Weekly Market Report 02/06/12

This Week’s Market Report provides you with an update on the precious metal markets and what I learned about the rare coin market at the last two major conventions.

 GOLD

Last week was the fifth week in a row that Gold increased in price.  With Friday’s closing of $1,740.30 per ounce, gold has gone up $174.50 (11.14%) since January 1st.  Gold is building a solid base on excellent volume for its future move towards record all-time highs this year.  

Last week’s IMF news that the World’s Central banks have increased their gold holdings at a record pace, only reinforces why gold must continue to be a significant portion of your financial assets. Gold again got a boost from investors who are seeking a haven against inflation (after Fed Chairman Bernanke cautioned that the U.S. outlook is still “uncertain,”) bringing speculation that the Fed will increase stimulus measures to continue the expansion.

The broader financial markets enjoyed another week of gains last week on the heels of strong U.S. economic data, decent China manufacturing, and continued solid U.S. corporate earnings. The real surprise was the much-stronger-than-expected non-farm payroll report from the Labor Department. The data was positive across the board -- job growth (243,000), unemployment at 8.3% (down from 8.5% in December) and revisions (60,000 more in November/December than originally reported).

This positive economic data led to higher prices last week for Gold, Platinum, and Palladium, with Silver off slightly. These increases happened in the face of continued talks between Greece and its international lenders dragging on, and with euro zone Finance Ministers unable to agree on a second financing package on Monday.  Hopefully, this week will bring some agreement in Greece for the debt crisis, as Greece’s coalition parties must tell the European Union on Monday whether they accept the painful terms of a new bailout deal.

States (worried about hyperinflation, depression, and the Federal Reserve and U.S. dollar on the brink of economic calamity) are taking action. Lawmakers from 13 states, including Minnesota, Tennessee, Iowa, South Carolina, and Georgia, are seeking approval from their state governments to either issue their own alternative currency backed by Gold or Silver, or explore it as an option.  Just three years ago, only three states had similar proposals in place.

SILVER

Silver hit a ten week high of $34.39 per ounce on Friday before seeing some profit taking. Silver has had a recent history of sharp rallies following a breakout above resistances levels. Silver closed above $30 per ounce January 12th, and within three weeks moved to Friday’s high. Our next resistance level is $35 per ounce; I expect that when it stabilizes above $35, we will see a move to $40 per ounce. 

Silver’s fundamentals are still looking excellent. Physical demand is still very strong with the U.S. Mint reporting Jan 2012 record sales for 1oz .999 U.S. Silver Eagles of 6,107,000.  Global demand in Asia is also running ahead of last year’s record numbers. In India there is growing interest by small investors. The Indian Commodity Exchange, which started operations in late 2009, will soon introduce micro volumes of silver contracts of up to 1 kilo each. Open interest was up 62.02% in silver this year at the exchange.

The Silver to Gold Ratio is now at 51.57 to 1

PLATINUM

Platinum has been outperforming gold since the start of the year, up $230 per ounce and trading at $1,629 per ounce last Friday.  The Gold premium over Platinum has dropped from $208 per ounce on January 6^th, to $108.40 on February 3^rd.

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

Having been at last week’s Long Beach Coin Expo and the Florida United Show in Orlando in early January, has allowed me to see the state of the market. It is clear that the investment quality Gold and Silver rare coin market has bottomed out and is now starting to move higher on limited supplies. This market reminds me of the 1985 market just ahead of a 300% increase that happened within two years. The combination of extraordinarily low premiums (based on today’s gold and silver prices) and very low availability of investment quality certified PCGS/NGC Gold and Silver coins should start showing excellent returns very soon regardless of which direction the precious metal markets go.

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 put CoinStats in the subject line and email me which series you would like to see.

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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.