Weekly Market Report 8/19/13

This Week’s Headlines:

Gold
Demand for physical Gold shows an unprecedented increase
India increases duty to 10% in its war against Gold imports
Popular European Gold back in inventory
Silver
Rare Coin Update
Recommended Investment Commitment and Diversification

Last week was the kind of week I have been waiting for since the beginning of the year. We saw large increases in values for all precious metals. The rare coin market set all-time highs for many of the popular investment Gold and Silver series at auctions during the World’s Fair of Money convention in Chicago.

GOLD

Gold has broken out of its recent trading range and is on the way to $1,400 per ounce. Last week Gold was up $58.80 per ounce, closing the week at $1,371 per ounce on heavy trading volume. After breaking through and closing above the $1,368 per ounce resistance level, Gold’s next resistance level is $1,400 per ounce. I look for the Gold price to continue moving higher. I expect it to break above the $1,400 resistance level in August and to close well above $1,500 per ounce by year end. I am recommending that my clients make additional purchases and increase their Gold holdings immediately.

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Demand for physical Gold shows an unprecedented increase

According to information released today by the World Gold Council (WGC) 2nd quarter report, consumers around the world bought 53% more bullion in the second quarter compared against the same period a year ago. Total purchases of Gold jewelry, bars and coins reached 1,083.2 metric tons. Of this, India accounted for the biggest share at 310 metric tons, which is a 71% increase from the previous year, followed by China at 275.7 metric tons, showing an 87% increase. Most Gold analysts knew that the demand for physical Gold investment products was increasing, but very few thought that the number was that dramatic. Read the complete story at: http://www.mintstategold.com/WGC_gold_report_Q2_2013.pdf

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India increases duty to 10% in its war against Gold imports

The Indian government does not yet feel that its war against Gold imports is having a sufficient effect. It has just announced that it is going to raise import duty on Gold yet again -from 8% to 10% - the fourth increase this year. This decision follows reported Gold import figures of 383 metric tonnes (from July to April), a sharp increase over the 205 tonnes that it imported in the same period in 2012. The Indian government has been trying to clamp down on Gold imports because of the adverse effect they have on the country’s balance of payments (given the ongoing demand in the world’s second most populous nation for the yellow metal). This year alone it has now raised Gold import taxes on three occasions. Duties on Silver imports were also increased from 6% to 10% in a attempt to try and control the burgeoning imports of physical Silver as well. Not content with these measures, the government raised duties on Platinum imports from 8% to 10% as well.

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Popular European Gold back in inventory

While in Chicago for the ANA’s World’s Fair of Money convention last week, I was able to meet with many of my European suppliers. Based on new government restrictions, many coin and bullion dealers in Europe are now unable to ship Gold coins and bullion bars. A few of my European dealer contacts were able to bring me a fresh supply of brilliant uncirculated French Gold Angels and Roosters, as well as British Sovereigns.

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SILVER

Last week was the best week for Silver investors since April of 2011, when Silver had reached $49.84 per ounce. Friday Silver closed at $23.32 per ounce, up $2.92 (12.50%) for the week. Silver was the best performing precious metal for the week, breaking its short term downtrend and spiking up on heavy volume. Silver’s breakout came after the fifth day in a row that it closed above $20 per ounce. The Silver/Gold ratio moved from 64.3-to-1 to 58.6-to-1 in only one week. If Silver continues to lower its Silver/Gold ratio it is a major sign that inflation is on the way.

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Rare Coin Update

I have just returned from the American Numismatic Association’s World’s Fair of Money Rare Coin Convention in Chicago. The convention was very busy with thousands of rare coin collectors, investors, and dealers in attendance. Many high end numismatic coins were sold for record prices at two auctions, with a rare 1804 Silver Dollar selling for $3.9 million. The bourse trading floor with over 500 dealers from around the world was the most active that I have seen in the past ten years. I believe that we have just started the next bullish cycle for investment quality rare coins, and these cycles normally last for 3-5 years.

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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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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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