Weekly Market Report 5/28/13

This Week’s Headlines:

Gold
Ben Bernanke causes volatility in the Gold Market
China demand drives Asian Gold bar premiums higher
Central Banks continue to buy Gold in April
Silver
Collectible Coin Protection Act
Recommended Investment Commitment and Diversification

GOLD

Last week, and for the first two days of this week, we have seen higher prices and strong global demand for Gold. Gold finally turned and climbed higher last week, up $22 per ounce for the week, while seeing heavy volume from commodity contracts and physical buying.

Last Monday, May 20, was a key inner-day reversal which is a very bullish technical indicator, especially since it occurred during a downtrend. The reversal happened when Gold opened below the previous day’s close, making a fresh low, and then closed higher than the previous day’s high.

Gold has closed above the important $1,350 per ounce support level for the past ten trading days. This has allowed Gold to consolidate, while it builds a solid support base for the move higher. Now, Gold is attempting to break above the key $1,400 resistance level. If Gold is able to break above $1,400, it would move very quickly to the $1,450 - $1,480 price range. This would position Gold to resume the long term bullish move after breaking above $1,500. On the other hand, if Gold breaks down below the $1,350 support level and then breaks below $1,300, it would be short term bearish and could drop to the $1,250 level. Of these two scenarios, I believe that the bullish one has a 75/25% chance of happening.

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Ben Bernanke causes volatility in the Gold Market

The Gold price took a roller-coaster ride on Wednesday, May 22, first jumping to $1,413.30 per ounce when Bernanke told the Joint Economic Committee of Congress that an end to the current quantitative easing (QE) program could mean a “substantial risk of slowing or ending the economic recovery and causing inflation to fall further.” He said the labor market has improved but “remains weak overall.” Then Gold sold down to $1,368 when during the question and answer period his remarks were construed to mean that policymakers conceivably could begin withdrawing some of their monetary accommodation in the coming months.

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China demand drives Asian Gold bar premiums higher

Reuter’s reports that premiums for Gold bars hit a record high in Asia today as lower spot prices lured more buyers, mainly in China (the world’s second biggest consumer of the precious metal) amid tight physical supplies. Premiums for Gold bars in Hong Kong touched a new all-time high of $6 an ounce over spot London prices, up from $5 last week. Singapore premiums rose to $5. Banks in China were quoting up to $7 in premiums, two traders in Singapore said. "China premiums remain high because of a shortage in supply of the physical metal," said a Hong Kong-based trader.

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Central Banks continue to buy Gold in April

Russia, Turkey, Kazakhstan, and Azerbaijan expanded their Gold reserves for a seventh straight month in April, buying bullion to diversify foreign exchange reserves due to concerns about the dollar and the euro.

Russia’s steady increase in its Gold reserves saw its holdings, the seventh-largest by country, climb another 8.4 metric tons to 990 tons, taking gains this year to 3.4% after expanding by 8.5% in 2012, International Monetary Fund data showed.

Kazakhstan’s reserves grew 2.6 tons to 125.5 tons, taking the increase to 8.9% this year after a 41% expansion in 2012, data on the website showed.

Turkey’s holdings rose 18.2 tons to 427.1 tons in April, increasing for a tenth month as it accepted Gold in its reserve requirements from commercial banks.

Belarus’s holdings expanded for a seventh month, as did Azerbaijan’s.

Greece’s Gold holdings climbed for a fourth month in April, according to the IMF data. This could be a sign of rising economic nationalism in Greece, or that the Greek central bank realizes that if Greece leaves the euro and is forced back onto the drachma, Gold reserves will offer a modicum of protection. Only a modicum, because Greece’s Gold reserves remain miniscule, especially considering the scale of their debts.

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SILVER

For the past nine trading days Silver has closed between $22.35 to $22.66, an amazing $0.31 per ounce trading range. Trading volume during this period has been above average, and extraordinarily strong. Silver did trade as low as $20.25 on May 20 before rallying on heavy demand to close at $22.58. Hopefully, Silver has established a firm base and new support level for the next leg up. While we are seeing some resistance at the $23 per ounce level, we have long term support at $20.00. So, the risk/reward for Silver looks outstanding, especially with the Silver/Gold ratio at 61-to-1.

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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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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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