The Michael Fuljenz Metals Market Report: April 2013, Week 3 Edition (Part I)
Reasons Cited in the Media for Gold's Decline
#1: Panic on Wall Street: Goldman Sachs turned bearish on gold last Wednesday, counseling its clients to sell gold or even sell it short. Goldman lowered its 2013 price forecast to $1545. Gold quickly fell to that range, and then lower. There were some large outflows from gold ETFs in the wake of this announcement. Also, in Europe, France's Societe Generale wrote a report on "The End of the Gold Era," saying that "gold may have had its last hurrah."
#2: The euro crisis: European bankers and politicians are still in crisis mode. Mario Draghi, head of the European Central Bank (ECB) has put pressure on Cyprus to sell its excess gold reserves to help fund the bank bailout there. There is fear that more central banks will sell their gold to raise funds for other emergencies.
#3: The dollar is strengthening. As a result of the euro crisis and the Japanese central bank's new wave of monetary pump-priming, the dollar is gaining strength to the euro and yen. This makes the gold decline, and other commodities, look far more severe in dollar terms than it does in terms of some other major currencies.
#4: A "slowdown" in China: China's first quarter GDP came in at +7.7%, a phenomenal growth rate in any other nation, but considered a "slowdown" from the 7.9% in the previous quarter. This is extremely short-sighted thinking. There is no meaningful difference between 7.7 and 7.9, but China is the main engine for commodity demand, so traders tend to over-react to small changes in China's GDP.
#5: The U.S. stock market seems more attractive, reaching new highs last week, so many trend-followers are selling their ETFs and running to stocks. Wall Street has been talking down gold as a "bubble" for two years now, so maybe investors are finally jumping off the wagon to get into stocks - too late!
None of these short-term developments justify such a rapid decline in commodity prices. The fundamentals are still solid for gold so a possible explanation for the rapidity of gold's fall is a short squeeze.
There could be a co-ordinated "short attack" on gold, reflected by the fact that over 400 tons of gold were sold in a matter of minutes on the New York Commodity Exchange (COMEX) last Friday. The Comex vaults only hold 300 tons of gold, so the run on gold represents 100 more tons of gold than is held in the Comex vaults. If European banks tried to sell some of their gold (most of which is stored in New York) late Friday or early Monday, the Comex may have told them that the gold is "not available," causing a rush for the exits at any price.
Remember, we are only one major worldwide event from the market running upward. This is a very volatile market compared to the rare gold coin market where many prices continue to rise!
NGC President Rick Montgomery Meets With Michael Fuljenz and Our Team
Rick Montgomery, President of Numismatic Guaranty Corporation, met with our account representatives in Beaumont, Texas on April 10, 2013. NGC is one of the world's largest numismatic certification companies.
During his visit, Montgomery discussed the importance of third-party authentication and grading of coins and how it benefits our customers by providing increased consumer confidence and liquidity in the numismatic marketplace.
He explained the processes NGC uses to evaluate coins for authenticity and grade, and the security involved in the NGC protective holders that house their certified coins.
Rick and I worked closely together in the 1980's as graders at ANACS (then the American Numismatic Association Certification Service), and we taught grading and counterfeit detection classes together for collectors, dealers and even Secret Service and FBI agents.
This was Montgomery's third visit to Beaumont.
Rick is one of the foremost rare coin authenticators and graders in the country, and we were honored to have him visit. We sell a lot of NGC-certified coins and respect their products.
Catholic Charities Honors Mike and Karen Fuljenz With Humanitarian Award
Mike Fuljenz and his wife Karen were honored with the 2013 Humanitarian Award presented by Catholic Charities of Southeast Texas. More than 350 people attended the 22nd annual "Breakfast with the Bishop" event in Beaumont, Texas where the award was presented on Saturday, April 13, 2013.
"The award was presented in recognition and appreciation of their service to the community of Southeast Texas," said Carolyn R. Fernandez, President and Chief Executive Officer of Catholic Charities of Southeast Texas.
Karen and I are honored to receive this award. We applaud the tireless work of Catholic Charities to provide assistance to all those in need in our community.
Bishop Curtis Guillory led the attendees with an opening prayer at the fund-raising breakfast where celebrities from local radio and television stations flipped hundreds of pancakes to serve the guests.
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