Weekly Market Report 6/24/13

This Week’s Headlines:

Gold
What has caused this dramatic drop in Gold?
What is the outlook for Gold now?
Ron Paul feels that the Gold Price is going much higher
Silver
Collectible Coin Protection Act
Recommended Investment Commitment and Diversification
 

GOLD

Last week was truly ugly for Gold and Silver investors. Gold fell sharply below the short term support levels of $1,322 and $1,300 per ounce and closed Friday at $1,292 per ounce, down $91 per ounce (almost 7%) for the week. On Friday Gold reached a low of $1,268 per ounce, simultaneously many Gold investors were hit with margin calls and an increase on Gold margin requirements for the COMEX futures contracts.

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What has caused this dramatic drop in Gold?

Federal Reserve Chairman Ben Bernanke stated that the U.S. Federal Reserve will begin scaling back its $85 billion bond-buying program later this year, saying "The committee currently anticipates that it will be appropriate to moderate the monthly pace of purchases later this year." This news, and the possibility of quantitative easing ending by next year if the U.S. economy improves, caused Gold to drop sharply. The U.S. central bank reiterated its view that interest rates shall remain low, but that was not enough for Gold traders, who did not want to see quantitative easing end. This news caused the U.S. Dollar to rally, the U.S. Stock Market DJIA to drop over 300 points and Gold to drop $87 per ounce.

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What is the outlook for Gold now?

On the positive side:
Physical demand for Gold investment products is running at a record pace around the globe. This demand is coming from central banks, international corporations, hedge funds and individual investors. European shipping prohibitions on Gold/Silver bullion items and the recent increases in India’s precious metal duties on Gold/Silver bullion products are driving prices and premiums for numismatic Gold and Silver coins higher.

The average cash cost for the world’s Gold mines to produce 1 troy ounce of Gold is about $1,200 - $1,250 per ounce. That cost includes employee salaries, admin costs, energy, mine on-site exploration, and financing. With Gold at the current price, the economic feasibility of a Gold mine comes into question. If the Gold price drops any lower, mine sites will shut down and this would limit the supply of Gold hitting the market.

On the negative side:
We have Gold ETF’s in depository holdings (paper Gold i.e. GLD) continuing to drop (under 990 tonnes), positive U.S. economic news, and moderating official U.S. inflation indicators. Which means the short term direction for the Gold price is down with $1,268 as the support level and $1,300 as its resistance.

The Gold price should consolidate in the $1,275 to $1,300 per ounce trading range this week to calm down and stabilize trading around the globe. I’ll be watching the volume and strength of the world’s commodity markets as it attempts to break above $1,300 for bullish indicators.

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Ron Paul feels that the Gold Price is going much higher

Ron Paul, the former congressman and presidential candidate who is known for favoring Gold, says that he still believes it will go higher. Ex-Congressman Paul believes that a Gold price of "infinity" might be hard to conceptualize, but his point is actually quite simple. Read the complete article at "http://www.mintstategold.com/investor-education/ron_paul_gold_to_infinity/"

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SILVER

Silver dropped $2 per ounce last week, putting the price at the lowest point in over three years. Silver traded as low as $19.31 per ounce last week before rallying to $19.96 per ounce on Friday. The short term resistance level is now $20 per ounce, with support at $19 per ounce.

Sales of one ounce .999 Silver Eagles by the U.S. Mint are heading for their best year ever as prices slumped. Sales in 2013 have reached 24,196,500 million ounces, according to data released last Friday. That’s the highest in the first six months of a year since records began, with one more week to go. Demand remains at an “unprecedented level,” and sales of Gold and Silver coins may reach an annual record this year. Richard Peterson, the acting Director of the Mint, said on June 5th that Silver coin sales were suspended in January for more than a week because of a lack of inventory.

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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, to the House of Representatives on May 7, 2013. This federal legislation amends and updates the Hobby Protection Act that was 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 him/her and request that they be a co-sponsor of HR 1849. Please let me know of any positive replies.

On June 19, 2013 I walked the halls of Congress in Washington D.C. and met with a number of Congressmen. I showed them Chinese made counterfeit U.S. coins and discussed the many good reasons for them to become a Co-Sponsor of HR 1849 (Collectible Coin Protection Act). My congressman, Henry Waxman from California was especially helpful, offering to send out a “Dear Colleague” letter to other congressmen about supporting HR 1849.

If you haven’t already contacted your congressman about supporting HR 1849, please visit http://www.goldandsilverpac.com/Coin_Protection_Act.html" Please email your congressman’s reply to me.

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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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