Weekly Market Report 4/25/16
Links to recent informative articles on precious metals and rare coins:
Silver’s burst of momentum to cap biggest weekly gain in a year
U.S. Mint releases the 2016 Mercury Dime Centennial Gold coin
Gold to $10,000 – Von Greyerz. Be afraid
Silver bull market as prices rally to 10-month high: up more than 20% this year
Gold
Silver
U.S. Mint releases the 2016 Mercury Dime Centennial Gold coin
Recommended investment commitment and diversification
Gold closed last Friday at $1,230, down $4.60 for the week, but up $170 (16%) since the beginning of 2016. Gold reached a high last Thursday of $1,272 per ounce before we saw a U.S. Dollar rally on Thursday and Friday. The $1,250 per ounce level is very important for the short term direction of the Gold price. In the face of a very strong Silver price last week, I was disappointed that Gold didn’t hold the key $1,250 level. I think Gold’s consolidation is over and it will make another move above $1,250 this week, and stay above $1,250 on its way to the next resistance level of $1,300 per ounce.
Last Tuesday, China launched a Yuan-denominated Gold bullion trading exchange for 1 kilo of .9999 Gold. This move will further boost China’s power in the global Gold and foreign exchange markets. Critics of the existing pricing mechanisms hope this will lead to increased transparency in the world’s Gold markets and possibly end price manipulation.
Today: Gold is moving higher today, as the U.S. Dollar weakens versus the Euro and Yen. Traders are optimistic about the Federal Reserve statement due out later this week.
Silver has been the super star of precious metals during the month of April. So far this month Silver has moved from $15.46 to $16.90 per ounce, an increase of $1.44 (9.3%) since the beginning of April, and an increase of $3.12 (22.64%) since the beginning of 2016. Silver reached a high of $17.72 on Thursday before traders and commodity professionals started taking short term profits. Silver traded above $17 four times last week and showed excellent demand every time it dropped below $16.75 per ounce.
Demand for physical Silver remained strong as the U.S. Mint added another million ounces of 1oz Silver Eagles to sales figures. 2016 sales are now 17,912,500 1oz .999 Silver Eagles. This is higher than last year and ahead of the record 47,000,000 pace of 2015 sales. The U.S. Mint sales have been averaging over a million 1oz Silver Eagles a week.
Last week’s Silver rally caused the Silver/Gold ratio to continue dropping - it is now 72.78-to-1.
Today: The sellers took the price of Silver down to $16.80 in early Asian trading, then the Silver bulls took control as trading moved into Europe and the U.S. Clearly the Silver price wants to stay above the $17 per ounce level.
U.S. Mint releases the 2016 Mercury Dime Centennial Gold coin
The U.S. Mint released the 1/10 ounce 100-year Mercury Dime 2016 Centennial Gold coin. The mint sold all 125,000 coins in 45 minutes at $205 each. Due to the high initial demand, we are seeing dealers offering pre-sales on this coin for around $400-600 a coin in SP70.
There are five excellent reasons that we do not recommend the purchase of this new issue right now.
- The U.S. Mint issued 125,000 of this 1/10 Gold coin, a large amount.
- The current dealer asking price is over 3 times the coin’s Gold content.
- The coin is a specimen. Specimens are not normal Mint State or Proof coins, which means specimens are typically not as popular with collectors or dealers unless they are part of a series.
- The coin is not part of an on-going collection. It is a special modern commemorative, which are not popular.
- Future pricing/market support for special modern commemoratives historically has not been good. An excellent example is the 2014 Gold Kennedy Half Commemorative, which I called a disaster and was available at half the initial price within six months.
We believe the price of this 1/10-ounce Gold coin will be coming down after the initial demand dissipates.
For many of our collector clients who still like collecting U.S. Gold coins, we plan to offer the 3-piece 100-year Centennial Gold set with the 2016 Mercury Dime, Standing Quarter, and Walking Half Dollar, three months after the last coin is issued. We believe at that point the price will reflect a fair market value for our collector clientele, as these commemorative coins are not something we believe have investment potential.
Recommended Investment Commitment and Diversification:
Precious Metal commitment: Minimum of 30% of investment capital
Diversification: Gold 50%, Silver 40%, Platinum & Palladium 10%
Diversification includes 50% in long term investment quality rare coins and 50% short term bullion products.
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.
