Weekly Market Report 1/7/13

This week we are accepting pre-orders for the 2013 1oz Gold & Silver Eagles at today’s low prices. These are the First Strike 2013 Gold and Silver Eagles in mint sealed boxes or PCGS/NGC MS70 holders. Whether you are interested in certified 2013 Gold sets or the popular sealed boxes of 500 Silver Eagles (First Strike Green Monsters) see below for more information.

GOLD

At 8pm PDT on Tuesday, January 1, 2013, the House of Representatives passed compromise legislation (257 to 167) that originated from the Senate. This legislation dealt with many of the most important parts of the Fiscal Cliff issues. President Obama promptly acknowledged in a press conference that he would sign it, and then quickly left for Hawaii. 

The new Fiscal Cliff legislation that passed the Senate and House of Representatives raised revenue, but did not cut spending. It increased 2013 income tax rates for individuals earning over $400,000 per year (or couples earning over $450,000 per year) from 35% to 39.6%. It also raised the capital gain rate from 15% to 20% for those same income levels.

Since the new legislation made the Bush tax cuts permanent, the Congressional Budget Office increased its projection of the federal deficit over the next decade by almost $4 trillion. Their estimate is based on the fact that all the Bush tax cuts covered in this legislation are now permanent for 98% of all tax payers. 

HOW DID THE GOLD MARKET REACT TO THE NEW FISCAL CLIFF LEGISLATION?  

On Wednesday, January 2, the Gold market quickly jumped to $1,695 before seeing some profit taking, driving the closing price down to $1,688. The new legislation is considered inflationary, which is why Gold rallied. On Friday, the price of Gold traded down to $1,625 per ounce on concerns over possible Federal Reserve reduction in quantitative easing, then rallied sharply on record volume (over 25 million ounces) and closed at $1,648, down $7 for the week. 

OUTLOOK FOR GOLD IN 2013

2012 was the eleventh year in a row that Gold has increased in value, up $109 per ounce or 7%, with an average annual increase for the past eleven years of 18.16%. The basic supply/demand fundamentals for Gold have never looked better for 2013. This is due to major problems in mining new Gold, and estimations for any increase in Gold supplies being minimal while demand from the world’s Central Banks and investors grows at a record pace. Continued currency debasement in the U.S., Europe, and Asia is driving down the buying power of paper money today and in the future. And then there is the recently announced Basel III agreement, which is a major positive for Gold as well. (Read my Precious Metal Prediction for 2013 in next week’s Weekly Market Report.)

BASEL III UPDATE

In the recently confirmed Basel III agreement, Gold was upgraded from a Tier-3 asset to a Tier-1 asset. As a Tier-1 asset Gold is considered as zero-risk collateral. This means that all banks can purchase Gold in addition to sovereign debt to increase their new Tier-1 asset requirements in the agreement. The U.S. Federal Reserve has lobbied the Basel Committee on Banking Supervision and on Sunday won a postponement of full implementation of Basel III until 2019. This is important because most of the U.S.’s largest banks were not able to meet the higher reserve requirements by 2015. 

The Basel III agreement is the first time that global bank regulators have sought to require banks to hold easy-to-sell assets to allow them to survive a short-term market crisis. The agreement raises the liquidity coverage ratio for the world’s largest 200 banks from 105% to 125%. The latest announcement allows cash, sovereign debt, Gold and some equities, and high-quality mortgage-backed securities, to be considered reserve assets by the banks.

This news brings Gold into the mainstream for Banks and allows them to build up their Gold holdings. The Shanghai Gold Exchange just started a trial on Gold inter-bank trading in order to increase the liquidity and flow of Gold into China.

SILVER 

Silver closed 2012 at $30.17 per ounce, up $2.29 per ounce (8.21%) for the year. Last week Silver traded between $29.24 and $31.53 per ounce as the Fiscal Cliff legislation and Federal Reserve Quantitative Easing statement volatility played out. Last Friday, Silver closed at $29.92 per ounce, down $0.03 for the week, but more importantly, right below the $30 per ounce support level. Today, Silver quickly moved back above the key $30 per ounce support level on heavy Asian buying. 

RARE COIN REPORT FROM THE FUN CONVENTION IN FLORIDA

On Tuesday, I am flying to Orlando, Florida for the Florida United Numismatic (FUN) Coin Convention. This convention is a major event for rare coin dealers, investors, and collectors. In addition to having a trading floor of 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. 

PRE-ORDER 2013 1oz First Strike U.S. Gold & Silver Eagles at Today’s Low Price

You can PRE-ORDER the 2013 U.S. 1 ounce Gold and Silver Eagles at today’s low prices. We are offering First Strike 2013 Gold 1oz Eagles in PCGS or NGC holders in the MS70 grade. We are also offering First Strike 2013 Silver Eagles in quantities of 100 or more. These are available in the popular original tubes of 20, or sealed boxes of 500 (First Strike Green Monsters.) We expect to ship the 2013 Silver and Gold Eagles between January 20 and January 30, 2013. Actual delivery dates are based on the U.S. Mint’s exact shipment dates and specific shipment dates cannot be guaranteed in advance. To place your order call Barry or David at 888-454-0444 or visit http://www.mintstategold.com/silver/bullion-coins-and-bars/silver-american-eagles/us-silver-1oz-american-eagle-2013-bu-presale.html 

PLATINUM & PALLADIUM

Both Platinum and Palladium showed excellent increases in 2012. Platinum was up $139 (9.93%), while Palladium increased $47 per ounce (7.18%) at 2012 year end. Platinum is now at a $90.50 per ounce discount to the price of Gold.

RECOMMENDED INVESTMENT COMMITMENT AND DIVERSIFICATION

Precious Metal Commitment: Minimum of 35% 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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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.