Weekly Market Report 01/09/12

GOLD

The gold rally continues, up another $50 last week and above the important $1,600 per ounce level all week.  Last week’s gold trading was on heavy volume, which is an excellent indicator that the 2012 rally to a new all-time high price is on. Gold closed at $1,616.80 per ounce on Friday, surprisingly in the face of strong U.S. economic news that strengthened the value of the U.S. Dollars. 

Last week’s news continued to show disappointing reports from the European community, with the unemployment rate higher and consumer confidence lower.  The European debt crisis has placed gold in the position of being the only true safe haven investment to protect against sovereign default and insolvent banks.

The average daily volume of gold trading last week was up over 50% from what we saw the last few weeks of December.  Buying interest from Asia, Europe, and the Middle East has picked up on the exchanges and in the physical markets. Most floor traders that I have spoken with are no longer shorting gold rallies; they are long gold or have a flat position. 

I see the gold price building a firm base for the next week or so, unless we have some exciting news coming out of Europe or an escalation in the Middle East status.  It would be healthy for the long term bullish sentiment for gold to stay in the $1,600 to $1,700 price area for the next couple of weeks.

SILVER

After a $1.65 increase in the price of Silver on Tuesday, January 3, (as gold simultaneously increased $33 climbing above $1,600) the price performance of silver has really been disappointing.  Silver did hit $29.74 on Wednesday before dropping back and closing down for the day.  It is clear that the negative Eurozone news that hit the market on Wednesday had more of an effect on Silver prices than Gold’s rally. 

Silver is truly a bargain for long term precious metal investors at under $30 per ounce; however it needs to break above $30 for the short term technicals to become bullish. I believe that we will see Silver trade above $40 per ounce this year, but that rally will need to be generated from positive monetary stimulus coming out of Europe.

The Silver to Gold Ratio is at 56.37 to 1

Domestic physical demand for Silver is still very good.  The U.S. Mint sold 2,009,000 1oz Silver Eagles in December, bringing the all-time record breaking 2011 total sales for 1oz .999 Silver Eagles to 39,868,500; another record breaking year, and a 14% increase over 2010.  Last week, the US Mint reported that silver coin sales for the New Year got off to a great start as 2012 Silver Eagle bullion sales climbed to 3,372,000 in the first six days of 2012.

2012 First Strike U.S. 999 Silver Eagles

We expect to have our first shipment of the 2012 1oz Silver Eagles next week. Our first shipments of U.S. Mint sealed boxes of .999 U.S. Silver Eagles are considered First Strikes.  You can lock in purchases of 100 or more 2012 Silver Eagles at today’s low prices. First Strike, mint sealed Green Monsters (500 pieces) are very popular for collectors and investors.  Call the office and speak with David or myself for current prices, 888-454-0444.

PLATINUM

With gold up $50 last week, Platinum only increased $8.50 and followed the weakness of the Silver price late in the week. Friday, the Platinum to Gold discount was back to over $200 per ounce, after dropping to $167 at the end of 2011.  Part of the weakness in Platinum was due to reports from Japanese bullion retailers of heavy selling of Platinum the last week of December. This selling was caused by a new Japanese reporting law which started on Jan. 1, 2012, requiring precious metal dealers to report any transactions of over 2 million Yen (US $25,000) to the tax authorities.

RARE COIN REPORT FROM THE FUN CONVENTION IN FLORIDA

I spent last week in Orlando, Florida at the Florida United Numismatic (FUN) Coin Convention. This convention is a major event for dealers, investors, and collectors. In addition to being on the dealer’s trading floor for four days and at the Heritage Coin Auction, I had the opportunity to speak with many of the largest dealers in the U.S. I learned that the U.S. coin collector is back.  After 3 ¼ years (since Oct. 2008) of low collector interest, the demand is back. Many of the larger dealers in the country with whom I spoke are aggressive buyers for investment quality gold and silver U.S. rare coins. They also believe that since the rare coin market has been flat (with gold and silver up over 100%) that investment quality rare coins are an extraordinary value at this time.

It is believed by most of the coin professionals that I spoke with, and me, that as the U.S. economy recovers this year we will see dramatic increases in the demand for high end numismatic coins. Since October of 2008, many coin collectors and investors were concerned about losing their job or home, and it was hard to purchase rare coins for collections and/or investment portfolios. Considering the low supplies and attractive pricing now, as compared to a few years ago, I focused my attention on graded MS63 and higher U.S. $20 Gold Liberties & Saints and Morgan & Peace Silver Dollars. Supplies were thin, primarily because most dealers’ inventory levels are low and they are aggressive buyers. I kept my attention at the show on acquiring high end gold and silver rare coins.

The Heritage Galleries (the official auction company for the FUN convention) had a very successful auction, selling over $50 Million in rare coins. Many of the gold and silver rarities sold at all-time highs and others at substantially higher prices than 2011 levels.

Recommended investment commitment and diversification:

Precious Metal commitment: Minimum of 35% of investment capital

Diversification:  Gold 70%, Silver 20%, Platinum & Palladium 10%

Diversification includes long term investment quality rare coins and 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.