Weekly Market Report 06/18/12

This week I discuss the results of the make-or-break Greek Election, and it’s effect on the precious metal markets.

My Weekly Market Report keeps you current on the latest events occurring in the exciting Precious Metal and Rare Coin markets. I welcome your comments.

Thank you,
Barry Stuppler

GOLD

Last week was great for Gold investors; the market was up every day, ending the week up $36.70. Most important was the fact that Gold moved above the crucial $1,600 per ounce resistance level on Tuesday, and stayed above it until the end of the week. This now makes $1,600 an important support level. The price what was so significant last week, the next resistance level for Gold is now $1,642.

Investors around the world were focused on, and very nervous about, Sunday’s make-or-break Greek election. The result of the Greek election was that the pro-bailout parties won by a slim majority, calming fears of Athens leaving the euro zone and going back to a Drachma currency. Sunday’s election result looks likely to yield a coalition government led by a conservative New Democracy. The election results reduced Gold bullion’s safe-haven appeal. Gold’s initial reaction was to fall 1% in value, even as the euro hit a one-month high against the U.S. dollar, which would normally support the Gold price. However, after Gold reached $1,607 per ounce, it came roaring back on heavy buying to virtually unchanged levels. I believe we are in the last stage of Gold’s consolidation phase, and Gold starts the move to over $2,000 per ounce from here.

Many Greeks were concerned that their Euro denominated accounts could be transferred into Drachmas.  Additionally, a run on the banks in Greece could be contagious and spread to Spain, Portugal, or Italy.  This is why, on Thursday, there was an announcement from the G-20 that Central banks would coordinate an action to provide liquidity for the European banking system, if required. Monday could be an exciting day in the precious metal markets.

As uncertainty about the European debt crisis continues to lead analysts to believe that the Gold price will probably receive a further boost, the financial markets expect more monetary stimulus (QE) from the major central banks. Gold traders are supported by the news that ICBC, the largest bullion bank in China, is expecting a 10% rise in investment demand, and that Chinese economic growth did not collapse as much as expected. Additionally, physically-backed Gold ETF holdings are still up year-to-date by 26 tonnes, and private investors are increasingly demanding Gold bars and coins, while central banks continue to invest in Gold, reflecting the diversified sources of long-term Gold demand.

SILVER

The performance of Silver last week was very disappointing. With Gold up $36.70 (2.31%) last week, Silver only increased $0.27 (0.94%) and could not close above $29.00 on Friday. Last week, Silver showed excellent support at the $28 per ounce price level, but with four attempts Silver could not close above $29.00, ending the week at $28.74 per ounce.  The Silver to Gold ratio has now increased to 56.65 ounces to 1, an overwhelming value.  This week we could see some strength in Silver as the G-20 meets in Mexico and the FOMC meets on Thursday, and any indication of future quantitative easing could lead to a rally.

PLATINUM

INDIA: With Gold prices reaching an all-time high of 30,420 Rupees per 10 gm on Wednesday, investors are keen on parking their money in Platinum, now trading at 28,500 Rupees per 10 gm. Precious Metal analysts say that it is the right time to buy Platinum because the metal is likely to provide a nearly 30% return by the end of the year.

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.