The Gold price took a roller-coaster ride today, first jumping to $1,413.30 per ounce when Bernanke told the Joint Economic Committee of Congress that an end to the current quantitative easing (QE) program could mean a “substantial risk of slowing or ending the economic recovery and causing inflation to fall further.” He said the labor market has improved but “remains weak overall.” Then Gold sold down to $1,368 when during the question and answer period, his remarks were construed to mean policymakers conceivably could begin withdrawing some of their monetary accommodation in the coming months.

I was disappointed that the Gold price did not stay above the important $1,400 per ounce level and went negative by the end of the trading session. Today’s trading tells me that Gold remains in a defensive position and needs to spend a little more time consolidating in the $1,350 - $1,380 per ounce price range before resuming its long term bull move.

At 11am PDT today, Gold is trading at $1,365 per ounce, down $12 per ounce on very heavy volume.

China demand drives Asian gold bar premiums to record highs

Reuter’s reports that premiums for Gold bars hit a record high in Asia today as lower spot prices lured more buyers, mainly in China, the world's second biggest consumer of the precious metal, amid tight physical supplies. Premiums for Gold bars in Hong Kong touched a new all-time high of $6 an ounce over spot London prices, up from $5 last week. Singapore premiums rose to $5. Banks in China were quoting up to $7 in premiums, two traders in Singapore said. "China premiums remain high because of a shortage in supply of the physical metal," said a Hong Kong-based trader.

SILVER

Silver followed Gold’s volatility today, reaching $23.34 per ounce and selling down to $22.30. Physical demand for Silver investment products remains strong as the U.S. Mint reports 2013 year-to-date sales of 1 ounce .999 Silver Eagles has hit 20,872,500 coins. This is on pace to set an all-time record above 40 million ounces.

At 11am PDT today, Silver is down $0.08, trading at $22.44 per ounce on better than average volume.

Yesterday Moody's Investor Service reported in a news wire around noon ET that U.S. policymakers must do something about the government debt to avoid a U.S. debt rating downgrade this year. This was one of the contributing factors to yesterday’s Gold rally to $1,385 per ounce, after hitting a low of $1,336 per ounce in Asia earlier. Yesterday we saw an inner-day reversal which is a very bullish technical indicator that occurs during a downtrend when Gold opens below the previous day’s close, making a fresh low, and then closing higher than the previous day’s high.

This morning Gold briefly broke above the important resistance $1,400 per ounce level and was quickly sold off, hitting a low of $1,359. $1,400 per ounce is a key level for Gold to surpass to regain its 12-year bullish sentiment. Gold rallied off today’s low on a statement by St. Louis Federal Reserve President James Bullard, who said that the Fed should continue its present bond-buying QE program.

While physical demand for Gold from investors and central banks remains very strong, we continue to see a selloff in paper Gold holdings (ETF’s) which has had a negative effect on the Gold price.

At 11am PDT Gold is trading at $1,377 per ounce, down $8 per ounce on active trading.

SILVER

Silver briefly broke above the $23.00 per ounce level in yesterday’s rally and couldn’t hold it. This morning Silver reached a high of $22.94 per ounce, before sizeable selling in the market drove the price down to $22.07. At 11am PDT today, Silver is down $0.15 per ounce, trading at $22.52 per ounce on average volume.

In the context of the current U.S. Dollar valuation bubble, silver’s eventual price rise seem inevitable. This paper currency bubble commenced with a desperate flight to quality, despite the fact that the U.S. Dollar had been an intrinsically worthless currency since it was taken off the gold standard by Nixon in the early 1970’s.

Silver is one of many sought after investment choices when risk aversion is high. What makes it a convenient choice happens to be that the metallic commodity has special qualities that have historically made it one of the best forms of money.

The key is not to say that silver would necessarily become a medium of exchange, although it might indeed be useful as an asset that could be bartered in an emergency situation.

Still, once the U.S. Dollar devaluation finally occurs, silver’s use as a medium of exchange in the aftermath would probably quickly transform into the metal’s other traditional use as a store of wealth.

In other words, what above ground silver is left would very likely return to the vaults, probably being held as the basis or backing for the next new script. The fiat currency cycle would then begin again.

The Dirty Dollar’s Secret

The dirty secret is that while having sound money like silver indeed seems like the rational thing to do, the short term pain of this transition from the paper Dollar seems unbearable and impossible to reconcile other than in an emergency situation. This self-reinforcing collective fear of short term pain is also why the politics reflecting this seem so entrenched. 

Still, in terms of societal pain, not individual, the concern over others’ wellbeing is used to rationalize putting off the inevitable. This questionable argument is also used to vilify just about anyone who would go against that sentiment as self-serving, deluded, etc.

The U.S. Dollar is a debt-backed currency. Never before has such an intrinsically worthless currency survived very long as a medium of exchange. Eventually, the interest payments on the debt become too high to service and the inevitable bursting of the Dollar bubble will begin. A small rise in the rate demanded for debt would quickly eclipse tax revenue.

The Silver Trader’s Dilemma

Trading paper silver rationally seems nearly impossible. Nevertheless, the paper price does not really matter as long as you are a long term physical investor and not a short term futures trader.

Furthermore, if you are an equity trader, you are typically better off by just buying an index, which usually beats the hedge funds that use it as their yardstick.

The moment that confidence in the U.S. Dollar eventually breaks, the opportunity to buy silver will be over. Sadly, complacency currently rules and that precious moment will be lost to those people who preferred to wait on the sidelines rather than jump into the chronically undervalued physical silver market with both feet.

Price controls are very powerful and can effectively shape perception, even where history is readily available, evidence of a paper versus physical separation exists, and the shortage of physical silver is widespread.

The Value of Seeing Silver Clearly

The short term price and investor anxiety effectively obscures their ability to perceive this situation. This phenomenon seems especially notable among the waiting multitude who are otherwise one step away from the internal shift to buying silver.

When the true value of silver hits them, the precious metal becomes the obvious investment choice in their personal flight to quality.

Silver may never return to its constitutionally mandated position as an official currency, its long forgotten status as the coin of the realm, but that does not mean it will not be an excellent future investment for you and your loved ones.

Once the revaluation of silver occurs, the lesson of its value as a store of wealth and a medium of exchange will not soon be forgotten.

To read the full report visit http://mintstategold.com/WGC_Gold_Demand_Q1_2013.pdf

Consumers power Gold jewelry demand, up 12% in Q1 2013
Q4 2012 recovery in the jewelry sector continued into the first quarter of this year. Global jewelry demand of 551 tonnes, a record of US$28.9bn, surpasses the previous quarter’s record.

Q1 2013 Gold investment: ETFs down 177 tonnes, bars & coins physical demand up 378 tonnes
The decline in investment demand relative to Q1 2012 was solely attributable to the net outflows from ETFs, which obscured the strong rise in investment for Gold bars and coins at the retail level.

Technology Gold demand contracted 4% in Q1 2013
In the first quarter of 2013, demand for Gold in the technology sector declined by 4% year-on-year to 102 tonnes. In value terms, demand was 7% lower at US$5.4bn.

Central banks continue steady level of Gold purchases in Q1 2013
Central banks added 109.2t of Gold to their reserves in Q1 2013, the ninth consecutive quarter of net purchases. This sector accounted for 11% of the demand in the first quarter, worth a value of US$5.7bn.

Total supply of Gold little changed in Q1 2013, up 1% year-on-year to 1,051.6 tonnes
A modest year-on-year increase in Q1 mine production was countered by a decline of a similar magnitude in the supply or recycled Gold with the net result that total supply grew by 1%.

Gold
World’s largest money manager is bullish on Gold
World Gold Council 1st quarter 2013 Gold Demand Summary
Silver
Physical demand & premiums for U.S. Silver Eagles strong
Collectible Coin Protection Act
Recommended Investment Commitment and Diversification
 

GOLD

Last week’s Gold trading felt like a slow death, each day it was down from $2 to $28 per ounce, ending the week at $1,364, down $72 per ounce for the week. Trading volume was off the charts, as many buyers were attracted by the low price. The main factors that drove down the Gold price were the exceptional rally in the U.S. Dollar and the continued drop in the paper Gold ETF’s holdings. Another negative for Gold last week was the OMB’s projected improvement in the 2013 U.S. Budget Deficit. Gold has definitely been in the down cycle, the only question is, where will it find support?

What is the short term outlook for the Gold price? Today, we are seeing margin call selling, which easily drove the Gold price below the $1,350 per ounce support level. However, Gold did not test the $1,322 level (the April 2013 low) and reversed direction on heavy buying, and ended today’s trading to close on or near the highs of the day; VERY BULLISH. I would strongly recommend adding to your Gold holdings if Gold holds above $1,350 per ounce. I would be bullish on Gold for the short term unless Gold breaks and stays below the psychologically important $1,300 per ounce level.

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World’s largest money manager is bullish on Gold

BlackRock Inc. (BLK), the world’s largest money manager, said that it is still bullish on Gold. BlackRock’s President, Robert Kapito, said on May 9 that he would still buy Gold, echoing billionaire John Paulson, who is sticking with a bullish view even after losing 27% of his Gold Fund last month.

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World Gold Council 1st quarter 2013 Gold Demand Summary

Last Thursday the World Gold Council released the 2013 first quarter Gold demand data. The numbers shown below are extraordinarily bullish for the long term outlook for Gold. To read the full report visit http://mintstategold.com/WGC_Gold_Demand_Q1_2013.pdf

Consumers power Gold jewelry demand, up 12% in Q1 2013
Q4 2012 recovery in the jewelry sector continued into the first quarter of this year. Global jewelry demand of 551 tonnes, a record of US$28.9bn, surpasses the previous quarter’s record.

Q1 2013 Gold investment: ETFs down 177 tonnes, bars & coins physical demand up 378 tonnes
The decline in investment demand relative to Q1 2012 was solely attributable to the net outflows from ETFs, which obscured the strong rise in investment for Gold bars and coins at the retail level.

Technology Gold demand contracted 4% in Q1 2013
In the first quarter of 2013, demand for Gold in the technology sector declined by 4% year-on-year to 102 tonnes. In value terms, demand was 7% lower at US$5.4bn.

Central banks continue steady level of Gold purchases in Q1 2013
Central banks added 109.2t of Gold to their reserves in Q1 2013, the ninth consecutive quarter of net purchases. This sector accounted for 11% of the demand in the first quarter, worth a value of US$5.7bn.

Total supply of Gold little changed in Q1 2013, up 1% year-on-year to 1,051.6 tonnes
A modest year-on-year increase in Q1 mine production was countered by a decline of a similar magnitude in the supply or recycled Gold with the net result that total supply grew by 1%.

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SILVER

Silver traded between $22.11 and $23.84 per ounce last week. Silver closed the week at $22.35 per ounce, down $1.30 (5.52%) on average volume. Silver is currently down 26% since the start of the year and at the lowest level since 2010. Silver between $21 and $22 per ounce represents a tremendous value, and the risk/reward ratio looks very attractive. On one hand, you risk the possibility that Silver could break through major support at the $20 per ounce level (5-10% drop) if Gold breaks below $1,300 per ounce; and on the other hand, the short term reward could easily see Silver hit $28 per ounce (25-33% gain) if Gold could rally back to the $1,500 level.

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Physical demand & premiums for U.S. Silver Eagles strong

U.S. Mint sales of 1 ounce .999 Silver Eagles as of May 15th hit an extraordinary 20,435,000 coins. At the current pace U.S. Mint sales could easily exceed 40,000,000 ounces, an all-time record high by year end. Physical demand for Silver investment products has been soaring during the recent decline in the market price.

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Collectible Coin Protection Act

As chairman of the Gold and Silver communities’ Political Action Committee (Gold & Silver PAC), I am proud to share the introduction of HR 1849, the Collectible Coin Protection Act, into the House of Representatives on May 7, 2013. This Federal legislation amends and updates the Hobby Protection Act passed over 30 years ago. HR 1849 allows both law enforcement and civil action against manufacturers, importers, and sellers of counterfeit coins and bullion products, as well as providing enforcement against the unauthorized use of registered trademarks belonging to collectible certification services.

This legislation is non-partisan and has no financial effect on the budget; therefore I am asking my friends who have a relationship with their local congressman to contact them and request they be a co-sponsor of HR 1849. Please let me know of any positive replies.

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Recommended Investment Commitment and Diversification:

Precious Metal commitment: Minimum of 40% of investment capital

Diversification:  Gold 55%, Silver 40%, Platinum & Palladium 5%

Diversification includes 50% in long term investment quality rare coins and 50% short term bullion products

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REMEMBER THE BLOG

If you want to be updated on what is happening in the Gold, Silver, and Rare Coin markets any weekday, our company offers a daily blog Monday through Friday at www.stupplerblog.com

All statements, opinions, pricing, and ideas herein are believed to be reliable, truthful and accurate to the best of the Stuppler & Company’s knowledge at this time.  Stuppler & Company disclaims and is not liable for any claims or losses which may be incurred by third parties while relying on information published herein.  Individuals should not look at this publication as giving finance or investment advice or information for their individual suitability.  All readers are advised to independently verify all representations made herein or by its representatives for your individual suitability before making your investment or collecting decisions.

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Today we saw a very bullish super reversal day, as Gold hit a low of $1,336 and quickly rallied on very heavy volume to reach $1,397 per ounce. This is a very positive sign that Gold has reversed it short term price direction and is now heading higher. Today we also saw any increase in hedge funds buying Gold.

At 11am PDT Gold is trading at $1,385 per ounce, up $21 per ounce on very heavy volume.

SILVER

This morning we saw sizeable volatility in the Silver price, reaching an unbelievable 3 year low of $20.25 per ounce in Asia, before reversing direction (along with Gold), and rallying to a high of $23.24 per ounce on very strong demand.

At 11am PDT today, Silver is up $0.35 per ounce, trading at $22.67 per ounce on heavy volume.

On Friday Gold fell for a seventh straight day, its longest losing streak in four years, as speculation that the Federal Reserve may soon rein in monetary easing lifted the value of the U.S. dollar versus other major currencies. The dollar rose, hitting a near three-year high against a currency basket, helped by comments from San Francisco Fed chief John Williams on Thursday the bank could begin easing up on stimulus this summer.

Today Gold was on the defensive from the start in Asia, the continued drop in the ETF stockpiles is a constant negative. However, the extraordinary global physical demand easily offsets the drop in ETF holdings, but the ETF (paper Gold) holdings drop is getting all the press. At 11am PDT today, Gold is down $23 per ounce, trading at $1,364 per ounce on heavier than average volume for a Friday.

SILVER

As Gold has fallen during the past seven trading days Silver surprisingly held up better and did not break down below the $22 per ounce support level. At 11am PDT today, Silver is trading at $22.32 per ounce, down $0.37 per ounce.

Early this morning in Asian/European trading Gold tested and held above the $1,370 per ounce level on heavy volume. Gold is still on the defensive, but we are seeing sizeable demand at these attractive levels. At 11am PDT Gold is trading at $1,387, down $11.20 per ounce on heavy volume.

World Gold Council first quarter 2013 in Gold demand summary

The World Gold Council just released the extraordinary 1st 2013 quarter Gold demand numbers.

Consumers power Gold jewelry demand, up 12% in Q1 2013

Q4 2012 recovery in the jewelry sector continued into the first quarter of this year. Global jewelry demand of 551 tonnes, a record of US$28.9bn, surpasses the previous quarter’s record.

Q1 2013 Gold investment: ETFs down 177 tonnes, bars & coins physical demand up 378 tonnes

The decline in investment demand relative to Q1 2012 was solely attributable to the net outflows from ETFs, which obscured the strong rise in investment for Gold bars and coins at the retail level.

Technology Gold demand contracted 4% in Q1 2013

In the first quarter of 2013, demand for Gold in the technology sector declined by 4% year-on-year to 102 tonnes. In value terms, demand was 7% lower at US$5.4bn.

Central banks continue steady level of Gold purchases in Q1 2013

Central banks added 109.2t of Gold to their reserves in Q1 2013, the ninth consecutive quarter of net purchases. The sector accounted for 11% of demand in the first quarter, worth a value of US$5.7bn.

Total supply of Gold little changed in Q1 2013, up 1% year-on-year to 1,051.6 tonnes

A modest year-on-year increase in Q1 mine production was countered by a decline of a similar magnitude in the supply or recycled Gold with the net result that total supply grew by 1%.

SILVER

Silver reached a low of $22.05 in Asian/European trading this morning. Physical demand is still strong, but supplies have been increasing and the premium on Silver rounds and eagles is dropping. At 11am PDT today, Silver is down only $0.13 per ounce, trading at $22.69 per ounce.

This morning Gold fell for the fifth straight session, hitting a three-week low as the dollar strengthened to a six-week high versus the euro after weak euro zone economic growth data. Another negative for Gold was the nonpartisan Congressional Budget Office announcement late yesterday that the U.S. budget deficit will shrink by the end of fiscal 2013 to $642 billion, the smallest shortfall in five years.

Once Gold dropped below the psychologically important $1,400 per ounce support level, pre-placed computerized sell orders were triggered from professional technical chart traders for both Gold and Silver, driving the Gold price down to $1,389.00. If the Gold price doesn’t quickly rally back above the $1,400 level, we could see the April low level of $1,322 re-tested again.

As of 11am PDT today, Gold is trading at $1,398.20, down $28.80 per ounce on heavy volume.

U.S. Budget Deficit improved for 2013

The improvement in the U.S. budget deficit for fiscal year 2013 was a result of three major factors account for most of the long-term improvement: a better economy, a continued slowdown in the rate of medical inflation — which reduces the cost of Medicare and Medicaid — and higher taxes that Congress approved as part of the "fiscal cliff" deal in January, the budget office said. In addition, the automatic budget cuts that took effect this spring have reduced spending in the short term. The government also will benefit this year from dividend payments it is getting from the two giant housing finance agencies bailed out during the financial crisis.

SILVER

This morning Silver hit a low of $22.51 per ounce before a combination of profit taking and new buying hit the market.  At 11am PDT today, Silver is down $0.69, trading at $22.76 per ounce on heavy volume.

U.S. Mint sales of 1 ounce .999 Silver Eagles as of May 15^th hit an extraordinary 20,435,000 coins.  Physical demand for Silver investment products has been soaring during the recent decline in the market price.

LISBON, May 14 (Reuters) - Portugal will not replicate a deal that allowed Cyprus to sell its gold reserves under its bailout, Bank of Portugal Governor Carlos Costa said on Tuesday, adding that its reserves were unchanged at 382.5 tonnes.

"It is not applicable in Portugal," he told reporters. "What happened in Cyprus (on gold reserves), just like a lot of other things there, cannot be replicated in Portugal."

Last month Cyprus said a sale of gold reserves worth 400 million euros was among the options for its contribution towards an international bailout, which also forced bank depositors to bear part of the costs in a ground-breaking move in Europe.

"If we can say today that the Bank of Portugal is among a small group of central banks with adequate risk provisioning ... is mostly because we have significant gold reserves," Costa said. The value of Portugal's reserves rose 3.6 percent last year to 15.51 billion euros due to gold price fluctuations, but Costa said the actual quantity remained the same.

He added that Portugal, which resorted to an EU/IMF bailout in 2011 and has applied painful austerity measures since, remains on course to exit its three-year recession next year and grow just over 1 percent despite a worsening European downturn.

"There are no reasons to revise the economic forecasts," he told reporters. The bank's 2013 forecast of a 2.3 percent contraction is the same as the government's, but its 2014 growth projection is higher at 1.1 percent, compared with 0.6 percent.