Weekly Market Report 07/23/12

This week’s Market Report provides you with an update on the precious metal markets. I am also requesting clients and friends support for HR 5977 (Collectible Coin Protection Act of 2012) which helps stop the flood of high quality Chinese counterfeit U.S. rare coins that are currently being imported into our country and sold. Lastly, I share information about the World’s Fair of Money coin convention starting in Philadelphia in about two weeks.

GOLD

The price of Gold is consolidating, with the high/low price range becoming much narrower. During the past week we saw higher lows and lower highs, with a high/low price range of only $21.60 per ounce.  We continue to see massive demand when the price reaches $1,560 per ounce, and some resistance at $1,600 per ounce. I expected to see Gold cross the $1,600 resistance level, and was disappointed when it only reached $1,598.80 on Tuesday, the weekly high.  This wasn’t surprising though, given that the U.S. Dollar reached a two-year high versus the Euro (based on no mention of monetary stimulus by Fed Chairman Bernanke), and the continued Spanish banking and government debt problems.  The real positive fact to focus on is that the price of GOLD doesn’t want to go below $1,560/ounce.

With the Russian Central Bank reporting late Friday that it purchased 6.2 metric tons of Gold in June, I believe that 2012 will be a record year for global Central Bank purchases of Gold. Central banks across the world have consistently raised their Gold reserves for 2012, diversifying their sovereign reserves amid global economic uncertainty. This has increased the volatility in the foreign exchange market. The International Monetary Fund (IMF) has stated that the central bank Gold demand figures are very bullish. The IMF suggests that the central bank demand in 2012 may be even higher than the 456.4 tons added in 2011 – which was the largest in almost five decades.

The only negative that I see is that Gold imports in India have plunged by 50% so far this year. The reason for the decline in Gold imports is that the Indian rupee has tumbled against the U.S. dollar, causing the price of Gold to reach an all-time high, as valued in rupees. Falling foreign investments and gloomy business sentiment in India are driving down the rupee’s value, making imports more expensive.

LARGEST GOLD COIN EVER MINTED

The Perth Mint has announced that its 2012 Australian Kangaroo 1-ton (32,150 troy ounces) Gold $1,000,000 coin has been awarded the title of “The largest coin in the world” by Guinness World Records. The Perth Mint Kangaroo (with Gold valued at the current price of over $1,570) is worth over $50,000,000.

The Perth Mint took this honor from the former title holder, the Royal Canadian Mint (RCM). The RCM had held the record for five years with its Maple Leaf 100-kilogram Gold coin with a $1,000,000 face value, weighing 3,215 troy ounces.

SILVER

Although the Silver price dropped below $27 per ounce four out of five days last week, Silver continued to close above $27 per ounce all five days.  What does this mean? The Asians love a bargain, and with Silver at $26.72 (the weekly low) it is truly an excellent value investment.  Silver’s high/low price range last week was only $0.88 per ounce, ranging from $26.72 to $27.60. The week saw Silver lose $0.06 per ounce, on a normal light volume of trading for the summer months.  Any agreement coming from the Eurozone leadership on new monetary stimulus (to bail out Spain and Italy in order to resolve their current debt problems) would be very bullish for Silver.

RARE COIN UPDATE

On Wednesday, August 1, I leave for Philadelphia to attend the largest rare coin event of the year.  The American Numismatic Association (ANA) holds its World’s Fair of Money Convention in August every year.  The show is a spectacular event for the numismatic community. Most of the World’s Mints create elaborate displays for their new and old coinage. The U.S. Mint and Bureau of Printing and Engraving offer their newly minted coinage and sheets of new currency, along with other interesting numismatic products. Thousands of numismatic dealers have, and share, bourse tables to offer their numismatic specialties. Tens of thousands of collectors and investors attend club meetings and spend days viewing the displays, exhibits, bourse floor, and auction lots. If you’re a numismatist and enjoy collecting or investing, this is truly a must attend event.

Starting August 3, I am attending some important PNG, ICTA, ANA, and Gold and Silver Political Action Committee meetings prior to the convention’s opening day. I am also scheduled to look at some coin collections that I am hoping to purchase.

If you haven’t already updated your rare coin Want List with me, please do so as soon as possible and email me a copy by July 30. I hope to buy two large collections of U.S. Gold and Silver Dollars while I’m in Philadelphia.

SALES TAX EXEMPTIONS FOR GOLD AND SILVER AT RISK

The Wall Street Journal reported on Monday, July 16, that Republican governors have joined Democrats in supporting federal legislation that would end the sales tax break for online purchases. This agreement has less to do with political ideology than the need for states to increase revenue. The National Conference of State Legislatures estimates that collecting sales tax on online purchases could provide states with $23 billion in new revenue annually.

I am aware of, and monitoring, three different federal "internet sales tax" proposals currently under consideration by Congress - the Main Street Fairness Act (S. 1452, H.R. 2701), the Marketplace Equity Act (H.R. 3179) and the Marketplace Fairness Act (S. 1832).  All three of these proposed legislations could directly or indirectly affect current laws in many of the states that offer sales tax exemptions for rare coins and precious metals. 

HR 5977 needs to be passed into law this session of Congress

Please contact your Congressman asking for support of HR 5977

As Chairman of the Gold & Silver Industry’s Political Action Committee (G&S PAC) I have been privileged to help our numismatic community build support for our anti-counterfeit legislation. HR 5977, introduced on June 20, 2012 (Collectible Coin Protection Act of 2012) helps stop the flood of high quality Chinese counterfeit U.S. rare coins currently coming into our country. This legislation provides badly needed enforcement “teeth” for the Hobby Protection Act of 1978, focusing on any manufacturer, importer, or seller of U.S. counterfeit coins.

I am asking my clients and friends to email or call their Congressman and request that they co-sponsor or support HR5977. According to our industry lobbyist, the more Republican and Democratic Congressmen that support our legislation, the better the chance we have to bring the bill to the House of Representative’s floor for unanimous consent by year end.

To find the name and contact information for your local member of the United States Congress visit http://www.contactingthecongress.org/  and enter your complete zip code.

If you wish to call your Congressman visit http://clerk.house.gov/member_info/mcapdir.aspx to find the Washington D.C. office phone number of your representative.  

Please email me when you have contacted your Congressman, with the results of your communication.

For more information on HR5977, see http://www.mintstategold.com/investor-education/cat/news/post/collectible_coin_protection_act/

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.