Weekly Market Report 5/9/16

Links to recent informative articles on precious metals and rare coins:

Investors – and Donald Trump – are loving Gold. How long will the rush last?

Exceptional growth in key sectors leads to record high Silver demand in 2015

Druckenmiller loads up on Gold, saying bull market exhausted

Gold could rise by 50%

Corporate defaults and Gold

This Week’s Headlines:

Gold
Negative interest will help Gold reach $1,500 in 2016
Silver
Platinum
Recommended investment commitment and diversification

GOLD

Gold closed last Friday at $1,294, up $3.50 per ounce for the week and up $233.70 since the beginning of 2016. Gold temporarily traded above the key $1,300 resistance level last Monday and Tuesday. For most of last week Gold consolidated its recent gains by staying in the $1,250 to $1,300 per ounce trading range. I expect to see Gold continue to consolidate its price and support as it gets ready to make the next attempt to break above the key $1,300 per ounce level.

One of the many factors that is supporting this year’s Gold rally is the continued increase of Gold into the ETF depositories (i.e. GLD). The GLD Gold depository increased 20-tons last week, up 192 tons (30%) since Jan 1, 2016. Other factors supporting this year’s Gold rally were disclosed in last week’s Weekly Market Report section called “Gold’s 12 Most Bullish Fundamentals”. You can read that section here: Gold’s 12 Most Bullish Fundamentals

Today: A short term rally in the U.S. Dollar has negatively affected both Gold and the commodity market this morning. Gold demand remains strong.

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Negative interest will help Gold reach $1,500 in 2016

If higher interest rates are a negative for the Gold price, negative interest rates are a major positive.

What are negative interest rates?
Negative interest rates occur when a Central Bank charges its depositors to keep their money in an account. Many of Europe’s central banks have cut key interest rates to below zero, and have kept them there for more than a year.

Why are eight of the World’s largest Central Banks telling their regional and international banks that they must pay interest if they want to deposit their excess funds with the Central Bank?
They are doing this in a bid to reinvigorate their economies as other options are exhausted. Because of the weak economies in many of these countries, combined with the low credit worthiness of potential lenders, many banks are not lending. Most of these Central Banks are continuing with their quantitative easing programs, with little to no positive economic growth. All that the quantitative easing programs are doing is building up the reserves of large regional and international banks.

The main reason for Central Banks using negative interest rates is to encourage large regional and international banks to lower their lending standards and become aggressive lenders to medium and large companies.

Stimulating world economic growth with quantitative easing done by central banks will surely diminish the value of all paper money and start a new inflation cycle. This, combined with renewed lending from banks, will lead to massive increase in the velocity of currency growth.

These are just a few of the many reasons Gold has increased over 20% since the beginning of the year. I now believe we will see $1,500 per ounce by the end of 2016.

The following are links to articles from Bloomberg View and Fortune Insiders that explain the potential effects and dangers that negative interest rates will lead to.

Negative Interest Rates: Less Than Zero

Here’s Why Negative Interest Rates Are More Dangerous Than You Think

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SILVER

Silver, the precious metal super star for April, spent last week consolidating its 2016 gains. Silver closed last Friday at $17.52 per ounce, down $0.29 for the week, but still up $3.75 (27%) since the beginning of 2016.

$18 is a very important resistance level for Silver. A confirmed break above $18 would be very bullish for Silver and a major step toward $20 per ounce.

Both paper and physical demand remain strong worldwide. Many official and private mints are reporting record demand, with shortages of supply. This year the U.S. Mint has been averaging monthly sales of over 4.5 million ounces of 1oz .999 Silver Eagles. 2016 sales are now at 20 million 1oz Silver Eagles which is higher than last year, and on pace to hit 50,000,000.

Last week the Silver/Gold ratio closed at 73.83-to-1.

Today: Silver is testing its $17 per ounce support level. After seeing a 30% increase this year when Silver hit a high of $18.06, it is expected that we would see it pull back. I believe Silver will hold the key $17 per ounce support level.

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PLATINUM

Platinum closed last Friday at $1,085 per ounce, up $7 for the week. As Gold moves higher this year, it appears that Platinum is moving up at a higher percentage. Platinum is trading at more than a $180 discount to the spot Gold price. This has only happened four times in the past twenty years, and Platinum rarely stays at a discount to Gold for more than a year. The Canadian Platinum Maple Leaf is the best bullion coin on the market, with the lowest premium over spot Platinum.

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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.

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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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