Weekly Market Report 01/30/12

This week’s Market Report provides you with an update on the precious metal markets and what last week’s announcement by Federal Reserve Chairman Bernanke will mean to your precious metal holdings.

GOLD

What a week for Gold and Silver investors. Last week’s Federal Reserve announcement confirms that the direction for Gold and Silver prices this year will be substantially higher. Gold closed last Friday at $1,732.20 per ounce, up $68.20 per ounce for the week, and up $166.40 (10.62%) since January 1st.  Today gold has traded in the narrow base building price range; excellent support for the rally.

Federal Reserve Chairman Bernanke stated that interest rates were going to be held down until late 2014 and inflation would not breach 2% in the near future, but long term rates could climb to 4% or more. Bernanke’s statement, combined with an ECB’s injection of 500 Billion Euros ($650 Billion) into the European banking system, caused gold and silver to rally sharply. 

Factors that could also influence gold prices upward are the developments in the Middle East and Greece. Iran has threatened to immediately start an oil embargo on European countries and has already threatened to block oil tankers that travel through the Straits of Hormuz. Approximately 25% of the world’s crude oil supplies travel through the Straits of Hormuz on their way from the Middle East to Europe and the Western World.  A European oil embargo, combined with any stoppage of oil from the Middle East, could drive up crude oil prices by 20-30%, and increase gold prices by 10%.

The Greek economic tragedy continues to unfold; the current impasse between creditors and debtors of Greek debt appears to be near settlement. The primary issues are the size of the debt cut that the E.C.B. and Greek government are willing to take, and the interest rate to be paid on the replacement securities. Is there a direct relationship between these developments coming out of Greece and the price of Gold? Yes, because the ECB & IMF policy will directly affect the future sovereign debt issues in Portugal, Italy, Spain, and Ireland (PIIGS).  The more quantitative easing provided by the ECB & IMF, the higher gold prices will rise.

SILVER

The Silver price is having quite a rally. Silver closed last Friday at $33.79 per ounce, up $2.15 (6.68%) for the week, and 21% since the start of the year. For months I have been saying that Silver needs to break above the $30 per ounce level to become bullish. On January 19th, silver finally stayed above the $30 per ounce level for the entire day and closed above $30.50 per ounce; since then, the silver price has gone straight up, reaching $33.96 last Friday.

After breaking out above the $30 per ounce level, silver looks to be quickly heading for its next resistance level of $35. If you look at last year’s silver price performance, you’ll see that when silver moved up or down it happened quickly. Silver moved from $36 to $49.85 within a month, and dropped back to $34.34 by the next month. Silver has built an excellent price base in the latter part of 2011, while its supply/demand fundamentals have improved.

The Silver to Gold Ratio is now at 51.26 to 1

Recommended investment commitment and diversification:

Precious Metal commitment: Minimum of 35% of investment capital

Diversification:  Gold 60%, Silver 30%, Platinum & Palladium 10%

Diversification includes long term investment quality rare coins and short term bullion products

RARE COIN UPDATE

This week I am attending the Long Beach Coin Expo, in Long Beach, California. This is also a major coin convention where thousands of dealers, investors, and collectors attend. I plan to focus my attention on purchasing graded MS63 and higher U.S. $20 Gold Liberties & Saints and Morgan & Peace Silver Dollars. Supplies have been thin lately, primarily because most dealers’ inventory levels are low now and they are aggressive buyers. Investment quality high end gold and silver rarities are always on my want list. 

Please forward your rare coin want lists to me by Wednesday AM.

January 2012 CoinStats Available

My numismatic CoinStats report is the best investment tool for rare coin investors. CoinStats is an in-depth statistical analysis of popular rare coin series which allow investors to identify the best values in certified rare coins. I am proud to offer this unique and informative investment tool exclusively for our clients. The January 2012 CoinStats update is now available for $20 Gold Saint Gaudens, $20 Gold Liberties, and the Morgan & Peace Silver Dollar series.

While the collector coin market continues to be weak, the high end gold and silver investment quality rarities (over $50,000 each) did set record prices at this month’s FUN Heritage Auction. The best values and opportunities are in the middle area ($3,000 to $49,000) where the market is still undervalued. The CoinStats Report provides a list of my recommended certified Investment quality US gold and silver coins which are listed on the best value page.  These are not the overly hyped modern issue bullion coins or low grade circulated coins, they are PCGS/NGC Certified MS63 or higher gold and silver U.S. rare coins, dated prior to 1936, that have a proven track record of appreciation.

For the latest CoinStats analysis, just email me which series you would like to see.

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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 to 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.