Weekly Market Report 6/17/13

This Week’s Headlines:

Gold
What are Professional Gold Traders doing?
Gold Confiscation is being discussed again
Gold Demand is growing as warehouse supplies decline
What are developed nations doing about the run to Gold?
Silver
Collectible Coin Protection Act
Recommended Investment Commitment and Diversification
 

GOLD

Last week Gold traded in a narrow $22 high/low range, from $1,394 on the high to $1,372 on the low. Trading volumes have been average for the summer months. However, the tug of war between the bears and bulls picks up as the Gold price approaches the highs and lows. For the week, Gold closed at $1,387.60, up $4 per ounce, and down $5.40 since the start of the month.

Back to top of report

What are Professional Gold Traders doing?

The net combined long positions in Gold by speculators and professionals rose 17.5 percent for the week ending June 4, after reaching a four-and-a-half year low on May 28. The short positions fell for the first time since mid-April, showing that many speculators and professional traders like Gold and are going long.

Back to top of report

Gold Confiscation is being discussed again

Casey Research just released an excellent article about the possibility of Gold Confiscation written by Jeff Thomas. I would recommend taking a few minutes to read it. Read the full article at www.mintstategold.com/investor-education/gold_confiscation_possibility/

Back to top of report

Gold Demand is growing as warehouse supplies decline

As governments around the globe from Europe to Asia attempt to accelerate their economies with massive injections of monetary stimulus, the concern about the ultimate result of this action is coming home to roost. The more that these governments stimulate their economies, the more they destroy the value of the paper money that they print. The realization that serious inflation is on its way as these currencies continue to be debased is the main reason that investors and central banks around the world are causing an unprecedented demand for more and more physical Gold.

The physical demand for Gold has caused the inventory of Gold bars in the COMEX (Commodity Exchanges) approved warehouses to fall dramatically, and it is now at a four-year low. Warehouse inventories of registered .999 fine Gold bars have fallen from over 3 million ounces earlier this year, to 1.43 million ounces on June 14. This COMEX warehouse decline does allow for the sizeable selloff from the ETF’s depositories (the paper Gold liquidation I have spoken about.) See the chart below.

Please notice that on the above chart the last time that the COMEX Depository Warehouse reached 1.5 million ounces of registered Gold stocks was September 2011 when Gold traded at $1,920 per ounce.

The surprising thing about this extraordinary decline in warehouse inventories and demand for physical Gold investment products is that Gold, since the beginning of this year, has fallen more than 17% (the worst performance in the past twelve years.) In the past year Gold has declined from a high of almost $1,800 per ounce to a low of $1,321 per ounce. Contrary to normal market reactions, which would be to have heavy liquidation, physical Gold demand has increased as bargain buying continues to grow regardless of whether its private investors, international corporations, hedge funds or central banks.

Back to top of report

What are developed nations doing about the run to Gold?

In last week’s Weekly Market Report I spoke about the prohibitions in Europe about shipping precious metals. As of May 23, 2013 UPS, FedEx, and French mail are not allowed to ship precious metals in or from France. In addition to that prohibition, on September 28, 2011 Austrian banks have now been ordered to restrict the sale of Gold and Silver bullion purchases and are limiting personal acquisitions of precious metals to €15,000 (US$20,243) at a time. The Austrian Gold and Silver restrictions have the excellent potential to spread to other European nations.

On June 5, 2013, the Indian government hiked import duty on Gold from 6% to 8%, the second increase this year. The central bank of India has said that jewelers can only use cash, rather than bank credit, to buy imported Gold. The Indian government is hoping these measures will help to moderate the demand for Gold bullion investment products as Gold demand in India surged 41% in the fourth quarter of 2012 (to 261.9 tonnes) compared to the same period last year.

What is happening in Europe and India are attempts to control, restrict, and make it difficult for their citizens to own precious metals. History has shown us (please read my 2013 Hyper-inflation Report, available at www.coinmag.com) that the first step by nations concerned about the debasement of their currency (which results in serious inflation) is to enact currency and precious metal controls and restrictions. What is happening in France, Austria, and India could easily go worldwide, making it more difficult to purchase Gold/Silver at the current attractive price and premiums. I would strongly recommend adding to your current precious metal holdings before the war against Gold expands to other nations and drives physical demand to an unprecedented level.

Back to top of report

SILVER

Last week Silver traded between $21.33 and $22.03 per ounce closing the week at $21.95 per ounce, up $0.21. $22 per ounce is now the new resistance level and Silver has made several attempts to break out above this level with little success.

The current premium on U.S. 1oz Silver Eagles is dropping as the U.S. Mint catches up with its backlog of orders. As of June 14, 2013, the U.S. Mint has produced 23,396,500 1oz Silver Eagles, an all-time record. Unless we see Silver break down below $20 per ounce, or a rally above $24 per ounce, I would expect to see the U.S. Mint caught up with orders by mid-July and premiums to go back to normal.

Back to top of report

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.

On June 19th I travel to Washington D.C. to meet with a number of Congressmen to discuss the many good reasons for them to become a Co-Sponsor of HR 1849. I will update you on the success of my meetings when I return.

From June 20th to 22nd I will be in Baltimore for the Whitman Coin Expo. For my rare coin clients, if you have updates to your Want List please email them to me asap.

Back to top of report

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

Back to top of report

REMEMBER THE BLOG

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.

Back to top of report