Weekly Market Report 1/6/14

This Week’s Headlines:

Gold
Silver
Major Rare Coin Convention in Orlando, FL
Pre-order 2014 First Strike Silver Eagles
Recommended Investment Commitment and Diversification

GOLD

Last week we saw the end of ’year-end tax loss’ and ’window dressing’ selling. The volume of trading had increased 70% from the previous week, and the trading volatility of December 31 is very noteworthy. The chart below shows how Gold traded from 1am to 1pm on December 31, 2013. During that time frame Gold dropped from $1,200 per ounce to $1,181 per ounce then back to $1,210, all in a little over an hour. As you can see on the chart, at 7pm Gold moved in a straight line from $1,189 per ounce to $1,213, increasing $24 in just a couple minutes. For the Gold price to make that type of move in such a short period of time it would have to involve a company, government, or high net-worth individual buying all the Gold available between those prices levels, a purchase of tonnes of Gold.

I believe that the December 31, 2013 trading was the final clean out of the ’weak hands’ and the technical traders. The first two trading days of 2014 confirmed my belief since Gold rallied both days, closing last Friday at $1,238.40, up $37 per ounce for the week.

2013 was the first year since 2001 that Gold closed lower. On the last day of 2013 Gold closed at $1,202.30 per ounce, down $473.50 per ounce (28.28%) for the year. In 2013 there were sizeable amounts of sales of paper Gold (GLD) and most of those funds were moved into equities and bonds. I think this trend is over and the physical Gold liquidated by GLD is now in strong hands. Almost a third of the Gold stored in U.S. COMEX depositories has been withdrawn (down from 11 million ounces to 7.83 million ounces during 2013) increasing the possibility of a short squeeze in 2014.

I also believe that 2014 will be a great year for precious metal owners. Our company’s Gold and Silver sales are running at a record pace, with many of last month’s sellers (for tax loss reasons) now buying back their Gold and Silver, and adding more. Today’s low prices are attracting many worldwide buyers who are increasing their holdings. I expect to see another year of substantial growth in the Central Bank purchases; while on the supply side, the World Gold Council has predicted a 1% to 3% decrease in mine production.

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SILVER

Silver ended 2013 at $19.34, down $10.83 (35.90%) for the year. I would call the decline very disappointing, but most Silver investors are in it for the long term and the basic fundamental reasons for owning Silver have never looked better. Silver is primarily an inflation hedge, and based on U.S. government data there was no serious inflation in 2013. Therefore, many commodity analysts felt that it wasn’t a good investment in 2013. However, next year will be a lot different.

The combination of 4 trillion U.S. Dollars put into the system by the Federal Reserve since 2009, and 2014 being an election year, will end Silver’s decline. As the U.S. economy continues to improve, wages and prices will be going up, which will increase the inflation rate. I believe that most of our U.S. Banks’ sub-prime mortgage problems will be resolved this year. U.S. banks now have the liquidation needed to be aggressive lenders and we will see that happening this year. As for our legislators, raising the minimum wage is popular with many voters, not with small business, but legislation is likely to pass in an election year.

As of December 31, 2013, the U.S. Mint reported they have sold 42,675,000 1oz .999 Silver Eagles. This is an all-time record high for sales of American Silver Eagles. In January 2012, the U.S. mint sold over 6.1 million 1oz Silver Eagles; in January 2013, over 7.4 million. At today’s Silver price, I predict the U.S. Mint will sell 9 million Silver Eagles in January 2014 alone. The U.S. Mint has been producing 2014 Silver Eagles since late last month in an effort to satisfy demand. Next week it will let distributors know how many they are being allocated. I expect to receive our first shipment of new First Strike Silver Eagles around the 22nd of January; but with the U.S. Mint nothing is for sure until the products arrive at our door.

A combination of low price, increasing demand, and shrinking supplies should set records for the consumption of many of the popular Silver investment items. Many of the world’s most popular mints are reporting record sales and are scrambling to source .999 Silver for their coinage. Australia’s Perth Mint reported a 33% surge in Silver coins sales, to 8.6 million ounces. Additionally, many U.S. Dealers report low inventories of the popular pre-1934 Morgan and Peace Silver Dollars.

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Major Rare Coin Convention in Orlando, FL

Tomorrow I am flying to Orlando for the Florida United Numismatic (FUN) coin convention. This convention is a major event for the rare coin community, with thousands of dealers, investors, and collectors attending. In addition to having a trading floor with over 500 rare coin dealers, there will also be a major rare coin auction. I am asking my rare coin clients to email me an updated want list. I recommend emailing me ASAP. I’ll be at Table 107 on the bourse convention floor should you be in the area and wish to stop by to say hello.

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Pre-order 2014 First Strike Silver Eagles

Stuppler & Company is now accepting orders for 1st Strike U.S. 2014 Silver Eagles at only $4.19 over spot in lots of up to 499, and $3.99 over spot for 1st strike in the Green Monster box (500 coins).

You can lock in today’s low Silver price for delivery early in 2014. Call or email me at 888-454-0444 or [email protected].

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Recommended Investment Commitment and Diversification:

Precious Metal commitment: Minimum of 40% of investment capital

Diversification:  Gold 50%, Silver 45%, 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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