Weekly Market Report 08/20/12

This week’s Market Report provides you with an update on the precious metal market activities, as Gold remains above $1,600 per ounce. Also included in this week’s report is an invitation to attend an evening cocktail reception for Congressman Howard Berman on Wednesday, August 22, 2012.  I am also asking my clients and friends to contact their Congressman and ask him/her 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 that are currently being imported into our country and sold.

GOLD

Last week, for the fourteenth time over the last five consecutive months, Gold tested the $1,600 per ounce support level and held.  Also last week, Gold may have gone below $1,600 per ounce during trading, but on all five trading days it closed above $1,600 per ounce. The volume of Gold traded on the days it dropped below $1,600 per ounce was over 10 million ounces.  For the week, Gold closed at $1,619.40 per ounce, down $3.40 per ounce with trading volume higher than expected for a summer month.

Public consumption of Gold bars, coins, and jewelry has declined in India, Europe, and the United States. Who is purchasing Gold in massive quantities every time it sells off?

Recent news releases from the World Gold Council (WGC) and the Security Exchange Commission say that it is the World’s Central Banks and many high net worth individual investors.  

WGC shows Central Bank Gold buying on record pace

The largest increase in official global Gold reserves purchased for the five-year period between 2008 and 2012 was recorded by Russia, not Europe or Asia. Russia bought over 500 tonnes of the yellow metal. China came in second with 454 tonnes, and India third at 200 tonnes. Recently South Korea (16 tonnes in June), Mexico, Egypt, Turkey, Kazakhstan, Brazil, India, Ukraine, and the Philippines have been aggressive buyers, building up their nations Gold reserves. In 2010, the world’s Central Banks purchased 77 tonnes of Gold, while in 2011 the world’s Central Banks increased their purchases by almost 500%, to 458 tonnes of Gold. The World Gold Council has projected 2012 to be an all-time record year for Central Bank purchases of Gold.

As more than twelve of the world’s largest developing countries exchange their Euro and U.S. Dollar reserves for Gold, you have to ask yourself why?  These countries have access to the world’s most experienced economists and advisors, and they are clearly concerned about the future value of western paper money.

Billionaires Keep Increasing Their Gold Holdings

Billionaire investors George Soros and John Paulson have increased their Gold investments in the second quarter of 2012. Based on just released U.S. Securities & Exchange Commission filings for the quarter ending June 30th, both men dramatically increased their Gold investments. George Soros has doubled his Gold holdings to 88,440 ounces, while Paulson & Company has added 450,000 ounces for the same period; they now hold 21.8 million ounces of Gold. 

John Paulson has been a major Gold buyer for years, while George Soros was a seller of Gold in 2011.  George Soros, a highly respected international investor, switched from a bearish to bullish position on Gold by doubling his holdings in the second quarter of the year. This begs the question, why?

Soros, who manages funds through various accounts in the US and the Cayman Islands, has reportedly unloaded over one million shares of stock in financial companies and banks that include Citigroup (420,000 shares), JP Morgan (701,400 shares) and Goldman Sachs (120,000 shares). The total value of these stock sales amounts to nearly $50 million.

What’s equally as interesting as Soros’s sale of major financials is where he has shifted his investment strategy, and where he put his money. At the same time that he was selling his bank stocks, he was acquiring some 88,400 ounces of Gold (approx. $130 million).

Why would anybody dump over a million shares of stock in major banks to purchase more than 100 million dollars worth of Gold?

Earlier this year, George Soros told Newsweek ….

“I am not here to cheer you up. The situation is about as serious and difficult as I’ve experienced in my career,” Soros tells Newsweek. “We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system.”

It looks like Mr. Soros is putting his money where his mouth is.

SILVER

Silver continued to stay in a very narrow price range last week. During the entire week, Silver’s low/high price range was only $0.86 per ounce, going from $27.43 to $28.29. Silver closed the week at $28.01 per ounce, down $0.05 per ounce, on very low trading volume.  If Gold breaks out in the coming weeks to above $1,630 per ounce, Silver demand will need to firm up. I need to see a move back to $30 per ounce to regain the market professional’s bullish sentiment. 

PLATINUM & PALLADIUM

Platinum and Palladium were the star performers in the precious metals market last week. Platinum increased $73 per ounce (5.2%) to $1,473 per ounce, while Palladium increased $23 per ounce (3.95%) to $605 per ounce. This increase in both white metals came in the face of a $3 decrease in Gold. The increase was caused by violence from police and protesters at the Lonmin Platinum mining facilities near Marikana, South Africa, killing upwards of 30 striking mine workers. Lonmin confirmed that the first six days of the wildcat strike resulted in production losses of 30,000 tonnes of ore, or 15,000 Platinum-equivalent ounces 

Both Platinum and Palladium still have excellent fundamentals and look like outstanding value investments. Platinum is trading at a $146 (9%) discount to Gold, and Palladium is trading at only 37.3% of the spot Gold price. Historically, Platinum has traded at a 10-30% premium to the Gold price, while Palladium has traded 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 vehicle, and since these are our #1 selling bullion items we can offer them at only a small premium over the 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

Special event for clients located in the Los Angeles area

On Wednesday, August 22, 2012 at 6pm we are holding a special cocktail party reception for Congressman Howard Berman at Delmonico’s on Ventura Boulevard in Encino, California.

There will be hors d’oeuvres and an open bar at the reception. Rep. Berman will share his opinion on anti-counterfeit coin and bullion legislation and the possibility of an Internet Sales Tax. Political contribution is requested but not required. For more information or to RSVP, please contact [email protected].   

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 the fund raising cocktail party mentioned above 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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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.