Weekly Market Report 9/29/14

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

China’s long term Gold plans

Russia & China Add To Their Gold Reserves!

This Week’s Headlines:

Gold
The critical moment is coming for Gold
Indian Gold demand about to surge
Silver
Recommended Investment Commitment and Diversification

GOLD

Last Friday Gold closed at $1,215.40, down $13.50 per ounce for the week, the lowest price it has traded at since January. Gold has declined steadily since reaching a high of $1,346.80 per ounce on July 10, 2014.

There is a combination of major factors that have encouraged traders to sell Gold. A strong U.S. currency has been caused by a series of upbeat U.S. data, highlighting the diverging economic outlook for the Eurozone and the United States. Expectations are growing that the Federal Reserve will begin tightening interest rates early next year.

The U.S. Dollar has gained approximately 7% in value against the Japanese Yen and the European Euro in the past couple of months, reaching a four year high. This is important for American citizens because we look at the value of Gold in U.S. Dollars. At current Gold prices, a 7% increase in the U.S. Dollar is equal to an $85 per ounce decline in the value of Gold.

Why is the Dollar so strong versus these two currencies? It is because of the economy. While the U.S. economy is firmly in a sustained recovery pattern, the Japanese and European economies continue to be in a recession, bordering on depression. These weak economies drive international investors to U.S. equity markets, and their funds need to be in Dollars.

Back to top of report

The critical moment is coming for Gold

Last week the bears made two attempts to take the price of Gold below $1,200. On Monday of last week, the bears were able to drive the price down to $1,208, and on Thursday, heavy selling drove the price down to $1,206.60 per ounce. I believe that we will see a third attempt to bring the Gold price below $1,200 per ounce very soon, possibly by tomorrow. If the bears are successful, Gold will be in a short term bear market. However, on that day, if the Gold price makes a new low then closes at or near the day’s high with heavy volume (referred to as an inter-day reversal) then I think Gold and Silver will be a buy, and professional traders will become bullish.

If Gold bounces off of the $1,200 per ounce level, immediately add more Gold 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 Sovereign, 20 Franc French Rooster and Angel, and the Swiss Gold Helvetia. 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.

Back to top of report

Indian Gold demand about to surge

In India, ahead of the ‘festival of lights’ [Diwali] held on October 23, importers are shipping what is estimated to reach 80 tonnes of Gold this month through ‘official’ routes, ahead of retail demand, at what they consider to be cheap levels. It is reported by Indian newspapers that 50 tonnes of Gold has been smuggled in the last 10 days over the Indian borders. There is no way an accurate figure can be given for smuggling, but we are in the high season for Gold over there. The ‘marriage’ season starts in November and lasts through May of next year. What is evident now is that Gold demand in India is now at record levels and will rise if Gold drops below $1,200. Likewise, Chinese premiums are rising and will continue to rise further if Gold goes lower.

Back to top of report

SILVER

The weakness in the Gold price continues to cause heavy selling in the world’s Silver markets. Silver has dropped $1.87 (9.6%) from the beginning of the month, closing at $17.54 per ounce last Friday. At one point during trading last week Silver hit $17.27 per ounce, a four year low. When we see the inter-day reversal in the Gold price, the Silver price should bottom out. The Silver/Gold ratio is at an amazing 69.30-to-1.

Back to top of report

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

Back to top of report

REMEMBER THE BLOG

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.

Back to top of report