Weekly Market Report 06/30/14

This Week’s Headlines:

Gold
Gold Heading to a New All-Time High
Gold Fundamentals Have Never Looked Better
Silver
Recommended Investment Commitment and Diversification

GOLD

Last week’s Gold trading was truly the definition of what market consolidation looks like. Gold closed between $1,317 and $1,322.60 per ounce all five trading days, with an amazingly small $5.60 high/low range. Given that one week earlier Gold had moved up $42.50 per ounce, I was really impressed that last week’s consolidation never seriously tested the $1,300 per ounce support level.

Trading volume last week for the hundred ounce August delivery Gold contracts on the CME commodity exchange surpassed the 100,000 mark on a daily basis. That consistently high daily trading volume hasn’t happened since mid-May, and is an excellent sign of fresh buying. I believe that last week’s sizable accumulation, combined with the professional short covering from a week earlier, is signaling that the direction of the Gold price is now UP.

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Gold Heading to a New All-Time High

Gold should move above the $1,332 per ounce resistance level in July. Then it will move above the next major resistance level of $1,392 per ounce (this year’s high), which occurred on March 17. By year end I am looking for Gold to reach the $1,500 per ounce level, on its way to reaching a new all-time high of $1,920 per ounce by early 2016. When making an investment, the key factor has always been timing. I believe that we are now starting the next leg of the bullish move up for precious metals.

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Gold Fundamentals Have Never Looked Better

The supply/demand fundamentals for precious metals have never looked better. These fundamentals (look at the World Gold Councils 2012 to 2014 quarterly demand numbers below) show a 13% increase in demand in the first quarter of 2014. These numbers, combined with the many geopolitical problems around the world, and all of the significant global geopolitical tensions, especially in Iraq and the Ukraine, continue to make front page headlines. These problems and similar on-going worldwide situations are causing many investors to look at Gold as the ultimate safe haven investment.

Gold moved from $276 in 2001 to $1,920 per ounce by September 6, 2011, an extraordinary 595% increase in just ten years. Then on December 31, 2013 Gold hit a low of $1,181 per ounce, a correction of $739 or (38%) in a little over two years. Now, from the start of 2014 Gold has consolidated between $1,230 and $1,392 per ounce, reversing its downward direction while building an impressive base and readying to move higher.

As both Gold and Silver markets move higher in the coming years, we should see a dramatic and very positive effect on prices. This will affect the popular bullions and Pre-1933 coins, as well as the rarer numismatic coins, which should increase at a higher percentage rate. Why? As the market moves higher, the financial media (Television, Radio and Newspapers) will become more positive on precious metals. This positive coverage will cause a sizeable increase in new precious metal investors. If only 5% of these new Gold and Silver buyers purchase investment quality certified Gold and Silver rare coins, their value should increase at a 20 to 30% higher rate than bullion coins.

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SILVER

While Gold was consolidating last week, Silver moved above the $21 per ounce resistance level and stayed there the last four trading days of the week on excellent trading volume. On Friday, Silver closed at $21.07 per ounce, up $0.13 for the week and up $2.39 (12.8%) for June. Major short covering and fresh buying caused the June price to appreciate at the highest percentage rate since reaching $22.22 per ounce in February, 2014.

I believe that the precious metals have turned bullish and are now positioned to move higher over the coming years.

Silver jumped from $4.52 in 2001 to $49.84 per ounce on April 25, 2011, an extraordinary 1,000% increase in only ten years. Then on December 31, 2013 Silver hit a low of $18.72 per ounce, a correction of $31.12 or (62%) in a little over two and half years. Now, from the beginning of 2014, Silver has consolidated between $18.62 and $22.22 per ounce, reversing its downward direction while building an impressive base, and ready to move higher.

Silver’s next resistance level is $21.60, and then $22.22 per ounce, (the 2/24/2014 yearly high) by the end of July. I look for Silver to reach $25 per ounce by year end and to test the 2013 high of $32.48 by the end of next year. Silver is now on its way to test the all-time high of $49.84 in 2016.

The Silver/Gold ratio has moved lower, and is currently at 62.63 to one.

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Recommended Investment Commitment and Diversification:

Precious Metal commitment: Minimum of 40% of investment capital

Diversification:  Gold 50%, Silver 45%, 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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