Weekly Market Report 12/27/11

GOLD

After trading as low as $1562 per ounce the week ending Dec. 16th, gold rallied last week, staying above the $1,600 psychological support level most of the week. Gold closed at $1,606.50 per ounce on Friday, Dec. 23rd, up $8.60 for the week.

Last week, Gold traded in a very narrow range while the following positive U.S. economic news was released:

• The U.S. Commerce Dept. stated that orders for durable goods rose in November, the most in four months.   
• The Labor Department data showed that initial jobless claims fell by 4,000 to 364,000 the previous week, versus forecasts for an increase to 380,000.
• Home prices in 20 US cities probably declined at a slower pace and consumer confidence rose to a five-month high, data suggests.

The positive news on the U.S. economy boosted the value of the U.S. Dollar, and lessened the possibility of another round of quantitative easing by the Federal Reserve.  I don’t expect to see any major movement on this shortened and low volume trading holiday week. Gold will probably stay in the $1,585 to $1610 range; however, I think we will see Gold continue its 11 year bull trend in early January.

NOT ALL GOLD INVESTMENTS WERE HIGHER IN 2011

John Paulson, the billionaire money manager mired in the worst slump of his career, lost 10.5% in his Gold Fund this year even as the metal heads for its 11th straight annual gain, according to people familiar with the fund’s performance. The fund, which invests in mining stocks and other gold- related securities, remains the best performer in Paulson’s $28 billion family of funds this year

As of today, Gold has climbed 12% this year, holding onto gains after peaking at $1,920.80 an ounce on Sept 6th.

Paulson was the largest holder of American depositary receipts in AngloGold Ashanti Ltd., the third-biggest gold producer. Paulson also owned shares or ADRs of Gold Fields Ltd., NovaGold Resources Inc., Randgold Resources Ltd., Agnico-Eagle Mines Ltd., Iamgold Corp., Barrick Gold Corp. and International Tower Hill Mines Ltd.

All of Paulson’s stocks underperformed the increase in physical gold for 2011; further proof that it is better to invest in physical gold over Gold mining stocks, Funds, or ETF’s. Physical gold has increased 12.2% since the beginning of the year, whereas Paulson’s mining stocks are down 10.5%.

CHINA’S CENTRAL BANK RESEARCH CHIEF WANTS MORE GOLD

On Monday, Zhang Jianhua, the head of the research department at the People’s Bank of China stated “The Chinese government needs to further optimize China’s foreign exchange assets portfolio and to seek relatively low entry point to buy gold assets”.  China has $3.2 trillion in foreign exchange reserves (mostly U.S. Dollars) and less than 1% is in Gold.

SILVER

Last week, Silver held a narrow trading range, from a low of $28.68 to a high of $30.21.  The last three days of the week, Silver held at the $29 psychological support level. Asian silver demand has slowed down from November’s record pace.  With Silver closing at $29.08 last week, it has come down $1.84 since the beginning of the year.

Silver to Gold Ratio is 55.22 to 1.

RARE COINS

On January 3, 2012 I am heading to Orlando, Florida for the Florida United Numismatic Coin Convention.   This convention is a major event for dealers, investors, and collectors, and I’ll be there for the entire week. 

If you haven’t already updated your numismatic want list with our company I would recommend that you email me an update.

Recommended investment commitment and diversification:

Precious Metal commitment: Minimum of 35% of investment capital

Diversification:  Gold 75%, Silver 20%, Platinum & Palladium 5%

Diversification includes long term investment quality rare coins and short term bullion products.

YEAR END GOLD LIKE KIND TAX TRADES

As we approach Dec 31st we have an opportunity to make some year-end like kind trades for gold without any tax obligation. We recommend trading 1oz Gold Krugerrands, Maple Leafs, and U.S. Eagles for European Pre-1933 Gold coins. This like kind trade offers many benefits. Please contact us to discuss prices and availability. For more details on Like Kind trades please contact your tax professional.    

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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 to 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.