Weekly Market Report 9/22/14

Some links to recent informative articles on precious metals and rare coins:

Why Goldman Sachs is Wrong on Gold

Gold imports soar 176% in India

This Week’s Headlines:

Gold
Silver
Rare Coin Update
Recommended Investment Commitment and Diversification

GOLD

The bears continue to maintain control of the Gold market. Gold was able to rally up $12 early last week, reaching $1,243 per ounce last Tuesday. However, professional short sellers came in later in the week driving down the Gold price to $1,214 per ounce. On Friday, Gold closed at $1,216.60 per ounce, down $14.90 for the week. As the Gold price moved lower during the week, the trading volume increased every day. By Friday the CME trading volume for the December hundred-ounce contract had reached a weekly high of 173,498 contracts, and that was on a Friday, normally the lowest trading volume day of the week. Why is trading volume important? I believe that the Gold price is getting ready to turn higher by month’s end, and will do it on record trading volume.

Gold’s long term support level is $1,200 per ounce, and I give Gold a 75% chance of testing that level by September 30th. Trading at the world’s commodity exchanges suggests that we will soon see the Gold price clean out, making a major turn higher. Twice last year Gold broke below the $1,200 long term support level, reaching a low of $1,180. Both times, Gold bottomed out on each trading day with exceptionally high trading volumes, then 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 when Gold had reached $1,393 per ounce in only 2 ½ months with an 18% increase in price.

My point is the following; yes, Gold is the favorite to 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 premiums over spot Gold to drop to recent lows on the British Gold Sovereigns, 20 Franc French Roosters and Angels, and Swiss Gold Helvetias. Right now, the good news is that you can benefit from a low Gold price combined with a very low premium. The current price is less than for the comparable U.S. Gold bullion coins like the Eagles or Buffalos.

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SILVER

The weakness in the Gold price really caused heavy selling in the world’s Silver markets. Silver dropped 4.27% last week, closing at $17.84 per ounce, down $0.76 per ounce for the week. At one point during trading last week Silver hit $17.78 per ounce; a four year low. Last Friday’s trading volume on the CME December 5,000-ounce contract reached 66,510 contracts; the highest I have seen in the past three months. The Silver/Gold ratio is an amazing 68.18-to-1.

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Rare Coin Update

As we move out of the summer months and into fall, the trading activity on the U.S. rare coin exchanges has been picking up. There is still a serious lack of low population PCGS/NGC high grade Gold and Silver rare coins, but the amount of bids for these rarities is increasing. The bulk of the demand is in PCGS/NGC certified $20 Gold Saint Gaudens and Liberties, plus Morgan & Peace dollars. Because of the lower Gold price the premium on low grade (AU to MS63) generic $20 Gold coins has dropped.

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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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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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