Weekly Market Report 08/6/12

This week’s Market Report provides you with an update on the precious metal markets, especially on Gold’s continued fight to stay above $1,600 per ounce.  I am also requesting that my clients and friends contact their Congressman and ask them to support HR 5977 (Collectible Coin Protection Act of 2012). This proposed legislation would stop the flood of high quality Chinese counterfeit U.S. rare coins currently being imported into our country and sold.

GOLD

Last week Gold tested the $1,600 support level again, and by the weekend closed at $1,609 per ounce. On Thursday, August 2, based on the fact that the August FOMC meeting did not result in additional monetary stimulus, Gold dropped to $1,584.00 per ounce. However, on Friday, Gold initially dropped to the weekly low of $1,584 per ounce after the data indicated that US employers hired 163,000 workers in July, the most in five months. The jobs data curbed expectations that the Federal Reserve will launch further monetary stimulus measures to boost growth. However, Gold quickly reversed the loss as the U.S. Dollar fell versus the Euro.

The U.S. Dollar fell because the employment increase of 163,000 jobs --- though the highest in five months --- was still below expectations, due to the increase in the unemployment rate for July, which ticked higher to 8.3%. Remember, a higher unemployment rate gives the Federal Reserve a good reason to provide additional monetary stimulus, which is bullish for Gold. I believe the increase to 8.3% in the U.S. unemployment rate will finally give our Federal Reserve the needed reason to provide QE3 at the September FOMC meeting, and today’s market trading activity reinforces that belief.

I was very impressed by the price action in last week’s trading. After the disappointing news from the Federal Reserve’s August FOMC meeting, and no actions taken by ECB President Mario Draghi, the price of Gold could have easily dropped back to the recent $1,565 level; but it didn’t.  During this consolidation phase for Gold, we are continually seeing higher lows, which have raised the recent support price from $1,525 to $1,580 per ounce, a very bullish sign. 

Gold’s basic bullish fundamentals: increasing central bank purchases, growing global monetary stimulus and debt, and decreasing Gold supplies from mining operations and recycling, are firmly in place. Gold is your ultimate safe haven investment during times of extraordinary global monetary stimulus.

I cannot stress enough that we are very close to a major Gold price rally, and I highly recommend adding to your Gold holdings immediately to take advantage of the current low price.  

HSBC has Gold at $1,900 per ounce by year end

Gold could be one of the few assets to profit from the political and economic turbulence in the United States as the “fiscal cliff” approaches, potentially creating a rally in the precious metal later in 2012 for it to reach $1,900 per ounce by the end of the year, analysts at HSBC said.

“Economic uncertainty, geopolitical tensions, and the uncertainty of the U.S. November elections are theoretically Gold-bullish,” and Gold should perform better later in the year “when U.S. growth is poor and the dollar is weak,” a new HSBC report said. “We expect prices to rally to above $1,900/oz by the end of the year. Patience is the most important commodity.”

Italy’s Prime Minister Mario Monti warns of a major risk of a Currency Crisis in Europe’s future. Monti said “I can only welcome the ECB’s statement that there is a ‘severe malfunctioning’ in the market for government bonds in the euro region. It’s also true that some countries have to shoulder ‘extraordinarily high’ costs to finance their debts. That’s exactly what I’ve been saying for a long time.” He urged swift action to lower borrowing rates during a Germany’s Spiegel magazine interview.   

SILVER

Last week Silver continued its recent price weakness, closing the week at $27.80 per ounce.

Although Silver ended the week up $0.30 per ounce, it dropped below the $27 support level twice, and couldn’t stay above $28 even with Gold reaching $1,631 per ounce on Tuesday. Silver needs to get above $28 per ounce and stay there for 3 to 5 trading days to become short term bullish; and above $30 per ounce to become long term bullish.

PLATINUM & PALLADIUM

Both of these markets look like outstanding value investments, with Platinum trading at a $195 (or 12%) discount to Gold, and Palladium trading at only 36% of the spot Gold price. Historically, Platinum trades at a 10-30% premium to the Gold price, while Palladium trades at a minimum of 50% of the Gold price.

I strongly recommend adding one or both of these rare metals to your investment holdings.

The Canadian 1oz Platinum and Palladium Maple Leafs are the most actively traded investment vehicles, and since these are our #1 selling bullion item we can offer them at only a small premium over spot metal content. For a current quote on these items please visit:

Platinum: http://www.mintstategold.com/platinum-1/bullion-coins-and-bars/platinum-canadian-maple-leafs.html

Palladium: http://www.mintstategold.com/palladium-1/bullion-coins-and-bars/palladium-canadian-maple-leafs.html

RARE COIN UPDATE

I am now in Philadelphia, attending 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, the bourse floor, and the auction lots. If you’re a numismatist and enjoy collecting or investing, this is truly a must attend event. In my next week’s report I will provide more information of this major numismatic event.

SALES TAX EXEMPTIONS FOR GOLD AND SILVER AT RISK

The Wall Street Journal reported on Monday, July 16, 2012 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 their revenues. 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 (Collectible Coin Protection Act of 2012)

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

Please contact your Congressman to ask for their 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 to 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.

If you want to keep track of the progress on this important legislation you can follow it on: http://www.goldandsilverpac.com/Coin_Protection_Act.html

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 are willing to call your Congressman see 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/  

If your residence or business is located in the San Fernando Valley of California, near my office, we have planned a fund raising cocktail party for Congressman Howard Berman on August 22, 2012. If you would like to attend or send a check thanking him for his support of HR5977, please contact our office. 

Recommended investment commitment and diversification:

Precious Metal commitment: Minimum of 35% of investment capital

Diversification:  Gold 50%, Silver 30%, Platinum & Palladium 20%

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 to 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.