Weekly Gold & Silver Market Recap – 7/25/2014

7/25/2014 3:38:06 PM By: Brandi Brundidge


The Gold price continued to climb Monday as geopolitical tensions grew over the controversial Malaysia Airlines Flight 17 that was supposedly shot down by Ukrainian rebels. U.S. Secretary of State John Kerry confirmed Sunday there is strong evidence suggesting Russia provided the missile that Ukrainian rebels used to shoot down the jet. The safe haven appeal of Gold has been supported by concerns between Ukraine and the Middle East, which has sparked a 9.4 percent gain for the yellow metal this year. “Escalation of sanctions on Russia and more geopolitical problems in Gaza are keeping Gold supported,” George Gero, a vice president and Precious Metals strategist at RBC Capital Markets in New York, said in a telephone interview. “There are enough fundamentals to keep prices over $1,300 [per ounce] for some time.”


According to a recent research note from Bank of America/Merrill Lynch, the worst may be over for the Gold market. “After the sharp correction in 2013, Gold prices have stabilized this year. Looking at supply and demand dynamics, this was heavily influenced by reduced investor selling at the same time as physical offtake from emerging markets has been steady,” BoA/ML analyst Michael Widmer said in the research paper. The price going forward will greatly be supported by buying in the emerging markets. “We believe that physical demand from emerging markets will gain further clout in the medium term as countries get more affluent, suggesting the worst may be behind the Gold market,” Widmer said.


The Gold price shifted slightly lower Tuesday as speculation regarding a near-term hike in interest rates weighed on the yellow metal. Though Gold was still trading above $1,300 an ounce, higher interest rate expectations sidelined some Precious Metals investors. However, geopolitical crises are still offering some support and the announcement of trade expansion for bullion in the Middle East could force prices even higher over the long term. A spot Gold contract has been extended into Dubai and is expected to boost the region’s demand for physical bullion delivery. “We believe the Middle East has a lot of potential to catch up with the rest of the world,” Frederic Panizzutti, chief executive officer of Dubai’s MKS Precious Metals DMCC, said.


Precious Metal prices traded flat Wednesday. Although this was the second straight day Gold futures declined, continued turmoil in the Middle East and Ukraine provided support to metals. Blake Robben, a senior market strategist at Archer Financial Services in Chicago said, “There is definitely some temporary support because of geopolitical tensions, but the strength in the equity market continues to be a big headwind.”


Equity markets around the world edged slightly higher Wednesday after data showed solid corporate earnings, increasing the demand for more “risky” assets. However, strong demand for safe-haven assets has continued as investors monitor geopolitical situations around the world. Rick Meckler, president of hedge fund LibertyView Capital Management in Jersey City, New Jersey said, “The bottom line is investors have moved away, for now, from the big political stories and are refocused on earnings, which in general have been good.”


Strong data out of China and the eurozone pressured Gold below the $1,300 per ounce level in early-morning trading Thursday. Physical demand for Gold in China increased after the price fell though is still considered weak when compared to earlier this year. Natixis analyst Bernard Dahdah said, “The market is going to follow very closely any comments from the Federal Reserve about interest rates as that is likely to continue having an impact on Gold’s trading pattern.”


U.S. jobless claims fell to their lowest level in eight years, according to data released by the Labor Department Thursday. The figure of 284,000 is much lower than the expected 310,000, which pressured Precious Metals. The four-week moving average fell to its lowest level since May 2007. U.S. stock futures increased, pointing toward a higher open for Wall Street. The Dow Jones Industrial Average held above 17,000 and the S&P 500 index closed in on 2,000.


The Gold price recovered from a five-week low as it climbed closer to the psychological $1,300 per ounce level Friday. Commerzbank analysts cite the low demand in Asia as a main reason for Gold’s trouble breaking higher. They wrote, “The World Gold Council’s forecasts of Chinese Gold demand, which were issued at the beginning of the year and envisaged demand being on a similar scale in 2014 as it was in 2013, meanwhile appear ambitious. In our opinion, the weak Gold demand figures to come out of Asia – not only China – of late preclude any rise in Gold prices.”


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


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.


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.


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 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.


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.”


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.


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.


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.


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.


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.”


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.

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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.

Interview with Natasha Muhl, designer of the APMEXclusive 2014 1/2 oz Silver Australian Great White Shark

Natasha Muhl, designer at the Perth Mint We had the opportunity to chat with Natasha Muhl, the creative force behind the APMEXclusive 2014 1/2 oz Silver Australian Great White Shark. See below for some unique insights into her design process.

Where do you get your inspiration from?
I’m from the Kimberley in the North West of Western Australia, so I spent a lot of time outdoors in nature growing up. This would probably be my biggest inspiration, especially when it comes to designing Australian fauna-themed coins. While doing my research for any new series, I tend to look at a range of photography and watch nature documentaries. This helps me to accurately recreate the animal. I also take inspiration from coin collecting catalogs and numismatic magazines, as it’s always great to see what other mints are up to and keep ideas fresh.

How do you start the design process?
The Perth Mint Sales and Marketing team meet fortnightly to discuss potential concepts for each coin program. Once the theme has been determined, the designers are given a detailed creative brief to follow. As part of the research process we often take part in field trips. With the Great White Shark bullion coin for example, I visited the Aquarium of Western Australia and dived with a range of sharks. It was wonderful to come face to face with these amazing creatures and it really helped steer my creative process.

What are some of your favorite coins?
There are so many to choose from, but I would have to say The Perth Mint’s Famous Ballets Silver proof coin set, with its subtle pad printing details, is one of my favorites. More recently I’m really enjoying the Gods of Olympus series which is struck in high relief to a rimless format – a first for the Mint! These mythological gods are quite dark and moody so it is an exciting concept for the design studio. They have also proven to be extremely popular with collectors which is always great.

How did you get into designing coins?

2014 1/2 oz Silver Australian Great White Shark

2014 1/2 oz Silver Australian Great White Shar

I studied at Central Institute of Technology [in Perth], graduating with an Advanced Diploma in Graphic Design in 2009. Fellow Perth Mint designer, Tom Vaughan, was a previous classmate of mine and he kindly recommended me to the Mint when they were looking for a new illustrator. It’s always been my dream to become a designer, so I feel very fortunate to work for The Perth Mint as I get the chance to illustrate a broad range of themes for a variety of audiences.

Why a shark instead of another sea predator or animal?
The Great White Shark is probably the most feared and interesting predator in existence. Most people around the world have watched the movie Jaws and can imagine the terror of an encounter with this deadly creature. I think that’s what makes them so exciting and sought-after.

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6 fun facts about one of the world’s most innovative mints: The Perth Mint of Australia.

The Perth Mint

The Perth Mint (Photo credit: amandabhslater)

If you’re an APMEX customer, you may know The Perth Mint as the prized destination for our annual “Escape To Australia” contest. As an investor or collector, you probably know The Perth Mint for their products. Their Gold and Silver Lunar coins are among the most beautiful and collected Chinese Zodiac coins in the world. Here are a few surprising facts about The Perth Mint that you might not know.

Rare. Many Perth Mint coins are made in strictly limited mintages, giving even their most value-priced bullion coins a dimension of collectibility.

Same Location since 1899. The Perth Mint was established in 1899 as a branch of Britain’s Royal Mint. Today, it’s one of the oldest mints in the world to operate on its original premises, despite the name change.. The Perth Mint is actually incorporated as Gold Corporation and  has two wholly owned subsidiaries – Western Australian Mint and GoldCorp USA.

Created The First Gold Bullion Series. In 1986, The Perth Mint launched the Australian Gold Nugget Coin Series, the first bullion series with a reverse (back) design that changes every year. The first few coins featured Gold nuggets. In 1989, the design switched to a kangaroo. Today, we commonly call this series the Australian Gold Kangaroo.

Biggest and Best. In 2011, The Perth Mint unveiled the biggest, heaviest and inherently most valuable Gold coin in the world. Weighing in at 1,000kg (2,204.6 pounds), this coin contains one metric tonne of 99.99 percent pure Gold and is worth more than $42.6 million at current Gold prices.

A Refinery and A Mint. There’s only one Gold refinery in Australia and it’s The Perth Mint. Between coins, bullion and industrial Gold, The Perth Mint produces more than 400 tonnes of Gold per year.

Visit Perth and The Mint. Located on the Western Shore of Australia, Perth is a bustling and beautiful city with beaches, parks and natural wonders unique to this island continent. You can also visit The Perth Mint while you’re there. In fact, you could…


Every fall, when the new Perth Mint coins come out, APMEX launches the “Escape To Australia” contest. Watch for it on this blog and APMEX.com.

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