Weekly Market Report 10/6/14

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

Alan Greenspan Explains Why China is Hoarding Gold

This Week’s Headlines:

Gold
Understanding the importance of an Intra-day reversal
Silver
Platinum
Recommended Investment Commitment and Diversification

GOLD

Gold dropped $22.50 per ounce last week, closing the week at $1,192.90, the lowest price that it has traded at this year. The Gold market is firmly under the control of professional traders, and they are shorting the market on rallies, and covering it on the down days. These bears are hoping to drive down the Gold price to below the recent support level of $1,179 per ounce, and it is highly possible that they will be able to accomplish this. I feel that if they are successful in breaking the Gold support level we will see an intra-day reversal in the Gold price. That reversal (if traded quickly) would give our clients an excellent opportunity to purchase additional Gold coins at a very attractive price.

This morning Gold hit a low of $1,183 per ounce when sellers disappeared and bargain buyers became interested after the U.S. currency weakened. The rally took the Gold price back above the important $1,200 per ounce level. Although I would like to think this could be the turn, it is too early to say that, particularly because the trading volume wasn’t large enough. Today’s Gold rally is more likely another bear market rally because of the low trading volume. A real turn in the direction of the market normally requires a high trading volume. However, if Gold could build a base above $1,200 per ounce for a minimum of 3 trading days on increasing volume, I could change my mind.

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Understanding the importance of an Intra-day reversal

I continue to look for an intra-day reversal on the world’s major Gold and Silver exchanges with very large trading volumes. Why? The last time that Gold made a major intra-day reversal was on June 28, 2013. On that day Gold reached a low of $1,179.40 per ounce during trading, but closed at $1,223.70. The trading volume that day was a whopping 308,000 one-hundred ounce CME Gold contracts (30,800,000 ounces). After the Intra-day reversal, Gold continued to rally higher, reaching $1,434 per ounce on August 28, 2013, a $255 (21%) increase in just two months. In my 40 year history of trading and monitoring the precious metal markets I have seen a good number of precious metal intra-day reversals, and I am sure another one is coming very soon. The primary reason that Gold rallies sharply after an intra-day reversal is that the small Gold investors are stopped-out of the market at the lows because of margin calls, known as ’cleaning out the weak hands’. Then the professional traders and commodity houses are able to purchase a large amount of Gold at a very cheap price. This is the reason that a large trading volume is so important.

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SILVER

Silver continues its move lower, reaching a low of $16.64 per ounce last Friday. On Friday Silver closed at $16.82 per ounce, a four year low, down $0.71 for the week. The question everyone is asking is: Where and when will Silver reach a support level? The $16.50 per ounce level could be the short term support, but long term support is at $15.14 (the 2010 low). As I have said numerous times before, the key to a turn in the Silver price is the Gold market.

The Silver/Gold ratio is an amazing 70.90-to-1.

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PLATINUM

On June 10, 2014, Platinum was trading at $1,482.50 per ounce, while Gold was trading at $1,260 per ounce, a $222.50 Platinum/Gold premium. This was higher than the average 2014 Platinum premium of 10% over the Gold price. On Friday, Platinum closed at $1,226 per ounce, down $75 for the week while trading at a $34 premium over the Gold price. In January of 2013, Platinum reached a discount of $121 to the Gold price. I am closely monitoring the Gold/Platinum premium and discount in order to give a recommendation in the near future.

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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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