Weekly Market Report 8/27/12

This week’s Market Report provides you with an update on the precious metal market activities, as Gold breaks out above the $1,600 per ounce level and starts its run to all-time highs. I also discuss what is next for Silver, which broke out above $30 an ounce and became bullish.

Additionally, I am 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 currently being imported into our country and sold.

GOLD 

What a profitable week for Gold and Silver investors. After four months of consolidating in a tight trading range, Gold finally broke out. The price of Gold was up $53.50 per ounce (3.3%) for the week, closing on Friday at $1,670.20 per ounce.  Gold broke out above the $1,630 per ounce resistance level on Tuesday and continued its run higher for the balance of the week. What’s next? The next resistance and psychological resistance level is $1,700 per ounce. 

Gold is trading at its highest price since April 12th of $1,680 per ounce; when it breaks through $1,700, we are off and running to a new record all-time high above $1,920 per ounce. Physical demand should continue to increase as we move past the summer months. Plus, increasing talk about monetary stimulus from Europe, the U.S., and Asia, can only add to the demand. 

MOVING FROM PAPER GOLD TO PHYSICAL GOLD

Many stock brokers, rather than losing control of their client’s money if their clients buy physical Gold, recommend that their clients buy Gold in the form of an Exchange Traded Fund (ETF).  The most popular ETF is the GLD, where investors purchase shares equal to 1/10 oz of Gold, but cannot take delivery of the Gold.  Many professional investors, (like George Soros & John Paulson) are moving away from ETF’s in order to own segregated physical Gold bars and coins that are stored outside the U.S.  As demand for segregated physical Gold and Silver storage has grown, a concern regarding the number of storage facilities available has been an issue.  It looks like Brink’s is going to fill that need.

The Brink’s Co. (BCO), which stores and transports bullion, is set to open one of the world’s largest precious metal vaults in the London area within the next month, at a time when investors’ Gold holdings are at record highs. Orit Eyal-Fibeesh, Managing Director for Brink’s in the U.K., said in an e-mail on Thursday, August 23, 2012 that the firm plans to open this facility with a major London clearing company and is considering opening another vault next year. The vault will be able to hold a “very substantial” amount of metal, she said, without being more specific.

DO REPUBLICANS WANT THE U.S. TO GO BACK TO A GOLD STANDARD?

The Gold standard has returned to mainstream U.S. politics for the first time in 30 years. This week, a call for an audit of the Federal Reserve’s monetary policy and a commission to look at restoring the link between the dollar and Gold is planned at the Republican Convention in Tampa, Florida. Additionally, a “Gold Commission” is set to become part of the official Republican Party platform.

MORE PROFESSIONALS BUYING GOLD

Pimco’s Commodity Real Return Strategy $20 Billion Fund has expanded its holding of Gold from 10.5% to 11.5% (adding $200 million worth, or 124,000 troy ounces) as a hedge against inflation, anticipating further moves by the central banks to spur economic growth, said its fund manager last week.

SILVER

Silver put in an outstanding price performance last week. Not only did Silver stay above the $28 support level, but it broke out above the $30 long term resistance level. By Friday, Silver had reached and closed at $30.62 per ounce, up $2.62 (9.35%) for the week.

Many professional commodity traders had been shorting Silver every time it got close to the $30 per ounce resistance level. That strategy proved to be very profitable during the past three months. However, when Silver broke through the $30 resistance level, it triggered a stop loss sale and the price and volume accelerated.

Last year, Silver broke through the $30 barrier on Feb 8th, and by April 25th it had reached $49.20 per ounce. On Jan 12, 2012, when Silver broke out above the $30 per ounce level, it ran up to $37.20 per ounce within 6 weeks. To say that Silver has had a recent history of making incredible price increases over a short period of time is an understatement. Will history repeat itself? I would like to see Silver stay above $30 within the first three trading days of this coming week.  

PLATINUM & PALLADIUM

The value of Platinum and Palladium has increased at an extraordinary pace over the past seven trading days.  Platinum has increased $158 per ounce (11.3%) to $1,554 per ounce, while Palladium increased $76 per ounce (13.1%) to $652 per ounce. Platinum has gone from a $210 discount to the Gold price, to a $118 discount; while Palladium is now trading at 39% of the Gold price. Both Platinum and Palladium still have excellent fundamentals and look like outstanding value investments.

I continue to 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 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

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/   

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.