Weekly Market Report 06/11/12

This week I discuss last week’s Gold/Silver trading, and provide information on who is buying all the Gold.

GOLD

This year, the summer months, which are normally less volatile for precious metal prices than the rest of the year, could be the exception to the rule due to what is happening in Europe with the sovereign nation and bank debt crisis. Last weekend’s $125 billion Spanish bailout is just the start of the monetary stimulus we are going to see. The Italians, Greeks, and Portuguese bailouts are coming this summer.

In May, Gold dropped below $1,535 three times, and all three times the market rallied to close the next day to trade above $1,555 per ounce. I believe much of that demand came from the world’s Central Banks and the fact that the average Gold price for May was $1,585 per ounce; the lowest since last year. I also believe we are soon going to see extraordinary demand numbers reported. 

Gold doesn’t want to go down, so the question is, “When will it go up?”

Last week, Gold reached a high of $1,642 per ounce before its dramatic drop after Chairman Bernanke’s testimony in Congress.  The Gold price rallied back to close the week at $1,591.40 on Friday.

This week starts on a positive note with the $125 billion Spanish bailout. Hopefully, the Gold market will rally back to above the important psychological $1,600 per ounce resistance level during the week. A move to above the $1,600 per ounce level is important, but a move to above $1,650 (last week’s resistance) would cause most professional traders to be bullish, and I believe we will see that happen in June.  

CENTRAL BANKS, BILLIONAIRES, AND CHINA KEEP BUYING GOLD

Kazakhstan’s Central Bank said it will increase the share of Gold in its foreign exchange reserves from 12% to 15%. That was on June 7th, a day after announcing plans to cut its holdings for the ailing Euro by a sixth. The bank’s deputy chairman, Bisengali Tadzhiyakov, told Parliament that it had signed contracts to buy 22 tonnes of Gold - worth more than $1 billion at current prices.

Billionaire George Soros, who was negative on Gold in the latter part of 2011, has turned bullish, adding a substantial amount of Gold to his holdings in the first quarter of 2012.

Hong Kong’s Gold shipments to China in April jumped 62% to the second-highest level on record, while Gold flow from China has increased to an unprecedented level, official Hong Kong trade data showed on Monday. Hong Kong shipped out 101,768 kg of Gold to mainland China in April, and received 34,368 kg from China, which brings the net exports to 67,400 kg, a surge of 77% for the month, according to the data just released

SILVER

Silver continued to hold above the $28 per ounce support level last week. The average Silver price last week was $28.32 per ounce. It dropped below $28, and then sizeable demand came in and drove up the price.  Last Friday Silver closed at $28.47, down $0.04 for the week, with volume considered good for a summer month.  Given that Gold, Platinum, and Palladium were all down last week, Silver being down only $0.04 is surprisingly strong.

PLATINUM

Last week Gold dropped $30.70 per ounce, and we saw Platinum only drop $8.20, closing the week at only $1,425 per ounce. Platinum’s discount to the price of Gold is currently at an unbelievable $166 per ounce. This provides you with an opportunity to purchase Platinum at almost a 10% discount to Gold. A discount of this size rarely happens, so I am maintaining my increased recommended investment diversification for Platinum of 15% of your precious metal commitment. 

The Canadian 1oz Platinum Maple Leafs are the most active Platinum trading vehicle, and because they are our #1 selling Platinum bullion item we can offer them at only 5.75% over spot.  For a current quote on this item please visit: http://www.mintstategold.com/platinum-1/bullion-coins-and-bars/platinum-canadian-maple-leafs.html

Recommended investment commitment and diversification:

Precious Metal commitment: Minimum of 35% of investment capital

Diversification:  Gold 50%, Silver 35%, Platinum & Palladium 15%

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.