Weekly Market Report 4/1/13

This Week’s Headlines:

Gold
Gold’s consolidation is over and it’s time to buy more
Major Dutch Bank will not deliver Client owned Gold
Many state legislators want to make Gold and Silver legal tender
Silver
Platinum & Palladium
Recommended Investment Commitment and Diversification

GOLD

Gold continued trading in a very narrow price range all last week, from a low of $1,590.40 to a high of $1,614.50 per ounce. The negatives for the sellers were a strong U.S. Dollar, a soaring equity market, and heavy selling of the ETF paper Gold (GLD). The positives for buyers were the financial crisis in the Eurozone, continued low interest rates (10 yr. note 1.85%), and heavy physical buying of Gold at the lows of the week by investors and central banks.

The financial markets were closed on Friday for the holiday (Good Friday) and there was no CME trading of Gold or Silver. Thursday Gold closed the week (and the month of March) at $1,595.70, down $10.40 per ounce for the week, with respectable trading volume.

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Gold’s consolidation is over and it’s time to buy more

Gold reached an all-time record high of $1,923 per ounce September 6, 2011 after rallying from $1,478 on July 1, 2011. This $445 rally in just 66 days was followed by a quick correction, which drove the value down to $1,535 by September 26, 2011. Since that time, Gold has been in a consolidation phase. Considering that Gold had a dramatic bull market for ten years this volatility was expected. Remember, Gold had increased from $276 per ounce in 2001, to $1,923 in 2011; an annualized average increase of 18.16% per year.

Now, for the past nineteen months the Gold price has been in a consolidation phase that was badly needed before the next leg higher. With the fundamentals for Gold ownership looking better and better every day, I believe the consolidation phase is over. With Gold at the current $1,600 per ounce price, it represents the best precious metal investment, with an unbelievable risk/reward ratio. Gold’s long term support price of $1,535 per ounce has been tested three times. Gold is now ready to move towards its long term resistance level of $1,800 per ounce, which could easily be followed by a good possibility of setting all-time record highs above $1,923 per ounce.

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Major Dutch Bank will not deliver Client owned Gold

Unlike American banks, most European banks buy, sell, and store Gold and Silver bullion coins and bars for their customers. Many precious metal investors have the bank hold their precious metals and pay a minimum fee for its storage and insurance. European banks normally permit their clients to take delivery of their precious metals whenever they request it. However, because of the current financial crisis in the Eurozone countries, the large Dutch bank ABN Amro just informed their clients that effective April 1, 2013 they would not permit any delivery of their Gold and Silver coins and bars anymore. The worst thing about this statement was that ABN Amro also has the option to cover or replace customer’s physical holdings with commodity exchange contracts. Please read the following article by my friend Pat Heller for more details: http://www.mintstategold.com/investor-education/dutch_bank_wont_deliver/

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Many state legislators want to make Gold and Silver legal tender

Similar to the legislation passed by Utah in 2011, lawmakers in the state of Arizona are moving forward with legislation that would make Gold and Silver legal tender. There are now eight states (mostly republican) with legislation in one form or another making Gold and Silver coins legal tender. For more details on the Arizona legislation, please read the following article: http://www.mintstategold.com/investor-education/az_bill_gold_legal_tender/

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SILVER

Silver closed the week at $28.39 per ounce; it’s third straight down week, continuing a sideways trend that has been in place for six weeks. On the monthly chart, Silver closed beneath the long term uptrend. Support is at the bottom of this consolidation range at $28.00, and short term resistance is at $29.45 per ounce.

The Gold-Silver ratio is trading higher on the month at 56.15-to-1. The ratio has been slowly moving higher for the past four months. Given the current trend, the next target for the Gold-Silver ratio is 57.52.

Physical demand for Silver continues to grow at a record pace. The U.S. Mint reported on March 29, 2013 that 14,223,000 1oz Silver .999 Eagles have been sold so far in 2013. I expect to see similar numbers for Canada, Australia, and other countries when they report their 1st quarter sales in April.

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PLATINUM & PALLADIUM

Platinum was down slightly, while Palladium was the only precious metal to increase in value last week. Platinum closed down $7 per ounce, at $1,575 per ounce, trading at a $21 discount to the Gold price. Palladium closed at $768 per ounce, down $7 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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