Weekly Market Report 5/13/13

This Week’s Headlines:

Gold
World’s largest Money manager bullish on Gold
Rumors of Germany offering Gold loans to Italy and Greece
China keeps buying and producing more Gold
Silver
Rare Coin Market Update
Collectible Coin Protection Act
The April 2013 CoinStats is now available
Recommended Investment Commitment and Diversification
 

GOLD

Last week there was a war going on in Gold trading pits around the globe. A financial minister at the G7 monetary meeting said that “Gold could retest the recent $1,322 low” and the Bank of America Merrill Lynch stated that “Gold could hit $1,200 per ounce in the short term.” These statements, combined with a strong U.S. Dollar versus the Euro and Yen, kept Gold on the defensive all week.

The statements from the G7 and BofA last week both talked down and sold down the Gold price until it broke the $1,450 per ounce support levels, at which point algorithm and computer programs triggered technical sell orders from professional chart traders. Three times last week they were able to drive the Gold price to under $1,450. The first two times they tried were last Tuesday and Wednesday, but Gold quickly rallied back on sizeable demand. The third time was last Friday, when they were able to drive the Gold price down to $1,418 per ounce, and again the demand came in taking the Gold price back to $1,448 per ounce by the end of aftermarket trading. Gold could have surpassed $1,450 per ounce if it had traded for just another 10 minutes. The volume of trading last Friday in the U.S. surprisingly was Gold’s highest of the week (23 million ounces for the most popular CME June contract.)

At the beginning of this week we could see margin call and program selling, but if last week’s low of $1,418 holds on heavy volume, it could be the final test. However, if Gold breaks that level then $1,400 is where major support really is.

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World’s largest Money manager bullish on Gold

BlackRock Inc. (BLK), the world’s largest money manager, said it is still bullish on Gold. BlackRock’s President, Robert Kapito, said on May 9 that he would still buy the metal, echoing billionaire John Paulson, who is sticking with a bullish view even after losing 27% of his Gold Fund last month.

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Rumors of Germany offering Gold loans to Italy and Greece

With debt in Italy and Greece continuing to build, and shortage of fresh capital to help stimulate their economies, there are rumors that they may use the Gold in their central bank reserves to borrow capital from Germany. History shows us that in 1974, Italy borrowed $2 billion from the Bundesbank, using Gold as collateral. Portugal did the same thing, borrowing $1 billion from the Bank of International Settlements (BIS) in 1975-1977, and India used its Gold to borrow from Japan in 1991. Gold has proven to be excellent collateral for a loan, as all of these loans were paid back within five years.

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China keeps buying and producing more Gold

China consumed a total of 320.54 tonnes of Gold in the first quarter; this was an increase of 25.6% year-on-year. With Gold prices still falling from higher levels earlier in the year, it is likely that consumption of Gold will continue at robust levels in China in the second quarter. In the first quarter, China produced 89.91 tonnes of Gold, an 11.26 percent increase over the same period last year.

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SILVER

During last week’s decline in the Gold price, Silver actually held up much better. With Gold declining $27.60 (1.88%), Silver dropped only $0.35 (1.48%), closing the week at $23.65 per ounce. Silver has been showing an increasing volume of buyers every time it gets near $23 per ounce. Physical demand for Silver investment products has increased at an extraordinary pace worldwide, driving up coin and bar premiums due to major shortages. The Gold/Silver price ratio is now at an astonishing 60.72 to 1.

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Rare Coin Market Update

Last week I attended the New Orleans’s American Numismatic Associations National Money Show. This rare coin convention was well attended and there was a major storage of investment quality Gold and Silver rare coins. Dealer inventories are at record lows and auction sales for top quality certified investment quality rare coins are soaring. In that type of environment, it was very difficult to purchase many CoinStats recommended coins there.

Since the financial crisis of 2008 the U.S. rare coin market has been unchanged to lower (in the face of Gold and Silver prices doubling) because of very weak domestic demand due to the recession. Based on an increase in the Gold and Silver bullion prices, many U.S. Gold and Silver rare coins have been substantially undervalued and have been excellent values.

For the past six months I have been reporting from major coin conventions that the demand for investment quality Gold and Silver U.S. rare coins has been growing, while most dealers’ inventories have been at very low levels. These fundamentals are an outstanding harbinger for much higher prices to come very soon.

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Collectible Coin Protection Act

As chairman of the Gold and Silver communities’ Political Action Committee (Gold & Silver PAC), I am proud to share the introduction of HR 1849, the Collectible Coin Protection Act, into the House of Representatives on May 7, 2013. This Federal legislation amends and updates the Hobby Protection Act passed over 30 years ago. HR 1849 allows both law enforcement and civil action against manufacturers, importers, and sellers of counterfeit coins and bullion products, as well as providing enforcement against the unauthorized use of registered trademarks belonging to collectible certification services.

This legislation is non-partisan and has no financial effect on the budget; therefore I am asking my friends who have a relationship with their local congressman to contact them and request they be a co-sponsor of HR 1849. Please let me know of any positive replies.

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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.

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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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