Weekly Market Report 04/30/12

This week’s Market Report provides you with an update on the precious metal markets and I discuss “Why I am confident that the price of gold is going to set new all-time highs this year.”

GOLD

Gold ended last week up $22 per ounce, closing Friday afternoon at $1,664.80 on heavy volume. I believe that last week the price of Gold finally bottomed out.  On Wednesday, the bears aggressively sold off Gold after hearing no mention of any future quantitative easing in the FOMC policy statement. However, when Gold hit $1,625 per ounce the trading volume picked up substantially and the price started to rally sharply.  This is the fourth time that I have seen gold demand and trading volume pick up sizably when gold is in that same price area.  The gold market is telling me that “Gold doesn’t want to go down.”  The only question is, "when will it breakout above $1,700 per ounce and resume its move to new all-time highs?"

Why am I so confident that the price of Gold is going to set new all-time highs this year?

The smartest fiscal and economic experts are employed (as consultants and financial ministers) by many of the world’s largest sovereign countries. These experts are responsible for protecting the countries trillions of U.S. Dollars, Pesos, Euros, Yen, and Yuan, that are being held as part of their vast reserves. Until 2009, these experts were advising these governments to sell Gold and keep U.S. Dollars as the primary part of the countries reserves; now these experts have changed their tune. Over the past two years, many countries including the BRIC countries (Brazil, Russia, India, and China) are exchanging their U.S. Dollars and Euros for Gold.

Last week, the IMF released the latest Central Bank Gold holdings data, which showed a net increase of 439 metric tonnes in 2011 (a 50-year high). An additional 57 metric tonnes were purchased by 11 countries just during the month of March 2012.  Mexico and Russia showed the most notable 2012 reserve increases, with about 16 tonnes each in March. Central Asian nations also caught some attention since they were net purchasers.  The trend of Central Banks diversifying their holdings out of US Dollars and into Gold has been intact for several years now and should continue into the coming years.

SILVER

Last week, while Gold was up $22 per ounce, Silver was down $0.30 per ounce, closing the week at $31.34.  After breaking the long term $30 per ounce resistance level on Wednesday, Silver came roaring back on heavy volume, closing Wednesday at $30.35 per ounce on the highest volume of trading for the week. I am convinced that the risk/reward for Silver at its current price is extraordinary.  You risk $1.00 per ounce with the possible short term reward of $5 per ounce, with the current Silver/Gold ratio at 53 to 1, showing that Silver is a better value than Gold.

The Silver Institute has just reported that physical Silver investments grew by a sizable 67% in 2011 to 96.7 million ounces.  The demand in Western Europe and the United States set new records for American Silver Eagle Bullion Coins, but the strongest demand came from China, which accounted for 60% of the demand for Silver bullion coins in 2011. The Silver Institute has also reported that 2011 saw a notable growth of 53% in Comex Silver futures turnover, in terms of the annual average.

Recommended investment commitment and diversification:

Precious Metal commitment: Minimum of 35% 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

REMEMBER THE BLOG

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 to 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.