Weekly Market Report 2/29/16

| February 29 2016

Links to recent informative articles on precious metals and rare coins:

Enormous purchases into U.S. Gold ETFs go virtually unnoticed

Russian Gold hoard nets $8 billion on world’s best rally

This Week’s Headlines:

Gold
What are the professional commodity traders doing?
Silver
Platinum
Recommended Investment Commitment and Diversification

GOLD

Last week, Gold tested the very important $1,200 per ounce long term support level and held. Last Monday during trading Gold hit a low of $1,202.50 on average volume, then quickly rallied to $1,210 per ounce with bargain buyers. After trading between $1,202.50 and $1,254.30 per ounce all week, Gold closed at $1,220.40 last Friday.

This year, with an environment of lower global equity markets, crude oil trading near 10 year lows, and negative interest rates expanding due to a slowdown in many of the world’s leading economies, the price of Gold has moved higher.

As Gold continues to be the best investment vehicle of 2016, up 15% since January 1, 2016, investors are pouring in. Remember that for thousands of years, currencies and equities have come and gone, but Gold is still the best/safest way to store value.

The three most popular ways investors are buying Gold are:

1) Physical Gold - taking delivery of popular bullion coins, bars & jewelry: Sales of bullion coins from the U.S. Mint and many other mints are running at record levels. Central Banks are aggressively purchasing tonnes of Gold in 400 ounce .999 Bars. Asian Gold buyers are purchasing 18kt & 22kt Gold jewelry, due to heavy taxes on coins & bars.

2) Paper Gold (ETFs): The most popular ETF (bullion-backed exchange traded fund) for Gold buyers is the SPDR Gold Trust, with the trading symbol GLD. Many large Gold investors (over $5 million) don’t want to take delivery of their Gold, so purchasing shares in GLD is a popular alternative. Since the beginning of 2016, the demand for GLD has caused their depositories to add an incredible 120 tonnes (3,858,000 ounces) of Gold, an 18% increase. Those depositories are now holding 762.40 metric tonnes (24,512,080 ounces) of Gold, the highest quantity of Gold since 2010.

3) Gold mining shares: Gold mining shares have declined sharply over the last 5 years due to lower production and market price, and higher mining costs. Many mines are not able to make a profit at the current spot Gold price due to environmental costs and governmental fees and taxes.

The U.S. Mint sold 195,500 ounces of Gold Eagles as of Feb. 26, 2016, up 96% compared to last year’s sales.

Today: This morning the bargain Gold buyers and professional traders came back. The Gold price started moving higher in Asia and continued through Europe and the U.S., reaching a high of $1,236 per ounce. Worldwide physical demand for Gold remains strong with central banks and private investors.

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What are the professional commodity traders doing?

I’m beginning to see a good amount of professional commodity traders change their Gold/Silver trading strategy. For over four years these traders were selling Gold/Silver on rallies (going short) and covering those sales on dips. Now, the same traders are buying on dips and taking profits on rallies. This is a more bullish trading strategy, because they prefer to own Gold/Silver, rather than being short. THEY ARE BECOMING BELIEVERS.

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SILVER

Silver closed last Friday at $14.71 per ounce, down $0.66 from the previous week but up $0.93 (6.78%) since the start of the year. It is very important that Silver broke down below the key $15 per ounce support level on Friday. It is equally important that Silver quickly move back above the key $15 per ounce level to maintain its bullish trend.

As of February 26, 2016, the U.S. Mint has sold 10,000,000 one-ounce .999 Silver Eagles. This is higher than last year by 17%, and ahead of the record 47,000,000 pace of 2015 sales.

The Silver/Gold ratio has reached 83-to-1, a ten year high.

What does that mean?

I believe the 83-to-1, ten year high Silver/Gold ratio means that the financial markets believe we are going to see deflation before inflation. Which means if the world’s financial markets are expecting deflation, it will lead many of the major world’s governments to create more currency. Many financial analysts believe there will be another round of sizeable quantitative easing.

Today: Considering the nice rally in Gold, Silver was disappointing as it was unable to reach the $15 resistance level and was only able to reach $14.88 per ounce before sellers appeared. If the Gold price stays strong, I am hoping that Silver’s trading volume will pick up this week and the price will move back above the key $15 level.

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PLATINUM

Platinum closed last Friday at $915 per ounce, down $30 for the week. Platinum is trading at more than a $285 discount to the spot Gold price. This has only happened four times in the past twenty years, and Platinum rarely stays at a discount to Gold for more than a year. The Canadian Platinum Maple Leaf is the best bullion coin on the market, with the lowest premium over spot Platinum.

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Recommended Investment Commitment and Diversification:

Precious Metal commitment: Minimum of 30% 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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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.

Categories: Weekly Market Report