Weekly Market Report 9/24/12

This week, as Gold stabilizes and starts its run to all-time highs, learn what’s next. I also discuss what should happen with Silver, which broke out above the $34 an ounce level and has become very bullish on its way to $35 per ounce.

I am continuing to ask 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 as authentic. We are up to 11 Congressmen as co-sponsors, and our goal is 50-100.

GOLD 

Gold broke out above the $1,640 per ounce resistance level on August 21st and quickly moved up 8% to $1,770 per ounce on Sept 13th.  Since then, although the $1,750 support level was tested, Gold has closed above $1,770 per ounce for the past seven trading days. During this same period, open interest of the popular December CME Gold contract has reached all-time record high levels. Record demand, combined with Gold’s refusal to retract part of the 8% increase, are excellent signs that Gold’s recent breakout isn’t over.

On Friday, Gold reached $1,790 per ounce during inter-day trading on news of a possible breakthrough in settlement talks between the ECB and Spain’s Central bank on the debt problem. This was the first attempt at $1790, the 2012 high and a technical resistance level, and trading volume was the highest for the week; surprising, considering that it was Friday. Gold closed the week at $1,778 per ounce, up only $5.30 for the week, up $90.20 for the month, and up $212.50 (13.55%) since January 1, 2012. What I expect to see for the Gold price is more consolidation for the next week or two, with Gold trading between $1,750 and $1,790 per ounce, building an excellent base for the next attempt to break above $1,790 and $1,800.  

I have spotted a pattern developing with Gold trading during the past six weeks. Gold’s biggest weekly increase has happened on a Thursday or Friday, and on every one of those six days, the trading volume was the highest for the week. I have spoken to a few professional commodity traders with regard to reasons for this pattern and couldn’t get any input. Let’s see if this happens for a seventh time this coming week.

WORLD CURRENCY DEBASEMENT

Last Thursday Japan became the fifth country and/or central bank to announce a fresh round of monetary stimulus (QE). I expect more countries to join the bandwagon along with England, Europe, China, and the United States. Currency debasement is contagious and will continue to spread as the price of Gold/Silver valued in these currencies will set new all-time highs again and again.

LAST CALL FOR GOLD

Gold under $1,800 per ounce still represents an excellent entry point for new purchases. However, as we get closer and closer to the all-time highs of $1,920 the risk/reward ratio does not look as good as right now.  I believe that we will see Gold above $2,000 per ounce very soon, but why wait? Look at the Recommended Investment Commitment and Diversification below, and if your Precious Metal commitment isn’t a minimum of 35% of your investment capital, make those purchases now.

SILVER

Silver has never looked better; during last week it would not close below $34.36 per ounce. Additionally, Silver broke out above the key resistance level of $35.00 per ounce three times last week before retreating on heavy professional short-term profit taking. While Gold traded in a narrow high/low price range last week, Silver was far more volatile with a $1.42 per ounce range, with a weekly high of $35.26 and a low of $33.84.  Trading volume and physical demand for Silver is picking up and every time there is strength in the Gold market, Silver increases at a greater percentage. 

PLATINUM & PALLADIUM

Platinum and Palladium prices were down last week, but that may offer an opportunity, as all the mining problems haven’t been settled. Last week Platinum was down $76 closing at $1,637.60, and Palladium was down $28 closing at $671 per ounce. Platinum is now at a $140 per ounce discount to Gold, and Palladium is trading near recent lows, an excellent value.

Workers at Lonmin’s Marikana mine complex in South Africa ended their strike last Wednesday after agreeing to a 22-percent raise plus a one-time payment.  Elsewhere, employees at Anglo American Platinum (Amplats) and Rustenburg in South Africa have not returned to work. Amplats has a production target of 2.4-2.5 million ounces of Platinum this year, while Rustenburg’s operations accounts for about a third of its annual Platinum output.

Recommended investment commitment and diversification:

Precious Metal commitment: Minimum of 35% of investment capital

Diversification:  Gold 50%, Silver 40%, Platinum & Palladium 10%

Diversification includes 50% in long term investment quality rare coins and 50% short term bullion products

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.  

SEPTEMBER 24, 2012 UPDATE TO HR 5977 

As of today we have 11 Congressmen that have signed up to be co-sponsors of HR5977; 3 Democrats and 8 Republicans. Our target is 50-100, so with Congress out of session, please email, call, or visit your local Congressman during this election period and ask them to co-sponsor HR5977.

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/   

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