Weekly Market Report 9/15/14

This Week’s Headlines:

Gold
Silver
Recommended Investment Commitment and Diversification

GOLD

Gold decreased all five trading days last week, dropping below the important $1,250 per ounce support level; making trading a bit strange. I saw very light technical trader selling coming in to short the market. Normally, after a serious break of an important support level the margin call selling, combined with professional short sales, will drive the price down 15% to 20% quickly. However, the selling was coming out of Europe and the U.S., and I saw sizeable bargain buying coming from Asia. The long term support level for Gold is $1,200 per ounce and I give it a 50/50 chance of testing that level within the coming weeks.

Based on recent trading increases in physical Gold trading and exchange volumes, the timing suggests that we will soon see the Gold price clean out, making a major turn higher. Last year Gold broke below the $1,200 long term support level, reaching a low of $1,180 per ounce twice. Both times, Gold bottomed out that day with exceptionally high trading volumes and quickly rallied higher. The first time this happened was on June 28, 2013 and Gold quickly rallied $254 (21 ½ %) in only two months. The second time was December 31, 2013 and Gold reached $1,393 per ounce in 2 ½ months with an 18% increase.

My point is the following: yes, Gold could reach the $1,200 per ounce support level, but recent history has shown that a correction below $1,200 per ounce will happen very fast and on exceptionally high trading volume. Therefore, if Gold gets near the $1,200 per ounce level, don’t wait to add to your holdings. With the strength of the Dollar versus the Euro, I would recommend purchasing the Pre-1934 European Gold. A strong U.S. Dollar has caused the premium over spot Gold to drop to recent lows on the British Gold Sovereigns, 20 Franc French Roosters and Angels, and Swiss Gold Helvetia. Right now, the good news is that you benefit from a low Gold price combined with a very low premium; prices on these Pre-1934 European Gold coins are now less than comparable U.S. Gold bullion Eagles or Buffalos.

We are moving out of the summer months and heading into the fall period where traditionally the Gold demand increases. Gold jewelry manufacturers should start to acquire Gold bullion to create new designs very soon for the coming holiday season. Asian Gold jewelry demand is expected to increase over the record 2013 levels.

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SILVER

Silver broke down below the $19 per ounce support level last Monday, then made new 2014 lows on Thursday and Friday, closing the week at $18.60 per ounce. Silver dropped $0.55 per ounce last week on heavy trading.

As I mentioned above, like Gold, when the price of Silver bottoms out and turns higher it will move quickly. Back on June 28, 2013, Silver hit $18.17 and then rallied $1.50 per ounce in just two days, ultimately reaching $25.12 (38% increase) in less than two months. Watch for the final clean out when Silver makes new 2014 lows and then rallies sharply on heavy volume. At the current level, Silver is an extraordinary bargain and a great long term value play.

The Silver/Gold ratio is currently at 66.19-to-1.

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Recommended Investment Commitment and Diversification:

Precious Metal commitment: Minimum of 40% of investment capital

Diversification:  Gold 45%, Silver 50%, 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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