Weekly Market Report 3/11/13

This Week’s Headlines:

Hyperinflation booklet
GOLD
Tug of War in the Gold Trading Pits
Growing Worldwide Demand for Physical Gold
South Korea Buys 20 Tonnes of Gold In February
SILVER
Silver Institute reports 30% increase in Investor Demand
PLATINUM & PALLADIUM
Recommended Investment Commitment and Diversification
Daily Blog

I am really excited to announce that my 2013 Hyperinflation booklet is now complete and has been mailed out to over 2,000 clients. This Hyperinflation study has been totally revised from last years and now contains 40 pages of pictures, charts, and graphs, plus a table of contents that allows you to locate the information that is of special interest to you. In addition to mailing you two copies (one for you and one for a friend), I have posted the PDF on our website. http://www.mintstategold.com/Hyperinflation/

Our Weekly Market Report keeps you current on the latest events happening in the exciting precious metal and rare coin markets. I always welcome your comments.

Thank you,
Barry Stuppler

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GOLD

We witnessed very unusual Gold trading last week. Gold was unchanged and/or higher all of the five trading sessions, ending the week higher by only $4.60 per ounce, at $1,576.90 per ounce. The highest trading volume for the week was on Friday with 213,945 CME 100 troy ounce Gold contracts. 

The reason for Friday’s high trading volume was that the U.S. government announced that the economy had added 236,000 jobs in February – much higher than the prior month – and the unemployment rate had dropped from 7.9% to 7.7%. After this announcement, early in the morning, the Stock Market rallied and Gold fell $15 per ounce to $1,560.40.  At that point significant demand appeared and the volume increased causing the price to move higher, up $20 per ounce.  At the end of the trading session Gold was up $1.80, closing at $1,576.90 per ounce.

Although it is nice to see sizeable demand every time Gold reaches its $1,560 per ounce support level, I expect to see Gold work its way through the recent $1,560/$1,585 trading range and get back above the $1,600 per ounce resistance level very soon. Breaking back above $1,600 per ounce will confirm for the market professionals that Gold has become short term bullish.

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Tug of War in the Gold Trading Pits

On one side of this tug of war are the buyers:

In the U.S., Asia, and Europe, we are seeing large physical Gold orders placed by precious metal dealers in record amounts (see Growing Worldwide Demand below.) Ten to fifteen Central Banks from developing nations are replacing billions of dollars, euros, and yen with Gold to protect and diversify their countries reserves

On the other side you have sellers and currency fluctuations:

Individual investors are selling their shares of paper Gold (GLD) to switch into equities. GLD is the popular Exchange Traded Fund (ETF) whose value mirrors the price of Gold. GLD holds exchange acceptable Gold bars and is forced to sell them into the market when there are liquidations of its shares. Last week 21.9 tonnes was liquidated from the holdings of all Gold ETF’s, significantly lower than the previous week’s 56.7 tonnes loss (which was a 12-month record.) Total Gold holdings are now at 2,567.7 tonnes, down 152.7 tonnes since the beginning of the year.

Since February 1, 2013 the U.S. dollar has rallied from $1.35 against the Euro, to under $1.29 versus the Euro, showing amazing strength. Remember, since American’s value their Gold in U.S. Dollars, a strong currency would be bearish for the Gold price.

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Growing Worldwide Demand for Physical Gold

Since a new Japanese government took over at the end of 2012, and brought in their own monetary policy, the value of the yen has fallen on international exchanges on concerns of major stimulus programs coming. As a result, Japan’s citizens are dumping their yen and are buying Gold at a record pace. An ounce of Gold is selling for 145,000 Yen up from 125,000 Yen last July. In early February, Gold was at a record high of 155,000 Yen ($1,614.58 USD). In two years, the price of Gold rose 36%.

Japan is just one example — Gold prices have hit new highs recently in places like Brazil, Iceland, and India. Argentina is another case; the precious metal is up 45% in the past two years, recently hitting record highs there, too.

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South Korea buys 20 tonnes of Gold in February

The South Korean Central Bank took advantage of the February Gold correction and added 20 metric tons in February, raising their Gold reserves by 24% to 104.4 tons. South Korea’s Gold holdings increased $1.03 billion in value to $4.79 billion at the end of last month. This is equivalent to 1.5% of total foreign exchange holdings. The Seoul-based central bank’s latest purchases are its fifth round of buying since June 2011. The Central Bank of South Korea’s bullion reserves has increased their Gold by 30 tons in 2012, and 40 tons in 2011.

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SILVER

Last week Silver was up on all five trading days, ending the week up $0.43, closing at $28.92 per ounce on Friday with its highest trading volume. Last Friday, trading on the most active CME May 2013 contract was over 25 million ounces. Last week Silver had a difficult time staying above $29.00 per ounce at the close. What is more important is the major resistance level of Silver, which is currently at $30 per ounce. Right now Silver has excellent support at $28 per ounce, but I need to see Silver above $30 to resume its long term uptrend.

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Silver Institute reports 30% increase in Investor Demand

According to the Washington D.C. based Silver Institute, 53% of Silver currently is now used in industrial products ranging from televisions to batteries. However, during the past year the largest increase in demand, over 30%, has come from global investors looking at this metal as a “cheaper alternative to Gold.”

The U.S. Mint continues to report record levels of sales for the 1 ounce .999 Silver Eagles. The latest update on March 8, 2013 was 11,763,500; an all-time record sales number.

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PLATINUM & PALLADIUM

Platinum and Palladium both showed sharp increases last week in the face of Gold’s small rally. Platinum closed up $30 per ounce, at $1,603 per ounce, trading at only a $27 premium to Gold. Palladium closed at $782 per ounce, up a very healthy $62 for the week.

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RECOMMENDED INVESTMENT COMMITMENT AND DIVERSIFICATION:

Precious Metal commitment: Minimum of 35% of investment capital

Diversification:  Gold 55%, Silver 40%, Platinum & Palladium 5%

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.

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