In 2016, the Tooth Fairy Index Rose by almost 20 Percent

Based on the “Tooth Fairy” index, inflation appears to be heating up again, which should prove positive for gold and silver. The Tooth Fairy index is a remarkably accurate inflation gauge that was originally conceived and sponsored by Delta Dental. According to the index, the average parental payment for a tooth under the pillow in 2015 was $3.91 and rose to $4.66 in 2016 for a 19.2 percent year-over-year gain. Payouts for a child’s first tooth, typically higher that the average, are also up almost 10 percent to $5.72.

The Tooth Fairy index is not a random survey of local parents. It’s actually a scientific poll that includes 1,588 parents of children ages 6-12. Conducted during the week of Jan. 24-31 each year, the resulting margin for error is just plus-minus 2.5 percent.

This poll also indicates a general rise among families of disposable income. Regionally, payments of Tooth Fairy index were highest out West at $5.96 ($6.89 for first teeth), followed by the Northeast ($5.08 and $6.31), the South at $4.57 ($4.88) and finally the Midwest $4.04 ($5.70).

Inflation is Rising Elsewhere in the Economy as Well

After lying relatively dormant for the past five years, inflation is finally returning, and that’s a good sign for gold and silver, which are historic hedges against rising inflation. In the United Kingdom, commodities fund manager James Luke of Schroeders said gold and silver, hedges against inflation, are “under-owned” since the quantitative easing – and the associated printing of money – by central banks around the world portends higher inflation in the future.

As more of the world’s population moves into the middle class and can begin to see the value in owning some gold and can afford the entry price, there is a lot of room for significant upside. Luke went on to note that investors with high exposure in traditional asset classes are urgently seeking alternative investments that are liquid and tangible. Gold and other precious metals, he says, are useful in this regard.

Gold Breaks Through the 200-Day Moving Price Average

Gold added $15 on Friday – in large part due to geopolitical events including the U.S. bombing of an air base in Syria and the launch of a Navy carrier-led strike force toward North Korean waters in response to its recent multiple missile launches. These moves were timed to coincide with the meeting of President Trump and Chinese President Xi Jinping in Florida. Gold has now moved up for four straight weeks to a new five-month high. On Friday, gold breached the 200-day moving price average, a positive technical indicator showing gold’s long-term strength.

Silver Outperforms in the First Quarter Again

Silver was once again the best-performing commodity in the first quarter amid an overall commodities decline. The precious metals, in general, all gained ground. The CRB Commodity Index, a widely watched measure, lost 3.44 percent in the first quarter. The public mostly watched declines in the energy sector with crude oil giving up 5.86 percent and natural gas losing 13.4 percent for the quarter.

In the precious metals group, platinum gained 5.2 percent, gold rose 8.6 percent and silver was the top performer of the 21 commodities tracked by FactSet with a 14.2 percent gain in the first quarter.

Here are the top and bottom four performing commodities for the first quarter of 2017:

Top 4 Performing Commodities Q1 2017

SILVER +14.2%
Lean Hogs +11.6%
Cotton + 9.5%
GOLD+ 8.6%

4 Worst Performing Commodities Q1 2017

Orange Juice -19.0%
Natural Gas -13.4%
Milk -12.0%

In 2016, gold rose 9.1 percent, while silver almost doubled that at 17.5 percent. Looking at all of 2016, along with the first quarter of 2017, silver rose 34.2 percent and gold climbed 18.5 percent.

In general, gold outperforms silver over time, but when both metals are rising, silver tends to rise more and faster. Investors, however, need to beware: Silver also tends to drop much faster than gold. Over the past 50 years, gold has risen from $35 per troy ounce to $1,250 (a 35-fold rise) while silver has only posted a 14-fold gain from $1.29 to $18.00 per troy ounce. Since Jan. 1, 2000, gold has risen 322 percent and silver is up 237 percent.

The Pogue Collection Auction Ended Last Month

The major news outlets, including Fox Business, the Associated Press and Reuters, were all abuzz with reports of the record-setting Pogue sale.

The five-part sale of the Pogue Collection, which ended on March 31, brought in almost $106.7 million in total sales. The sale included several important American coins, including the 1804 Dexter specimen silver dollar graded Proof-65 by PCGS, which brought almost $3.3 million.

Two other small denomination coins each brought in almost $1 million. An 1811 half-cent graded MS-66RB by PCGS brought $998,750, and a rare 1793 Liberty Cap cent graded PCGS AU-58 brought down the hammer at $940,000, setting a record for the most valuable cent ever sold. Both coins brought far above auction estimates.

High-profile, record-setting auctions often increase interest in collecting and investing in rare coins, which when held for the long term can appreciate in value significantly. Rarities such as these, selling for record prices with broad media coverage, turn on the spotlight and bode well for the rare coin market. Experts believe these trends signify big money being ready to enter the market, which would benefit both collectors and investors. Brent Pogue began his collection in the early 1970s as a teenager. Young collectors starting out now have a chance to match these results.