The Michael Fuljenz Metals Market Report: June 2012, Week 4 Edition

Central Bankers Remain Keen on Buying (and Controlling) More Gold

A recent UBS poll of central bankers and other top government investors (i.e., sovereign wealth fund managers and heads of government institutions) showed that gold was their favorite investment. Polling 80 national institutions, managing over $8 trillion in assets, the large Swiss bank found that gold was picked as #1 by 18 of them (22.5%).

Turning to central bank actions, the Central Bank of The Russian Federation bought 500,000 ounces of gold in May, boosting their holdings to 29.3 million ounces, which means they have more than doubled their total holdings in the last five years. In 2007, their total holdings were only about 13 million ounces.

• Gold 52 weeks ago (June 27, 2011): $1498.00
• Gold's average price during 2012: $1654.53
• Gold's London Low for 2012: $1537 on May 16
• Gold's London High for 2012: $1788 on February 29

Last Week In Metals: Gold fell $54 (-3.3%), silver fell $1.79 (-6.2%), platinum fell $49 (-3.3%) and the Dow fell 1.0%.

Seven Signs That Gold Coin Demand Is Growing

1. Large dealers are receiving more large orders this month than in any month in 2012.
2. Large dealers are reporting more large orders coming from buyers they haven't heard from in years.
3. National radio network ads for rare gold coins are increasing, especially for $10 Indians.
4. Dealers are reporting several large orders for $10 Indians, some totaling over $1,000,000 in one month.
5. Newspaper and magazine ads for gold coins are increasing.
6. The numismatic premiums over gold "melt" value are expanding for most common pre-1933 gold coins, like the 1904 $20 Liberties.
7. My 2010 Numismatic Literary Guild Best Investment Book of the Year, "Indian Gold Coins of the 20th Century," has been selling well enough that I need to reprint the book. The new edition will be out as soon as possible. New books, or reprints of recent award-winning books, typically spur new demand for the coins in question.

Mike Fuljenz Wins Press Club Awards for Gold Advisories

Michael Fuljenz again has been honored by journalism professionals for his consumer education writings about gold and other precious metals. The Press Club of Southeast Texas presented Fuljenz with a first place Excellence in the Media Award in the brochure category for his Personal Gold Guide and a first place award in the electronic newsletter category for the Mike Fuljenz Metals Market Report.

The prestigious annual awards were announced on June 8, 2012 at the Press Club's 21st Annual Excellence in the Media awards banquet in Beaumont. Last year Fuljenz won a first place award from the Press Club of Southeast Texas for consumer protection work about alleged coin fraud by traveling gold buyers who briefly set up in hotels, then move on to another town.

The Personal Gold Guide, compiled by Fuljenz and other market analysts, provides investors with comprehensive market insights and specific guidance about acquiring gold to diversify and strengthen portfolios. A free copy is available. This Metals Market Report is a weekly analysis of significant marketplace developments and trends for gold, silver and other precious metals as well as rare coins.

Harold Bareford - Like Louis Eliasberg - Knew How to Build a Coin Collection

New York City lawyer Harold Bareford assembled most of his own private coin sets from 1945 to 1955. During that decade, he built one of the most stunning collections of U.S. gold coins ever seen. In 1947, he summed up his coin-buying philosophy: "I collect only the finest specimens." He was also meticulous in record keeping, making it easy to track the performance of his rare coins. In 1947, for instance, he paid just $310 for a rare 1933 Eagle gold piece. When his heirs sold it in 1978, it brought $92,500, or about 300 times what he paid. In all, Bareford laid out $13,832 for his gold coin collection. At auction, his coins fetched about $1.2 million, almost 87 times his original outlay. But Bareford made one mistake. He stopped buying coins in 1955, thinking they had gotten too expensive. Instead, he could have added coins to his collection and probably made a second million-dollar fortune from small beginnings.

Is it possible to match Bareford's 8,575% gains in the next few decades? Yes, it's possible, if the U.S. continues to print too many paper dollars, fueling inflation. Harold Bareford offers us another lesson in historical perspective. Tremendous bargains are only available in hindsight, so if you want to look back at 2012 with pride, you can start your rare coin collection today. Perhaps today marks your "Bareford Beginning" in coin buying.

Summary: The Main Factors Pushing Gold Up, Down and Sideways in 2012

After gold reached $1788 on Leap Year Day, February 29, 2012, gold is down because of a confluence of temporary factors: (1) A stronger U.S. dollar vs. the euro, which results in a sharp decline in commodities in dollar terms, including crude oil at $84; (2) A weak Indian rupee and new import taxes on Indian gold, (3) shorting or selling of gold ETFs on Wall Street and (4) attacks on gold by Warren Buffett and others.

The positive factors we've seen arise lately include: (1) fear over the breakup of Europe and the euro, (2) more central bank gold buying, (3) low interest rates, giving gold a "level playing field," (4) slow growth in newly-mined gold, (5) new buying on dips from "big-name" buyers and (6) rising demand in China.

We still believe gold will close 2012 on a positive note for the 12th straight year. Some possible "game-changers" include: (1) More states and nations installing gold-backed coins or bills, (2) an outbreak of war in rogue nuclear powers, like Iran or North Korea, (3) widespread printing of new fiat money to fight the coming global recession, (4) fear of U.S. growing debt, no matter who is elected in November, or (5) another "sneak" terrorist attack on America.

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