Weekly Gold & Silver Market Recap – 7/18/2014

GOLD TUMBLES FOLLOWING WIDESPREAD SELLOFF

The beginning of the week began with the Gold price experiencing it’s largest single-session decline of the year as Portuguese banking worries subsided and a rally among stocks influenced a round of profit-taking for Gold and Silver. “A strong stock market and some stability in the EU [are pressuring gold,]” Peter Thomas, a senior vice president at Zaner Group LLC in Chicago, said. Monday’s drop was not cause for concern among many investors as hedge funds continued to increase their positions and holdings for exchange-traded products. Traders and investors will continue to monitor Federal Reserve monetary policy along with macroeconomic news and geopolitical developments abroad for signs of market movement in the coming weeks and months.

YELLEN’S COMMENTS WEIGH ON GOLD

The Gold price fell back to $1,300 for the first time in roughly one month on Tuesday following testimony by Federal Reserve Chairwoman Janet Yellen in front of the Senate Banking Committee. “Yellen was a little bit more hawkish than expected. That signals higher rates sooner rather than later. And that’s anti-inflationary, and presents competition for Gold,” Gold expert George Gero of RBC Capital Markets, said. Volatility continued Tuesday as the yellow metal hovered near the $1,300 mark. Monday’s significant price drop influenced a strong influx of new positions among Gold ETFs. The inflow of new contracts has raised trading volume to its highest level in nearly three years.

WGC RELEASES 2014 ASSESSMENT OF GOLD

As investors look to the second half of 2014, the Gold price is currently up over 9 percent this year. The World Gold Council (WGC) has released its 2014 review of Gold and has surmised that general interest in Gold is gaining momentum. According to the WGC, following the tremendous price drop in 2013, the current market climate appears bullish for Gold. Citing low prices, high bond issuance, tight credit spreads and record low volatility (prior to recent weeks) the WGC believes Gold is primed for higher prices through the second half of 2014. With ongoing speculation regarding a stock market correction and revamped turmoil in the Middle East, there could be plenty of impetus for a bullish run among Precious Metals before the end of the year.

GOLD TREADING WATER AS INVESTORS AWAIT YELLEN

Gold futures were trading even Wednesday as the yellow metal awaited new upward momentum following three days of losses. Prices dropped over $40 through Monday and Tuesday following a large technical selloff and dovish comments by Federal Reserve Chairwoman Janet Yellen regarding the future of interest rates in the United States. So far this year, Gold has been buoyed by geopolitical tension and low interest speculation. “The new speculative longs in the market may be justified based on (largely unpredictable) political tension in e.g. the Middle East and Eastern Europe,” Walter de Wet, commodities strategist at Standard Bank, said.

METALS RECOVERY CONTINUES; PALLADIUM AT 13 1/2 YEAR HIGH

Precious Metals were on the rise Thursday beginning the day on a positive note, following the recovery that started Wednesday. Fresh sanctions on Russia by the U.S. weighed stocks down, making way for higher Gold and Silver prices. The Palladium price hit a 13 1/2 year high on the sanctions. Mitsubishi analyst Jonathan Butler explained, “I am forecasting a 1.8 million-ounce palladium deficit this year due to the perfect storm of South African supplies falling to a near-20-year low, growing auto catalyst demand and of course the heavy inflows into the two South African ETFs.”

IS ANOTHER U.S. STOCK BUBBLE NEAR?

Andrew Smithers, chairman of Smithers & Co., was one of the only analysts to warn of the late 1990s stock bubble, and he believes we are now seeing the third largest stock bubble in U.S. history. Smithers used a collection of data to come to that conclusion, but also believes that stocks will likely go even higher before the bubble bursts.

MALAYSIA AIRLINES JET CRASH URGES INVESTORS TOWARD SAFE-HAVEN ASSETS

Gold bounced back Friday after news broke that a Malaysia Airlines jet carrying 295 passengers crashed in eastern Ukraine. Investors quickly began to sell stocks and move into safe-haven assets such as U.S. Treasury’s and Gold sparking both to jump immediately. There is still concern that the plane was possibly shot down. At this time, Ukrainian officials have confirmed that neither the government nor pro-Russian separatists fighting in the area were responsible for the incident. “The worst-case scenario from a market perspective would be one in which it was found Russian officials ordered the plane shot down while the most benign scenario would be one in which the crash was the result of mechanical failure, pilot error or some other cause unrelated to the long-running conflict on the ground,” John Canally, investment strategist at LPL Financial in Boston, said.

GOLD, SILVER DROP AS GEOPOLITICAL TENSIONS BECOME OLD NEWS

Speculations that the Federal Reserve plans to raise interest rates sooner than expected trumped Thursday’s geopolitical fears, causing Gold and Silver prices to fall. On Thursday, Gold jumped sharply on news about the Malaysia Airlines plane crash and Israel sending forces into the Gaza strip. Investors appear to not be as worried now. “There’s a little bit of concern that the Fed starts tightening,” Rob Kurzatkowski, a senior commodity analyst at optionsXpress, a Chicago-based brokerage unit of Charles Schwab Corp., said in a telephone interview. “Some of the fears that we’ve seen yesterday have dissipated.”

Top Webinar Q&A

Recently, APMEX held two webinars with Q&A opportunities at the end of the sessions. Below we’ve listed the top 5 Questions and Answers we received. Know that you can always contact APMEX at 800-375-9006 with any questions or issues. Our helpful staff is there ready and waiting for your call.

Question: Is Gold a better investment than Silver?

Answer: Most APMEX customers buy both Gold and Silver. Silver prices tend to move relatively the same as gold. Most people who invest only in Silver do so because of the low cost to invest. Gold has a higher cost to invest. Often we hear the thought that Gold is to “protect my money” and Silver is more “I want make a little bit of money” strategy. This is the reason I think most APMEX customers buy both. If most of your need is to protect your money, then you are probably going to be heavier on Gold and if most of your desire is I want to make money you might gravitate a little bit more toward Silver. Silver also is 57% used for industry where Gold is only 11%. So Silver can actually also benefit a little bit when the time comes in a good economic situation.

Question: What are the advantages and disadvantages of owning bullion vs. minted coins like American Eagles, Krugerrands etc.?

Answer: This is a great question and it’s a common misconception. A coin minted like American Eagles, Krugerrands, Canadian Maple Leafs, are bullion. The value of a Gold American Eagle is only the Gold content.

Now you can buy proof Gold Eagles and you can buy graded Gold Eagles and those have collectible value. But when you are buying just the regular Gold Eagles, Maple Leafs and Krugerrands, the value of those coins is the metal content. It’s purely a matter of preference and the intentions of why you are buying.

Question: Why is the American Eagle weight more than a Canadian Maple?

Answer: If you see the coins side by side, you will notice that the Eagle is actually bigger than the Maple Leaf. The Maple Leaf is actually twenty four carat Gold. The American Eagle and the Krugerrand is twenty two carat gold. Now it is still a full one ounce of Gold. The difference is Gold is a relatively soft metal. If you were to take a Canadian Maple Leaf and drop it ten feet on hard concrete, you might do a little damage; not major but certainly a lot more pliable. Some countries like the United States, South Africa and others mix copper and some other things just to make the coin a little bit more resilient, make it stand up to scratches and things like that. But in the end, it’s not like jewelry, just because it is twenty four carat doesn’t make it any more valuable. Quite frankly the Maple Leafs are often less money than the American Eagle simply because the Royal Canadian Mint charges less than the U.S. Mint. In the end they are all one ounce of Gold. Canadian Maple is twenty four carat, a little bit smaller coin and it has a bright Gold color to it, whereas the American Eagle and especially the Krugerrand have a coppery look to it because of the Copper in it.

Question: What about fractional pieces vs. bulk?

Answer: You will pay a higher premium for a fractional piece. If you are a person with a point of view that it is possible for there to be a currency collapse and you may need real metal to go out and buy real goods and services then you are probably going to gravitate to 1 ounce Silver coins and fractional Gold coins. In those cases it make sense.

If I am just trying to invest in Gold because I want 5% of my money asset in Gold, (or 10% or 20% or whatever it is), I am going to stay away from fractional coins unless I am a collector and like to have a little bit of everything.

Question: Which Gold products would be less likely to be recalled by the U.S. Government?

Answer: This question always comes up in webinars and it is a good question. There are a lot of precious metals dealers that use scare tactics to try and get people worried about what the government might take as far as precious metals. Encouraging customers should buy a more expensive Gold product which the government “couldn’t take”.

Now if you are a person that believes that there is a possibility that the United States or other governments can confiscate Gold, I will not try to talk you out of that. If you are a person that believes that, you do not want to buy bullion coins, you would want to buy things like Pre 33 Gold or graded coins that have been through a grading service anything that would have a collective value because if the rules for confiscation were the exact same thing as in 1933, then collectible coins would not count.

Now those of you who do not have an opinion on whether or not the U.S. would confiscate Gold, I would urge you to consider this: In 1933 Gold coins were at actual currency. You carried them around in your pocket and used them just like you would dollar bills, five dollar bills, ten dollar bills in today’s world. They were a currency.

When the confiscation act came up in the United States, the government knew where to find the coins. They were in the banks. 90% of all the Gold was in the banks. It was very simple for the government to go to the banks and say here is a bunch of paper money give me your Gold. They did not make any attempt really to confiscate Gold from people individually, (they never went door to door,) they just asked the citizens to turn in their stuff and for the most part the citizens did turn it in. Many U.S. citizens sent huge amounts of gold to Europe because many still had friends and family over there. Much of the pre 33 Gold supply that we see in the United States now comes from Europe from those days. There was actually only one case prosecuted by the United Sates government on Gold confiscation and they lost on a technicality.

In today’s world, it can be argued that people aren’t going to give up their Gold. How much would Gold have to be worth for it to be cost effective to get the National Guard to go out door to door?

There are some great reasons to buy Pre 33 Gold. It is historical, it is beautiful, and it has collectability value over and above the bullion content that can go up and down as well. There’s great reason to buy those kinds of coins. I just don’t think the reason to buy them is that the government might come and confiscate it.

Everyone can have an opinion on that. Once again, if you are fearful of that, then certainly buy collectible items because that is something that cannot be confiscated as long as the rules were the exact same as they were in 1933.

WEEKLY GOLD & SILVER MARKET RECAP – 5/16/2014

Domestic Economy Gaining Strength

The Gold price is set to realize a mild weekly gain today as strong U.S. economic data continues to hamper any significant rally for Precious Metals caused by the crisis in Ukraine.  Reassuring unemployment numbers, good home construction figures and strong corporate earnings all point to increasing strength in the domestic economy.  Benchmark equities indexes have reached all-time highs as the mounting improvement in macroeconomic data helped the Dow Jones Industrial Average and S&P 500 briefly realize record levels.  With geopolitical turmoil simmering in Ukraine and strong data regarding the U.S. economy struggling to force steady momentum for Precious Metals prices, Gold remains range-bound pending further impetus. 

Equities Markets could be higher in the short-term

U.S. stocks reached all-time highs on Monday with the S&P 500 and Dow Jones Industrial Average seeing little change through Tuesday.  “We’ve had a stealth rally in the market to this record,” Eric Marshall, a portfolio manager at Hodges Funds, said.  “The fact that we’ve moved up and hit new highs, in spite of some lingering negative sentiment is a very healthy and positive thing for the market.”  Investors are now awaiting the completion of earnings season as over 75 percent of S&P 500 organizations have weighed in with positive reports.  Ongoing strength in earnings data could force equities markets higher in the short-term.

Platinum and Palladium

Platinum and Palladium traded higher early in the week as supply concerns continue in South Africa due to ongoing miner strikes.  South Africa is responsible for a large portion of the world’s Platinum and Palladium production, which has been reduced by nearly 40 percent since the strikes began four months ago.   “A sudden end to the strike would lead to a sharp drop, but we believe the market is working under a structural production/consumption deficit, and we are therefore bullish medium – to longer-term,” James Steel, chief precious metals analyst at HSBC, said.

The Gold Price

U.S. unemployment figures dropped to their lowest level in seven years Thursday, dragging Gold down following Wednesday’s mild surge.  “Jobless claims dropping below 300,000 is a big deal and people are getting convinced that the economy is showing signs of recovery,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates, said.  However, signs of economic growth have fallen to force Gold too low as ongoing geopolitical turmoil in Ukraine is helping buoy the yellow metal.  The Gold price will more than likely maintain a tug-of-war while concerns regarding unrest in Ukraine struggle against the forces of continued domestic economic growth.

Stocks

Friday saw stock futures rise on housing data, a day after equities were pummeled by poor earnings from Wal-Mart. Alpari, U.K., Ltd. research analyst Joshua Mahoney said, “The hesitancy seen within markets could lead many to believe we are seeing a top and thus will be looking at more bearish set-ups.” Another bearish sign for stocks is the situation in Ukraine, with reports that Ukrainian troops are attempting to force separatists out of two towns serving as basis for the opposition.

 The Dollar

Gold and Silver turned lower in early morning trading Friday after housing data showed higher-than-expected new home construction numbers. VTB Capital analyst Andrey Kryuchenkov said, “Gold is still stuck in a narrow range because the downside is limited by geopolitical concerns and the upside is capped by generally good U.S. data, which suggest the [Federal Reserve] will carry on with the current pace of stimulus tapering. You have one central bank reducing its quantitative easing when the ECB (European Central Bank) does the opposite. From the simple perspective of the dollar, it should be relatively strong.”

Closing

In closing Friday, the Gold price is set to realize a mild weekly gain as strong U.S. economic data continues to hamper any significant rally for Precious Metals caused by the crisis in Ukraine.  Reassuring unemployment numbers, good home construction figures and strong corporate earnings all point to increasing strength in the domestic economy.  Benchmark equities indexes have reached all-time highs as the mounting improvement in macroeconomic data helped the Dow Jones Industrial Average and S&P 500 briefly realize record levels.  With geopolitical turmoil simmering in Ukraine and strong data regarding the U.S. economy struggling to force steady momentum for Precious Metals prices, Gold remains range-bound pending further impetus.  

Headed into the latter half of May, investors will continue to weigh the prospects for further unrest in Ukraine as they digest both domestic and global economic data.  Time will tell if U.S. stocks can continue their rally as Gold looks to find a catalyst to break out of its current trading range.

Click this link to view on our website. http://bit.ly/1lUxwCr

 

APMEX hosts webinar: What the World Knows about Investing

APMEX recently hosted a webinar on April 23, 2014 focusing on what the world knows about Gold that the U.S. probably doesn’t. It had great information for all investor levels. The presentation is only about 20 minutes with Q&A taking up the rest of the hour. It’s definitely worth a look. Check it out here.

Get These Beautiful Silver Taku Coins For A Special Price

Discover Why Lovers Of Rare Species And Coins Love
The 2013 1 oz Silver New Zealand Taku. While Supplies Last.

As low as $2.99 per coin over spot!
Limited mintage!
The Taku coin combines the appeal of 1 oz of pure Silver with an elegant design that captures the beauty of the ocean! Nearly 3,000 of these critically endangered Takus (Hawksbill turtles) call the island nation of Fiji their home.

Coin Highlights:

  • Contains 1 oz of .999 fine Silver.
  • Coins come packaged in plastic flips.
  • Strict limited mintage of only 350,000 coins or less.
  • Brilliant Uncirculated condition.
  • Obverse: stylized design of a Hawksbill turtle, also known as the Taku, swimming along the ocean floor amidst tiny bubbles.
  • Reverse: Fiji coat of arms and 2013 date.
  • Produced by the New Zealand Mint under the authority of Fiji.

Click here to place your order now.

GOLD FORECAST CHANGES; GOVERNMENT SPENDING QUESTIONED

Most financial experts are forecasting the Gold price to increase in 2013 for the 13th year in a row. However, some financial institutions are scaling back their initial Gold forecast. “The Gold market tends to look beyond headline inflation, to what the reaction of the central banks is going to be. Even though inflation has been rather low for the past couple of years, the Gold market went very strong, because it correctly identified that the central banks around the world are going to keep the spigot on. Even when inflation does begin to rise, if investors sensed there were going to be a steep ratcheting up in the interest rate, that would be the end of the bull market,” James Steel, chief Precious Metal analyst at HSBC, said.

The United States debt ceiling is dominating the financial news as of late, and for good reason. If the government does not find a way to avoid hitting the debt ceiling, the result could be disastrous. There are some financial experts who believe it could trigger a new recession in the country. Tim Phillips, president of Americans for Prosperity, says the focus should not be solely on the debt ceiling, but the amount of government spending. “We’re saying calibrate your message. Focus on overspending instead of long-term debt. Focusing on [the debt ceiling] makes the messaging more difficult.”

At 1 p.m. (EST), the APMEX Precious Metals spot prices were:

  • Gold, $1682.00, Down $4.00.
  • Silver, $31.52, Down $0.05.
  • Platinum, $1691.80, Up $1.90.
  • Palladium, $726.30, Up $11.90.

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 8 p.m. (EST)! Or call us Fridays until 6 p.m. (EST)! If you have any questions about investing in Precious Metals or simply would prefer to place your order by telephone, we are here to help.

Top 10 most read posts from the APMEX blog

Catch up on what you missed this year! Here are 2012’s top ten most read posts from our blog.

Buying Gold? Top 4 Things to Keep in Mind

Interview with David Ganz, author of The Essential Guide to Investing in Precious Metals

Oklahomans can Buy Gold and Silver Coins and Bars without Paying Sales Tax!

Special Report: Fiscal Cliff? U.S. Debt Ceiling is the REAL Issue

Fun Facts About Gold – Part 1

How can I buy Gold?

Ten (10) Things to Know Before you Buy from APMEX

How to Spot a Fake Coin

Gold and Silver Prices Down. Is this an opportunity to invest?

Why investing is hard and Gold’s role in your portfolio. An interview with Tadas Viskanta.

Enhanced by Zemanta