Weekly Market Report 10/8/12

This week, as Gold consolidates in the $1765 to $1795 area and starts its run to all-time highs, learn what’s next. I also discuss what should happen with Silver, which has stabilized above $34 an ounce and has become very bullish on its way to $38 per ounce. Also, the  October 2012 CoinStats update is now available.

GOLD 

Gold continues to consolidate in the $1,765 to $1,795 area.  Last week Gold never closed below $1,775 per ounce, only hitting the $1,765 support level once. Gold closed up last week, ending at $1,780.80 per ounce on Friday. This means that Gold has closed higher six out of the last seven weeks. During the past three weeks Gold has been building an extraordinary base in a very narrow $30 trading range.  The only question that I continue to ask myself is how long will it trade in this range before it breaks out; is it days or weeks? Surely it will happen in October. This breakout should quickly be followed by a move to substantially over $1,800 per ounce, on its way to setting a new all-time high by year end.

The pricing pattern I mentioned last week of Gold having its largest weekly increase on Thursday or Friday continued for an eighth week in a row. Gold rallied $16.70 per ounce on Thursday, the best performance of the week. Coincidentally, Thursday was the day the stock market rallied in reaction to Romney winning the presidential debate on Wednesday evening. I also noticed that the days with the highest increase over the past eight weeks are also the days with the highest demand, with trading volume at the highest level for that week.

What does this mean? There is a major buyer in the Gold market who aggressively makes purchases when Gold is trading at the lower end of the trading range.

Bill Gross of Pimco Likes Gold

Pimco founder and co-chief investment officer Bill Gross warns that the U.S. will no longer be “the first destination of global capital” seeking safe returns if it doesn’t address its fiscal gap. The U.S. “will begin to resemble Greece before the turn of the next decade” if it continues to close its eyes to deficits, Gross said “Unless we begin to close this gap, then the inevitable result will be that our debt/GDP ratio will continue to rise, the Fed would print money to pay for the deficiency, inflation would follow and the dollar would inevitably decline. Bonds would be burned to a crisp and stocks would certainly be singed; only Gold and real assets would thrive within the ‘ring of fire,’” Gross said.

Physical Demand for Gold Eagles Increased 76% in September

Total U.S. Mint sales of the American Eagle Gold bullion coins during September soared 75.6% to 68,500 ounces compared to 39,000 ounces of Gold Eagles sold in August.

Last Call for Gold

Gold at 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 it does right now.  I believe that we will see Gold above $2,000 per ounce very soon, so why wait?  Look at the Recommended Investment Commitment and Diversification section below, and if your Precious Metal commitment isn’t a minimum of 35% of your investment capital, make those purchases now.

SILVER

Last week Silver traded above $35 per ounce four of the five trading days, reaching a high of $35.44 per ounce on Monday. The low/high range for Silver last week was $34.21 to $35.44 per ounce, definitely showing excellent consolidation at the current level. At Friday’s close of $34.57 per ounce, Silver was up 24% since January 1, 2012.  Silver has now traded above $35 per ounce seven times in the last three weeks, and we have seen light resistance at the $35.50 level. A breakout above this level is coming and when it does we should see some light resistance at $36 per ounce as it makes a serious move to $38 per ounce. 

Industrial Demand for Silver on Record Pace

Normally, when I talk about Silver consumption, clients think that I am talking about coins and medals or jewelry, and in the past they would be right. But now we are seeing major increases for physical Silver in industrial areas; solar panels, batteries, solid state lighting, water purification, and medical uses, are all causing dramatic increases in physical Silver demand. For more details read the article at http://www.mintstategold.com/investor-education/silver_demand_solar_industry/.

PLATINUM & PALLADIUM

Problems at South African Platinum and Palladium mines continue to affect the above ground supplies and the market value. Mine workers at South Africa’s largest Platinum and Palladium mining properties are striking for higher wages, better working conditions and medical benefits. This news, and a very strong bullish precious metal sentiment, have combined to drive Platinum up $38 per ounce and Palladium up $23 per ounce last week. Platinum is now trading at $1,707 per ounce, only $73.60 under the Gold price, compared to last week when Platinum was $104.80 per ounce lower than the Gold price.

The October 2012 CoinStats is now available

Our numismatic CoinStats report is the best investment tool for rare coin investors. CoinStats is an in-depth statistical analysis of popular rare coin series that allows you to identify the best values in U.S. certified rare coins. I am proud to offer this unique and informative tool exclusively to our clients. The October 2012 CoinStats update is now available for $20 Gold Saint Gaudens, $20 Gold Liberties, Morgan & Peace Silver Dollars, and the Walking Liberty Half Dollar series.

The CoinStats Report provides a list of my recommended certified U.S. Gold and Silver coins that are found listed on the best value page. These are not the overly-hyped modern issue bullion coins or low-grade circulated coins, they are PCGS/NGC Certified MS63 or higher Gold and Silver U.S. rare coins, dated prior to 1936, that have a proven track record of appreciation.

For the latest CoinStats analysis, just put CoinStats in the subject line and email me which series you would like to see.

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

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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.