Weekly Market Report 8/26/13

This Week’s Headlines:

Gold
JPMorgan Chase becomes bullish on Gold
Gold in COMEX warehouses at record lows
Asian demand continues to drive physical Gold market
Silver
Recommended Investment Commitment and Diversification

GOLD

Gold has continued its move to and above $1,400 per ounce and was up another $24.80 per ounce last week, closing the week at $1,395.80 per ounce. At one point on Friday, Gold reached $1,399.90 per ounce before seeing some light selling. I look for the Gold price to continue to move higher and expect it to break above the $1,400 resistance level this week, and close well above $1,500 per ounce by year end.

As we approach the end of the year there will be two political events that will add to the additional demand for Gold and should drive the price higher. The first will be the congressional budget debate, starting in September, which could include the possibility of closing down our government. The second event is the needed increase in the federal debt ceiling, which has the potential to lower the rating of U.S. debt. Both events are bearish for the equity markets and very bullish for precious metals.

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JPMorgan Chase becomes bullish on Gold

JPMorgan Chase has explained that there are some positive seasonality factors that are coming into play with Gold, and that physical Gold demand still remains strong. The spokesman for Chase said that Gold typically does well in August and September. “We’d encourage short-term investors to consider getting long with a four to five week time horizon.”

I am recommending that my clients make additional purchases and increase their Gold holdings immediately.

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Gold in COMEX warehouses at record lows

Ever since Germany asked for the return of 300 metric tonnes of Gold that was being held by the Federal Reserve (and was told that it would take seven years) we have seen major withdrawals of Gold from U.S. depositories. Last week, JP Morgan withdrew over 28,000 ounces, bringing the Gold in registered COMEX warehouses down to just over 7 million ounces. 2013 started with almost 11.7 million ounces of Gold and has declined now by 4.7 million ounce (40.1%). At the current rate of decline COMEX warehouses will be out of Gold by 2014. This would be extremely bullish for the price of Gold.

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Asian demand continues to drive physical Gold market

India’s demand for Gold during the second quarter of 2013 topped all other countries, according to the latest World Gold Council data. As noted by GoldCore, the demand for Gold in India rose to its “highest in the last 10 years” with jewelry, bars, and coins in demand, capping 310 tons for that period.

India isn’t the only country in Asia with a strong Gold demand. I’ve pointed out many times China’s love for physical Gold investment products. Gold deliveries on the Shanghai Gold Exchange climbed to record levels and their jewelry stores have been jammed with buyers in Beijing, Shanghai, and Guangzhou.

Now the World Gold Council (WGC) confirms that during the second quarter of 2013, 60% of the World’s demand for Gold jewelry, and almost half of all Gold bars and coins, were sold in India and China.

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SILVER

Silver rallied above $23 per ounce on August 15, 2013, and has tested that price level every trading day and managing to bounce back above $23 by the close of the market. Last Friday, Silver closed at $23.73 up $0.42 per ounce for the week. Silver continues to build an excellent base and is preparing to break above the $24 resistance level on its way to $25 per ounce quickly. With Silver up $4.11 per ounce since the beginning of the month, many of the professional commodity traders I speak with are very bullish and are buying Silver on weakness, versus selling into rallies. I have raised the Silver percentage in the recommended precious metal diversification based on Silver’s recent strength.

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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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