Weekly Market Report 12/28/15

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

Something ’enormously rare’ is happening in gold: Gartman

Russia Gold “Buying Spree” Continues – Buy 22 Tons In November

Gold is still going to $5,000: Peter Schiff

This Week’s Headlines:

Gold
Gold bullish fundamentals have never looked better
Gold’s backwardation continues to widen
2016 Eagles/Buffalo Pre-Order now available with Lowest Premium Guarantee
Four days left to benefit from a 2015 Tax Loss Strategy
Platinum
Silver
Recommended investment commitment and diversification

GOLD

During the year-end holidays, trading volumes on the world’s Gold exchanges falls off substantially. Light trading volume gives professional floor traders a better opportunity to manipulate the Gold and Silver prices. Last week Gold had a $33.50 high/low trading range, from $1,081.40 to $1,047.90 per ounce. The low was reached on Thursday as some bearish traders reacted to some year-end tax selling, trying to break the Gold price down below the 2015 low of $1,045.40 per ounce. Gold quickly rallied $10 per ounce on bullish bargain buying. This bull/bear war could continue this week due to more year-end tax sellers. However, if Gold can stay above the $1,045.40 by year-end I think we could see much higher prices in January.

In addition to January historically being an excellent month for Gold and Silver prices, the basic fundamentals of supply/demand, listed below, have never looked better for higher prices.

Today: This morning Gold reached a high of $1,077 per ounce before seeing selling that drove the price back to $1,068 based on a stronger U.S. Dollar.

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Gold bullish fundamentals have never looked better

I firmly believe the Gold price has ended its four-year bear market this year because the fundamentals have never looked better for the price to continue higher. These basic fundamentals are:

1. Physical demand for Gold and Silver investment products is at the strongest level in years. Many world mints report record 2015 sales for bullion coins.
2. Worldwide interest rates are at historic lows, making Gold/Silver an excellent alternative.
3. Global quantitative easing (money printing) in the U.S., China, Japan, and Europe is increasing at an unbelievable rate.
4. Gold mine production is falling dramatically as the cost of production goes higher.
5. Central banks continue to trade their U.S. Dollars for Gold, thus building their reserves.
6. Stockpiles of Gold in exchanges and depositories continue to drop, filling heavy physical demand.

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Gold’s backwardation continues to widen

The CME exchange contract for Gold continues to trade with backwardation. This rarely happens with precious metal futures contracts. Last Friday the spot Gold price for December 2015 closed at $1,077.20 per ounce, while the April 2016 spot closed at $1,075.90 per ounce, now at a $1.30 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 because buyers are willing to pay a premium for immediate delivery.

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

Mint State Gold by Stuppler & Company is now offering the LOWEST PREMIUM GUARANTEE on Pre-Orders of 2016 Gold Eagles, Gold Buffalos, and Silver Eagles! 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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Four days left to benefit from a 2015 Tax Loss Strategy

With only four days left in 2015, I believe there is an extraordinary opportunity to take advantage of this year’s drop in Gold and 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 $885 per ounce, and 1oz Platinum Maple Leafs are trading at an amazing $160 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 managed to close above the $14 per ounce support level all four trading days last week. Silver closed last Thursday at $14.38 per ounce, up $0.28 for the week. Silver appeared to be establishing a nice tight trading range between $13.80 and $14.40, but year-end tax strategies could break that trading range. Based on the current demand, I doubt that Silver will go below its 2015 low of $13.62 per ounce, but you never know for sure.

2015 physical demand for Silver investment products has set new all-time records. The U.S. Mint sold 47 million 1oz Silver .999 Eagles. That mintage would have been higher if the U.S. Mint hadn’t stopped manufacturing 2015 Silver Eagles in mid-December to start on the 2016s. Other mints around the world had similar demand and record production for Silver investment coins and bars.

Today: Silver got hit with sellers this morning, based on the weakness in Gold. Silver broke down below the $14 per ounce level.

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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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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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