Weekly Market Report 5/6/13
Gold
China’s Real Gold-Reserves at 4,000 Tonnes?
Federal Reserve ponders increasing stimulus, and lower inflation
Silver
Demand for .999 U.S. $1 Silver Eagles is soaring
Rare Coin Market Update
The April 2013 CoinStats is now available
Recommended Investment Commitment and Diversification
After the excessive price volatility in April, (ranging from $1,321 on the low to $1,604 on the high), it was nice to see the Gold price stabilize in a tight $48 high/low range for the entire week. With the exception of Wednesday, when Gold sold off in early trading to $1,439, last week the Gold price consolidated in the $1,450 to $1,487 range for the entire week. Last Friday Gold closed at $1,464.70, up $10.60 per ounce for the week. Gold needs to break out above the $1,500 per ounce level for the professionals and chartists to become bullish.
The European Central Bank (ECB) announced a ¼ point cut in their interest rate when they met last Thursday. Current economic conditions in Japan, China, and Europe are causing concerns about asset deflation, which is driving interest rates lower. China and Europe are preparing for a new round of debt monetization to stimulate their economies. Although we are not currently seeing global inflation, history has shown us that hyperinflation is always preceded by massive asset deflation, forcing central banks and sovereign governments to monetize far above desired risks.
Based on what the world’s leading central banks are currently doing by increasing monetary stimulus while building up their Gold reserves, I believe that the die is cast. I see substantial currency debasement and serious inflation coming in the near future. Therefore, I am raising my recommended precious metals commitment to 40%, to diversify your investment portfolio. The combination of the current low Gold/Silver prices, and the actions being taken by Central Banks, make right now the right time.
China’s Real Gold-Reserves at 4,000 Tonnes?
There has been no official announcement from the Chinese government in regard to their central bank Gold holdings since 2008. At that time, the Chinese disclosed to the IMF and World Gold Council they were holding 1,054 metric tonnes of Gold. Since 2008 there has been numerous articles written speculating on how much Gold the Chinese have accumulated over the past five years. However, last Friday, May 3, I read a very informative article on this subject by Jeff Nielson which I have shared at the following link: http://www.mintstategold.com/investor-education/china_real_gold_reserves/.
Federal Reserve ponders increasing stimulus, and lower inflation
The Federal Reserve has an on-going program to purchase $85 billion in bonds each month in an effort to keep long-term interest rates low, and stoke demand. This program is tied to improvement in the labor market, and officials had begun talking about tapering it off after several strong months of job growth earlier this year. However, the recent U.S. economic data has been disappointing, and after the Fed’s two-day policy-setting meeting that wrapped up Wednesday, May 1, the Federal Reserve Bank explicitly stated for the first time that it could increase, as well as reduce, bond purchases “as the outlook for the labor market or inflation changes.” Additionally, the Federal Reserve is worried that the U.S. inflation rate is “somewhat below” the Fed’s target of 2%.
Last Tuesday Silver closed the month of April at $24.15 per ounce, down an unbelievable $4.14 per ounce, or 14.61%. Considering that Gold declined 7.72%, this is what is driving the Silver/Gold price ratio to 61-to-1. Silver declining at double the pace of Gold in April is not unexpected considering the current global central bank policies and concerns over deflation. Last week Silver had a difficult time rallying above $24 per ounce, while volume was moderate. However, physical demand for Silver investment products has increased at an extraordinary pace, driving up coin and bar premiums.
Demand for .999 U.S. $1 Silver Eagles is soaring
The U.S. Mint reported that 1oz .999 Silver Eagle sales in 2013 have increased 57%:
- First four months of 2012: 11,659,000
- First four months of 2013: 18,310,000
This week I am heading to New Orleans for the American Numismatic Associations National Money Show. This rare coin convention should be well attended and I am hoping to fill our client’s rare coin want lists. As the certified investment quality rare coin market soars, I am seeing increasing demand from our clients for CoinStats recommended coins.
Since the financial crisis of 2008 the U.S. rare coin market, in the face of the Gold and Silver prices doubling, has been unchanged to lower because domestic demand due to the recession was very weak. Based on the increase in the Gold and Silver bullion prices, many U.S. Gold and Silver rare coins were substantially undervalued and have been excellent values.
Over the past six months I have been reporting from major coin conventions that demand for investment quality Gold and Silver U.S. rare coins has been growing, while most dealer’s inventories were at very low levels. These fundamentals were an outstanding harbinger for much higher prices to come very soon. Well, at major conventions the demand at the auctions and on the dealer’s trading floors are driving prices up 10% and more on many of the CoinStats recommended Gold and Silver rare coins. Many of the dealers attending these conventions reported raising both their asking prices and bids on many of their Gold and Silver rarities.
The April 2013 CoinStats is now available
Our numismatic CoinStats quarterly report is the best investment tool for rare coin investors. CoinStats is an in-depth statistical analysis of popular rare coin series that allows you to identify the best values in U.S. certified rare coins. I am proud to offer this unique and informative tool exclusively to our clients. The April 2013 CoinStats report is now available for $20 Gold Saint Gaudens, $20 Gold Liberties, Morgan & Peace Silver Dollars, and the Walking Liberty Half Dollar series.
CoinStats provides a list of my recommended certified U.S. Gold and Silver coins which are found listed on the best value page. These are not the overly-hyped modern issue bullion coins or low-grade circulated coins; they are PCGS/NGC Certified MS63 or higher Gold and Silver U.S. rare coins, dated prior to 1948. These investment quality rarities have a proven track record of appreciation over the past 60 years or longer.
For the latest CoinStats analysis, just put CoinStats in the subject line and email me which series you would like to see.
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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