The Michael Fuljenz Metals Market Report: October 2012, Week 1 Edition
The third quarter, ending Sunday, was gold's best-performing quarter since the second quarter of 2010. Meanwhile, stocks have declined for eight of the last 10 trading days, with two straight declining weeks. As October opens, gold is up again, reaching a new 2012 high above $1790, while silver topped $35. Wealthy investors worldwide are flocking to gold.
| Metal | June 28 | Sept 28 | Gain |
|---|---|---|---|
| Gold | $1,558 | $1,776 | +14% |
| Silver | $26.81 | $34.65 | +29% |
| Platinum | $1,402 | $1,668 | +19% |
Basis London closing price
Six Signs That Gold Coin Demand Grew in August and September and Should Continue Growing
- Major dealers' gold coin inventories have shrunk dramatically.
- Major dealers report more million dollar days than in any other months in 2012.
- Major dealers are reporting more large gold coin orders coming from buyers they haven't heard from in years.
- National television and radio ads for rare gold coins are increasing, especially for $10 and $20 denomination gold coins.
- My book, "Indian Gold Coins of the 20th Century," selected as the 2010 Best Investment Book of the Year by the Numismatic Literary Guild, has been selling well enough that I need to reprint many more copies to meet the demand for it. 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.
- We have recently seen more European buying than selling of U.S. gold coins. Traditionally, Europeans sell more than they buy. This reversal hasn't happened in a long time. It is very bullish for many $10 and $20 gold pieces that are typically imported from Europe and are becoming tougher to find and more expensive to buy.
1911 Philadelphia Mint $10 Indian Gold Eagle MS63
Periodically, I will post graphs of how various coins have performed over time. For many years, I have liked the historic $10 Indian gold coin. I believe the popular obverse Indian design will someday become the "Face of Numismatics." I even wrote an NLG award-winning book about the series, titled "Indian Gold Coins of the 20th Century." Currently I believe it is a historically opportune time to acquire better date $10 Indians in better grades. This week's graph shows how multiple coins totaling $10,000 in scarce MS63 1911 $10 gold eagles would have increased in value in the last 4 months that I have purchased them. The graph reflects the price gains of actual coins I have been fortunate to buy, showing an increase from $10,000 to $11,200 in just 4 months.
I recommend at least a 5-10 year hold period on rare coin purchases but this graph shows impressive gains can occur during a short time span. We all know that past performance of this one coin does not guarantee future performance for all coins. Many experts recommend buying better dates and grades because of often better long-term performance for much of the past 100 years. Read my book to learn about famous successful long-term gold coin set builders like Louis Eliasberg. His set building provided him the long-term benefits of diversification and significant premiums were later realized.
Central Bank Buying & Rising Investment Demand Lift Gold's Price in 2012
The International Monetary Fund (IMF) said last week that central banks in Turkey, Russia, South Korea and Kazakhstan increased their gold holdings in July.
In addition, Thomson Reuters GFMS predicted in the new update of their Gold Survey 2012 that world gold investment in the second half of 2012 will reach a record in both tonnage terms (over 970 tons) and in dollar value (over $53 billion). One factor in their raised estimate is increased central bank buying in the first half, when the official (government) sector added over 270 tons, a record 540-ton annual rate.
Also, GFMS says that their estimates of new gold mine supply have fallen in the second half. These new bullish factors offset a 13% first-half decline in jewelry sales, mostly due to lower demand in India.
Deutsche Bank: Wealthy Investors Flocking to Gold
The rich are flocking to gold to protect their wealth from inflation risks triggered by the central bank stimulus mania, according to Deutsche Bank AG's asset and wealth-management unit.
"Gold has historically been considered to be a store of value and an inflation hedge and increasingly it is being utilized as a monetary instrument," said Mark Smallwood, head of Asia-Pacific wealth-management solutions. "There is a growing interest among our clients to gain exposure," he said. Significantly, he noted an increase in the preference for physical gold holdings.
As gold's bull run extends through its 12th year, with a 13.5% gain year-to-date, wealthy investors are seeking hedge protection against weakening currencies worldwide and the very real threat of escalating consumer prices. Holdings in gold-back exchange-traded funds hit an all-time high this week. Deutsche Bank and Bank of America are among the banks forecasting that gold will push to a new record high.
German Banking Giant Touts Gold Standard
In a scathing report titled "Gold: Adjusting for Zero," German financial giant Deutsche Bank declares that the world is in a situation that is "Zero for growth, yield, velocity and confidence," and makes a strong case for the gold standard.
In this refreshingly frank analysis, Deutsche Bank acknowledges that people are talking openly now about the gold standard as a common topic, no longer a fringe idea. This emerging readiness to talk candidly about a gold standard "says much about the change in attitudes by investors, many who would have ridiculed the mere mention of such a thing as little as five years ago." This is extremely bullish for higher gold demand and prices worldwide!
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