50 Years in Review

In the Beginning… We Were There

In 1973, when I was recruited to open CMI Gold & Silver, Inc., I was a stockbroker in Denver, Colorado.  At the time there was a horrible bear in stocks–so bad I dreaded clients calling to ask about the prices of their stocks.  I jumped at the chance to move to Phoenix.

When I came to Phoenix, gold was trading at $35 an ounce, the official price according to the US government.  However, in 1974, Senator Jesse Helms and Congressman Ron Paul ushered through a bill that made it legal to own gold.  It took effect January 1, 1975, which nullified FDR’s confiscation enacted in 1933.  If you owned gold coins, you had to turn them over to the government.  Many people did not.

When I opened CMI, (previously known as Certified Mint, Inc., for those that go back that far!) we could only sell 100-oz. silver bars, and they were “odd-weight bars.”  Sometimes we see sellers of those bars, and we buy them.  Soon, though, companies were producing exact-weight 100-oz.  We now have Asahi, Valcambi, Germania, Nadir, and JBR–all exactly 100-oz. in the 1970’s silver sold in the range of $2.00 an ounce.

Today there are a plethora of exact-weight silver bars, including 50-oz., 10-oz., 5-oz., 1-oz. bars, and kilo gold bars (32.15-oz).  Additionally, a multitude of National Mint coins: Maple Leafs, Philharmonics, Britannias, Kangaroos, Krugerrands, Buffalo rounds, Sunshine rounds—all 1-oz. pieces.  Further, we have old US silver coins: dimes, quarters, and half-dollars, often referred to as 90% coin because of their silver content.

And, we now have more gold products than we can keep track of: Krugerrands (which were the first gold coins we could sell), Gold Eagles (which come a variety of sizes: ½-oz, ¼-oz, 1/10-oz), American buffaloes, Australian Kangaroos, and British Gold Britannias.

Additionally, we have multiple options of 1-oz. gold bars from various mints: Perth Mint, Fortuna, Royal Canadian, Valcambi, and Credit Suisse.  We also carry Valcambi 100-gram gold bars, PAMP Fortuna gold bars, and kilo gold bars by various mints.

Still more, we deal in Mexican 50 Pesos (1.2057 oz. each).  Further, we have Austrian 100 Coronas (.9802 oz.), Hungarian 100 Koronas (.9802 oz.), Swiss Twenty Francs “Helvetia” (.1867 oz.) and occasionally we have British One Gold Sovereigns, (0.2354 oz.), which was one the most produced coins in the world, a further proof that gold and silver is used all over the world.

Bull and Bear Markets in the metals… We Were There

Over the last 50 years, I’ve seen several bull and bear markets.  However, the bear markets didn’t cause me to leave the industry because I had faith in gold and silver, which have existed since biblical times.  Unfortunately, the US government has gone to a fiat (paper) system where they could print as much money as needed.  Even early in my career, with all the deficit spending at the federal level, I came to believe that a permanent bull market was in place, not only for silver but for gold as well.

The price of gasoline in the 1970s… We Were There

I remember pulling into a gas station in Tucson with my family.  A young employee asked me if I wanted to schedule an appointment to buy gas.  I told him “No,” in no uncertain terms, and we left.  A few hundred yards down the road, I found a gas station that was willing to sell gas at the price posted.  That’s how crazy it was in the days of the Oil Embargo.

The Hunt Brothers… We Were There

The most exciting bull market was called the “Hunt Brothers run-up” when silver topped near $50 in 1980.  From $5 to $50 in less than seven years was exciting.  But then, a bear market set-in with occasional run-ups.

With an enormous amount of capital, the Hunt brothers accumulated silver and purchased silver futures contracts.  By early 1979, the price of silver had risen to about $6 per ounce.  The Hunt Brothers obtained about 195 million ounces of silver, approximately a third of the world’s total supply at that time.  By the end of 1979 silver spot oscillated between $20-$25 per ounce and peaked near $49 per ounce in late January 1980.  Also, in January of 1980 COMEX initiated restrictions on the purchase of commodities on margin.  Silver began to fall along with the Hunt Brothers’ fortune.

Gold Bullion Coins of the 1980s… We Were There

The first Krugerrand ever created was made in 1967 by the South African Mint.

This was a time of incredible political unrest. The United States stopped basing its own currency on gold. Because many countries looked to the United States as a leader in economic issues, this made many other nations consider the possibility of ending their own gold standards.

However, South Africa made a bold decision. It created a special gold coin featuring the appearance of Paul Kruger, the president of the South African Republic.

Most gold coins are created so that rich people can enjoy, collect, or invest in them.  However, one of the main points of the Krugerrand coin was that it would be accessible to everyone.  In other words, since 1967, Krugerrand gold coins have been designed for working people and used to help them improve their financial health.

On top of everything else, the Krugerrand coin is the first gold bullion coin ever created in the world. In fact, it was the success of this coin that inspired many other countries to create similar coins.

But in 1985 the Reagan Administration banned the importation of Krugerrands, which were seen as a symbol of Apartheid—the racial segregation of non-white South Africans.

This was timely considering American Eagle Gold Bullion Coins were introduced in 1986.  The American Eagle Gold Bullion coin obverse (front) bears a re-design of Augustus Saint-Gaudens’ work that graces the iconic $20 Saint Gauden coin which served as money in the United States from 1907 until called-in by President Franklin Roosevelt in 1933.  Interestingly, American Gold Eagles were created with the exact coins dimensions and alloy specifications as the gold Krugerrand. They are 22-karat gold, which means they contain 91.6% gold and 8.4% of a copper-silver alloy.

In 1995, Nelson Mandela was elected South Africa’s first black president. With Mandela’s election, the ban on the importation of Krugerrands into the United States was lifted.

Following the lifting of the importation ban, the South Africans tried to again market Krugerrands to Americans.  However, Krugerrands failed to gain another foothold in the US for two reasons.  One, the US Mint had introduced American Gold Eagles in 1986, and by 1995 they had become as popular in the US as the Krugerrands had been in the 1970s and early 1980s.

The second reason the Krugerrands could not again be marketed successfully in the US was because there were an estimated 25 million of them already in the US, with thousands of them trading daily in the secondary market at lower premiums than at which new Krugerrands were being offered. In short, the huge quantities of Krugerrands sold into the US in the 1970s and early 1980s provided tough competition, along with Gold Eagles.

Y2K… We Were There

The “millennial bug” as it was known, created concern about a worldwide shutdown.  It was feared computers would cease to operate as the year 1999 turned over to 2000.  Many feared not being able to access money from banks, stirring demand for silver products that could be used in barter and trade.  90% silver coins– dimes, quarters and half-dollars minted before 1965 once used as money were again very desirable, so much so the premium peaked to 50% of spot silver.

21^st Century… We Were There

In 2004, silver began a well-remembered bull market that continued until just short of $50 in 2011.  However, in 2008, there was a correction from $20 to below $10.  But then silver soared to nearly $50 in 2011, where it hit a 31-year high.  The Great Recession of 2008 as it will forever be known, was in part the reason for silver to move more than 500% in less than three years. Gold rose 100% during this same time frame.  The Federal Reserve accelerated quantitative easing to get the US out of the economic mire.  Doing so lowered the value of the dollar and investors flocked to precious metals to protect their principal.  Those three years were extremely busy for the precious metals industry.

Silver and gold spot prices recessed, then ebbed and flowed until 2020.  I think we will all remember March 11, 2020—the day the World Health Organization declared COVID-19 a pandemic.  Gold increased approximately 20% over the next 6 months, while silver spot doubled.  Increased interest because of spot silver price rising or fear quickly evaporated supply and the manufacture of new products had difficulty meeting demand for the next 2-½ years.

Recollection and reflection… We Are Here

I feel like Mr. Toad.  What a wild ride these past 50 years, but a few things have remained constant. Gold and silver have proven to be a store of wealth.  From $35 to nearly $2,000 per ounce, gold has proven to be a valued commodity—a haven during uncertain political and economic circumstances.  Gold and silver have been used for millennia as money, for barter and trade, and as backing of other currencies.  Gold and silver will continue to be a trusted avenue for wealth preservation, and an asset for those concerned about the long-term value of the dollar.  I look forward to another 50 years for CMI Gold & Silver—a family-operated, full-service, precious metals firm providing clients with education and experience to make informed precious metal decisions that deliver peace of mind.

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