minted before 1982 still has a metal value that exceeds its face value by about 40%. And even though pennies are now made out of a cheaper zinc substitute, it still costs the Mint more to produce a penny than it is worth.

Government officials have called on the Mint to find a cheaper substitute for the zinc used in pennies (and for the nickel and copper used in nickels). But in an inflationary monetary system, the only viable long-term solution is to scrap the penny entirely. Treasury Secretary Jack Lew is considering that option.

Lew said in a talk last Monday, “Obviously the value of a penny has gotten smaller and smaller as time has gone on. Even with low inflation, it continues to diminish.”

Of course, Lew made no mention of the central role the Treasury and the Federal Reserve has played in this problem.

So yes, the penny has already become functionally obsolete. Its days as a circulating coin will be numbered sooner or later – sooner if base metals prices start climbing markedly higher.

Pre-1982 copper pennies, on the other hand, stand to become more valuable over time. They can potentially be used as barter instruments or as a means of betting on higher copper prices.

At some point, currently circulating nickels will be worth hoarding for their copper and nickel content. But not now. Given current metals prices, the melt value of a nickel is less than its 5-cent face value.

If you want to own circulated coins whose melt value exceeds their face value, then consider pre-1982 pennies and 90% silver pre-1965 dimes, quarters, and half-dollars. You can also obtain some historic gold coins, such as $10 and $20 U.S. Libertys, that currently sell at Money Metals Exchange at bullion-like prices.

The U.S. Mint halted production of its iconic gold coins in 1933 after Franklin Roosevelt infamously outlawed owning more than 5 ounces of gold bullion. Wise people ignored the official assurances that the new dollars would carry the same stable value and hid the gold coins away. Today these coins are worth more than 50 times their face value in gold content.

By Stefan Gleason

MoneyMetals.com

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2015 Stefan Gleason - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules