The Michael Fuljenz Metals Market Report: February 2013, Week 1 Edition
Gold rose $8 last Friday, reaching $1670.60 for the most widely-traded futures contract (April). On Monday, April platinum rose $18.80 to $1706.50, on continued supply disruptions vs. rising demand, while March silver fell 13 cents on Monday to $31.82. This week will likely be positive for gold, as gold demand should rise in China in advance of the start of the Chinese New Year next Sunday, February 10.
Six Signs that Rare Coin Demand is Increasing
- The Wall Street Journal contacted us for information on the most valuable coins and how quickly they were selling.
- A 1794 Silver Dollar recently sold for over 10 million dollars at auction. A new record!!
- Dealers are reporting increased sales of high priced individual coins of great rarity and beauty.
- Newspaper, magazine, TV and radio ads for coins are increasing.
- The numismatic premiums over gold melt value are expanding for many common gold coins.
- Another large coin company has greatly increased their emphasis on selling the popular certified $2.50 Indian series. They are using my award-winning books to assist them.
Silver Investment Fever Heating Up
The increased demand for silver coins, as well as record holdings in silver-backed (exchange-traded products), indicate that increasing numbers of people are looking to protect themselves with wealth-preserving assets. Holdings in silver global exchange-traded products have doubled over the last five years, from just over 300 million ounces in 2008 to more than 600 million by January of this year, according to data from ETF Securities.
The masses in China are taking to silver with a gusto usually reserved for gold in that populous country. China's retail investment demand for silver is forecast to grow "robustly over the short to medium term, as a wider population base gains access to silver bars and coins," according to a Silver Institute report issued last month compiled by Thomson Reuters GFMS.
After Chinese government restrictions on owning silver bars was lifted in 2009, net demand for silver bars and coins doubled in just a year, from 9.8 million ounces in 2010 to 17 million ounces by 2011.
The caveat for silver investors, however, is its notoriety for volatility.
Gold to $1,800 by Mid-Year: J.P. Morgan Chase
J.P. Morgan Chase sees gold heading to $1,800 by mid-2013, pushed there by trouble in the South African mines and "escalating instability" in the Middle East. Allan Cooke, an analyst at the bank, said in a report released this week that South Africa, once the world's top gold producer, faces more unrest in its troubled mining industry as workers strike for higher wages and the government imposes unfavorable regulatory burdens on the miners.
Geopolitical risk boiling out of the Middle East, including the very real possibility of war between Israel and Syria/Iran, continues to be underestimated by the market, says the JPM report, and will provide price support for both oil and gold. In addition, says the JPM analyst, gold will get a boost from more money printing stimulus flowing from the U.S., Japan, and Europe. Lingering low interest rates will also favor gold investment.
Most World Major Central Banks Have Launched "Easy Money" Policies
Last week, the Reserve Bank of India cut its key interest rate by 0.25% in an attempt to kick-start its economy. This marks India's first rate cut since last April. This is merely the latest example of central banks cutting rates and fueling their respective economies with more liquidity - imitating Fed policies!
Here are some recent examples of global "easing" - which should lead to a new round of global inflation:
The Bank of Japan just announced a massive new easing program for 2014, on top of the dramatic easing they launched in November, after the election of the new Liberal Democratic Party Prime Minister, Shinzo Abe, who campaigned on a promise to devalue the yen. Since November, the yen has fallen 12%.
The Swiss National Bank also devalued their once-strong franc last year. A recent Wall Street Journal front-page article said the Swiss are now "printing and selling as many Swiss francs as needed to keep its currency from climbing against the euro, wagering an amount approaching Switzerland's total national output, and, in the process, turning from buttoned-down conservative to the globe's biggest risk-taker."
The Bank of England launched its version of "QE-2" in 2011, while the European Central Bank (ECB) launched its own version of QE-1 in the same year. (Formerly, the ECB was very austere and cautious.)
This "race to the bottom" in global currencies is unique in human history. Never before have we seen so many major central banks inflate their currencies at once. With central banks adding more fuel (money) to the fire, we're now liable to see gold and silver increase in terms of almost every currency, but gold should rise fastest in U.S. dollar terms, since our Federal Reserve has maintained its easing policies the longest.
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