Weekly Market Report 5/20/13

This Week’s Headlines:

Gold
World’s largest money manager is bullish on Gold
World Gold Council 1st quarter 2013 Gold Demand Summary
Silver
Physical demand & premiums for U.S. Silver Eagles strong
Collectible Coin Protection Act
Recommended Investment Commitment and Diversification
 

GOLD

Last week’s Gold trading felt like a slow death, each day it was down from $2 to $28 per ounce, ending the week at $1,364, down $72 per ounce for the week. Trading volume was off the charts, as many buyers were attracted by the low price. The main factors that drove down the Gold price were the exceptional rally in the U.S. Dollar and the continued drop in the paper Gold ETF’s holdings. Another negative for Gold last week was the OMB’s projected improvement in the 2013 U.S. Budget Deficit. Gold has definitely been in the down cycle, the only question is, where will it find support?

What is the short term outlook for the Gold price? Today, we are seeing margin call selling, which easily drove the Gold price below the $1,350 per ounce support level. However, Gold did not test the $1,322 level (the April 2013 low) and reversed direction on heavy buying, and ended today’s trading to close on or near the highs of the day; VERY BULLISH. I would strongly recommend adding to your Gold holdings if Gold holds above $1,350 per ounce. I would be bullish on Gold for the short term unless Gold breaks and stays below the psychologically important $1,300 per ounce level.

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World’s largest money manager is bullish on Gold

BlackRock Inc. (BLK), the world’s largest money manager, said that it is still bullish on Gold. BlackRock’s President, Robert Kapito, said on May 9 that he would still buy Gold, 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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World Gold Council 1st quarter 2013 Gold Demand Summary

Last Thursday the World Gold Council released the 2013 first quarter Gold demand data. The numbers shown below are extraordinarily bullish for the long term outlook for Gold. To read the full report visit http://mintstategold.com/WGC_Gold_Demand_Q1_2013.pdf

Consumers power Gold jewelry demand, up 12% in Q1 2013
Q4 2012 recovery in the jewelry sector continued into the first quarter of this year. Global jewelry demand of 551 tonnes, a record of US$28.9bn, surpasses the previous quarter’s record.

Q1 2013 Gold investment: ETFs down 177 tonnes, bars & coins physical demand up 378 tonnes
The decline in investment demand relative to Q1 2012 was solely attributable to the net outflows from ETFs, which obscured the strong rise in investment for Gold bars and coins at the retail level.

Technology Gold demand contracted 4% in Q1 2013
In the first quarter of 2013, demand for Gold in the technology sector declined by 4% year-on-year to 102 tonnes. In value terms, demand was 7% lower at US$5.4bn.

Central banks continue steady level of Gold purchases in Q1 2013
Central banks added 109.2t of Gold to their reserves in Q1 2013, the ninth consecutive quarter of net purchases. This sector accounted for 11% of the demand in the first quarter, worth a value of US$5.7bn.

Total supply of Gold little changed in Q1 2013, up 1% year-on-year to 1,051.6 tonnes
A modest year-on-year increase in Q1 mine production was countered by a decline of a similar magnitude in the supply or recycled Gold with the net result that total supply grew by 1%.

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SILVER

Silver traded between $22.11 and $23.84 per ounce last week. Silver closed the week at $22.35 per ounce, down $1.30 (5.52%) on average volume. Silver is currently down 26% since the start of the year and at the lowest level since 2010. Silver between $21 and $22 per ounce represents a tremendous value, and the risk/reward ratio looks very attractive. On one hand, you risk the possibility that Silver could break through major support at the $20 per ounce level (5-10% drop) if Gold breaks below $1,300 per ounce; and on the other hand, the short term reward could easily see Silver hit $28 per ounce (25-33% gain) if Gold could rally back to the $1,500 level.

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Physical demand & premiums for U.S. Silver Eagles strong

U.S. Mint sales of 1 ounce .999 Silver Eagles as of May 15th hit an extraordinary 20,435,000 coins. At the current pace U.S. Mint sales could easily exceed 40,000,000 ounces, an all-time record high by year end. Physical demand for Silver investment products has been soaring during the recent decline in the market price.

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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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Recommended Investment Commitment and Diversification:

Precious Metal commitment: Minimum of 40% 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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