Weekly Market Report 4/8/13
Gold
Gold’s Tug of War Continues
More Monetary Stimulus helps bullish fundamentals for Gold
Low Gold price projected to increase India’s demand
Silver
Platinum & Palladium
Rare Coin Market
Recommended Investment Commitment and Diversification
Last week’s Gold trading was very exciting. After dropping $48.50 on Tuesday, Wednesday, and Thursday, to $1,540 per ounce, Gold made an extraordinary inter-day reversal on trading volume at the highest level in a month. On Friday, the heavy buying and short covering began driving Gold back to $1,575 on the CME close, reaching $1,582 in late after-market trading. Gold was actually down only $13.70 per ounce for the week, while the other precious metals did substantially worse. It appears that massive purchasing of physical Gold offset the GLD (paper Gold) liquidations, and the key $1,540 per ounce support level held again.
In previous Weekly Market Reports I talked about the “Tug of War” in the Gold trading pits. One of the key negative factors was the selling of paper Gold (GLD) by short term Gold investors to purchase equities. The SPDR’s physical Gold holdings have dropped from 1,350 metric tonnes of Gold at the beginning of the year, to 1,205 metric tonnes as of last Friday. This 145 metric ton drop (10.6%) has been a major negative for the Gold price, although the world’s precious metal markets have been finding major buyers, i.e. Central Banks. Last week’s Gold trading showed the major buying power that appears whenever Gold reaches the support levels. I doubt that we will see Gold break below the $1,525 per ounce long-term price support within our lifetime, unless we see a drastic change in the current bullish fundamentals for Gold.
More Monetary Stimulus helps bullish fundamentals for Gold
The Bank of Japan unleashed the world’s most intense burst of monetary stimulus last week. It promised to inject about $1.4 trillion into the economy in less than two years; a radical gamble that sent the Yen reeling to record lows against the U.S. Dollar.
Low Gold price projected to increase India’s demand
Gold imports by India are estimated to increase 31% this quarter after the price drop hits a 10-month low. India’s festivals and weddings are projected to reach record level sales of jewelry. Over the next three months, through June 2013, India’s purchases may climb from 153 tonnes in the prior year, to 200 metric tonnes. Read the complete article at: http://www.mintstategold.com/investor-education/India_gold_imports_climbing/
Silver really got hammered last week, trading as low as $26.58 per ounce on Thursday. It closed on Friday at $27.22 per ounce, down $1.10 per ounce (3.9%) for the week. Silver’s price performance and trading volume were unable to show sizeable buying support, and Silver could not hold $28 or $27 per ounce support levels. With multi-year support at $26.25 per ounce Silver may test that support, but if Gold consolidates at the current level, Silver could easily break down again. The Gold-Silver ratio is trading at the highest level for the month at 57.89-to-1. The ratio has been slowly moving higher over the past four months. Given the current trend, the next target for the Gold-Silver ratio is 60.
Physical demand for Silver continues to grow at a record pace. The U.S. Mint reported on April 4, 2013 that 15,035,000 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 for April.
Platinum and Palladium were both down last week. Platinum closed down $39, at $1,535 per ounce, trading at a $40 discount to the Gold price. Palladium dropped $45 (5.8%) closing at $723 per ounce.
I have carefully monitored the rare coin dealer’s internet exchanges for the past twenty years. Since July 2012, I noticed there has been a dramatic increase in demand for nice U.S. Gold and Silver investment quality coins.
Right now, the market is really hot; particularly focused on PCGS/NGC certified Gold and Silver rarities with populations of less than 50 coins. These are truly scarce coins, valued at approximately $25,000 or more, that rarely come to the marketplace now. These rarities sell quickly; at a premium over their last sale price.
Other investment quality coins (*CoinStats recommended) in the $5,000 to $25,000 price range have been in an accumulation phase since last July, and are now showing plus signs on many of the price guides. Many dealers are reporting record low inventories of popular and key coins, as shown on the largest dealer network index, Certified Coin Exchange (CCE).
On April 7, 2013 the CCE bid/ask rare coin index (one of my key indicators) shows the following:
BIDS: 1,957,193 Coins, $ 869,502,811 total value
ASKS: 15,428 Coins, $ 8,205,994 total value
These bids and asks cover everything from half-cents to $50 Gold slugs, and show over 10 times more buyers than sellers. Given that two years ago the Bid/Ask ratio was 50/50, this is a good indicator of the strength of the current demand for U.S. rare coins by investors and collectors.
*The new April 2013 CoinStats rare coin in-depth statistical analysis for the five most popular rare coins series will be available by email April 15, 2013.
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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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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