Weekly Market Report 12/21/15

Links to recent informative articles on precious metals and rare coins:

Rising Inflation Could Be Game Changer For Gold In 2016 - Capital Economics

This Week’s Headlines:

Gold
Backwardation and Contango
2016 Eagles/Buffalo Pre-Order now available with Lowest Premium Guarantee
Tax Benefits for your Gold & Silver holdings
Platinum
Silver
Recommended investment commitment and diversification

GOLD

The U.S. Federal Reserve policy-setting committee finally raised its benchmark interest rate by ¼% (to between 0.25 percent and 0.50 percent) last Wednesday afternoon. This increase in the Federal Reserve interest rate, the first time in nearly a decade, has been highly anticipated for over three months. Federal Reserve Chairman, Janet Yellen, said in a press conference after the rate decision was announced, "The economic recovery has clearly come a long way."

Many precious metal analysts and traders felt that once this announcement was made, Gold would break below the key $1,000 per ounce long term support level. Prior to the Fed announcement, Gold had been trading between $1,058 and $1,077 per ounce. On Thursday, the next trading day after the announcement, Gold quickly sold off, reaching a low of $1,046.80, just $1 higher than the 2015 seven-year low. At that point, buying appeared and Gold showed excellent price support on the highest CME trading volume of the week.

During Asian, European, and U.S. trading last Friday, Gold saw excellent demand from short covering and fresh buying. Gold quickly moved off Thursday’s lows and rallied $25 per ounce, reaching a high of $1,071 per ounce on Friday. Gold closed in New York on Friday at $1,065, virtually unchanged from the start of this month. With the exception of some year-end tax selling, I believe the bear market in precious metals is behind us. I would like to see Gold rally above $1,100 per ounce and Silver move back above $16 per ounce to have confirmation of this.

Today: This morning Gold’s move higher from last Thursday’s lows continued. Gold appears to have bottomed out last Thursday, the first trading day after the Fed raised interest rates.

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Backwardation and Contango

The CME exchange contract for Gold is trading with backwardation. This rarely happens with precious metal futures contracts. Last Friday the spot Gold price for December 2015 closed at $1,066.20 per ounce, while the April 2016 spot closed at $1,065.70 per ounce, a $.50 discount for four months. Normally, outside contract dates trade at a premium to the spot price, which is called Contango. Backwardation is considered very bullish for the price of the commodity.

Definition of Contango
Contango refers to a situation where the future spot price is below the current price, and people are willing to pay more (interest on the money and storage costs) for a commodity at some point in the future than the immediate price of the commodity.

Why is Gold futures price trading with backwardation?

There are four major reasons that spot Gold is trading in backwardation on future exchanges:

1. Strong physical global demand for Gold investment products (i.e., bars and coins).
2. Sizeable decrease in newly mined Gold is causing a major squeeze on physical supply.
3. Stockpiles of Gold in exchanges and depositories continue to drop to fill consumer demand.
4. Gold inventories of the popular ETF, SPDR Gold Trust (GLD), has dropped from over 1,000 metric tonnes of Gold in 2013, to 634 tonnes today.

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2016 Eagles/Buffalo Pre-Order now available with Lowest Premium Guarantee

Stuppler & Company is now offering the LOWEST PREMIUM GUARANTEE on Pre-Orders of 2016 Gold Eagles, Gold Buffalos, and Silver Eagles by Mint State Gold! THIS IS THE BEST DEAL WE’VE EVER GIVEN ON PRE-ORDERS! Order your 2016 U.S. Gold/Silver Eagles and Gold Buffalos in PCGS MS70 First Strike, NGC MS70 Early Release, or in BU Condition at today’s prices and pay the current premium over spot! Click on the following link to learn more:
www.mintstategold.com/2016_lowest_premium_guarantee.

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Look at the tax benefits for your Gold & Silver holdings

As we approach the end of 2015, I believe there is an extraordinary opportunity to take advantage of this year’s drop in Gold & Silver prices. Let me explain how you can turn your paper loss in your precious metal holdings into an Asset. I’ve explained your options and how this tax strategy works in the follow article: www.mintstategold.com/investor-education/cat/news/post/2015_tax_strategy/.

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PLATINUM

For most of 2015, the spot price of Platinum has traded at a discount to the Gold spot price. This has only happened four times in the past twenty years, and Platinum rarely stays at a discount to Gold for more than a year. Platinum closed last week at $861 per ounce, and 1oz Platinum Maple Leafs are trading at an amazing $170 discount to the 1oz Gold Maple Leafs. The Canadian Platinum Maple Leaf is the best bullion coin on the market, with the lowest premium over spot Platinum.

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SILVER

Silver reached a seven-year low last Monday of $13.62 per ounce, but closed the week above the important $14 support level, at $14.09 per ounce. It appears that we have already seen the 2015 lows for Silver and that $14 per ounce is going to be our new support level.

2015 physical demand for Silver investment products has set new all-time records. The U.S. Mint sold 47 million one ounce Silver .999 Eagles. Other mints around the world had similar demand and record production for Silver investment coins and bars.

Today: Silver continues to rally, reaching $14.33 per ounce this morning. I like the trading activity and volume on many of the world’s markets.

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Recommended Investment Commitment and Diversification:

Precious Metal commitment: Minimum of 30% 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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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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