While gold and platinum followed a similar trend line this month — starting off strong, dipping mid-month and then stabilizing to levels on par with the end of July — silver and palladium broke free from this pattern, showing remarkable strength on renewed investor interest and growing world demand.
Trading strongly at the start of August on dollar weakness and continued uncertainty in the Middle East, gold touched $655 on August 2 and remained relatively stable until a dip in oil prices led to a substantial softening in the gold spot price. After breaking the $1,250 barrier on August 11, platinum sagged to just over $1,215 by mid-month. It did however, show signs of recovery in subsequent weeks, finding steady support in the $1,220-1,240 range. Silver managed to escape the downward pressure that affected gold and platinum in August, rising steadily throughout the month and touching a 12-week high of $12.66. Palladium also decoupled itself from gold and platinum, testing $345 before slipping slightly to $335 at month's end.
| August Spot Price Summary (U.S. Dollars) | ||||
| Silver | Gold | Palladium | Platinum | |
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| High | 13.14 | 655.50 | 350.36 | 1269.55 |
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| Low | 11.45 | 607.90 | 311.44 | 1225.13 |
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| Open | 11.45 | 638.10 | 318.00 | 1246.50 |
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| Close | 12.53 | 618.55 | 340.00 | 1237.50 |
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We’ll include one absolutely FREE 1-Troy-ounce American Silver Eagle, the world's best-selling silver coin, with any individual order of $1,000 or more on all bullion items offered by Northwest Territorial Mint now through September 30, 2006 (phone orders only). Mention this offer when you call us toll-free M-F at (800) 344-6468 between 7:00am and 5:00pm Pacific Time to get your FREE Silver Eagle!
CONTENTS
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Market Summary - August 2006 |
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Evaluating Silver's Strength |
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What Is the Best Way to Store Bullion? |
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What Is Money? |
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Precious Metals Worldwide News |
ABOUT NORTHWEST TERRITORIAL MINT PRECIOUS METALS MONTHLY
Combining market summary information and insightful analysis, this publication offers an insider’s perspective on the numbers, trends, and moves that drive the precious metals market, allowing you to stay on top of the most important investment news each month without investing hours of your precious time.
LINKS
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Northwest Territorial Mint Bullion web site |
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Bullion FAQ |
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Bullion Reading List |
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Online Store (For purchase of less than 5 ounces of gold, palladium or platinum, or less than 50 ounces of silver.) |
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CHARTS
The following charts display the low, high and closing spot price of each metal for the month of August, 2006. Source: Northwest Territorial Mint spot prices as posted at nwtmintbullion.com.
The following charts display the closing spot price of each metal for the five months ending August 31, 2006.
Evaluating Silver's Strength
by Ross Hansen
You may be aware that some of the world's largest silver producers experienced record profits for the second quarter of 2006. Or maybe you came across the Wall Street Journal article from August 13 highlighting silver's recent positive price moves and touting its strong future. If you're a silver watcher, you no doubt took note of the fact that silver spot hit $12.66 this past month, its highest level since May 31.
Just in case you haven't heard, silver has been steadily gaining strength since early July and many market analysts are predicting a continuation of this trend. In fact, some commodities experts have suggested that silver is radically undervalued and that it could easily break the $40 range in the near future.
One thing is clear from even a cursory comparison of the precious metal price charts for the past thirty days – silver has been surging and has even outperformed gold. While the price of silver has jumped nearly 20% in a month, gold spot has risen a paltry 4% in the same time period. Moreover, demand for silver, both in the industrial and investment sectors, continues to strengthen worldwide, creating a positive long-term picture for silver that many market analysts say has been developing for quite some time.
If this sounds to you like the same old speculative bullish talk dressed up in different metal, experts suggest taking a closer look at the fundamental factors driving silver's recent upswing. Consider the following, for example.
Industrial Demand Ramping Up
Industrial demand for silver has remained consistently strong over the past decade. Utilized in areas ranging from health care to video electronics to electroplating, its versatility as an industrial component is seemingly inexhaustible. In its report for 2005 (the latest data available), the Silver Institute stated that industrial and consumer demand for silver had reached its highest levels since 2001. It further indicated that industrial applications grew by 41 million ounces in 2005. Just this month, an official report confirmed that silver consumption in China, the world's fastest growing economy, had tripled in 2005 to 2,600 tons.
Inelastic Supply
Most of the silver produced each year is the by-product of copper, gold, lead, and zinc mining operations. In fact, less than one-third of all silver produced worldwide is obtained from primary silver mines, (those mines that specialize in recovering and refining silver as opposed to recovering it from other base metals). As a result, when the cost of extracting base metals such as copper and zinc rises, the world silver supply decreases.
Silver's Above-Ground Supply Is Shrinking
The bulk of the silver used in industrial processes is not recovered because it is simply not cost-effective to do so. The result is a net drawdown of above-ground stocks. The Silver Institute points out that silver inventories decreased by 1.2 billion ounces in the decade from 1990-2000. With silver demand for consumer products, industrial applications, and coinage at about a billion ounces per year, analysts have pointed to a growing gap between supply and demand. Moreover, since Barclay's Global Investment introduced iShares, the world's first-ever silver exchange-traded fund (ETF), in April 2006, investors have drained more than 92 million ounces from the market.
Some commodities experts have long suspected that the price of silver has been artificially suppressed. In fact, a host of seemingly plausible theories has been bandied about for years by astute analysts seeking to explain why silver hasn't yet followed gold's dramatic rise. They've stated that current economic conditions reflect those of the recent past, when silver hit $48. Is a silver price explosion likely to happen soon? Only time will tell, but more and more analysts are becoming bullish about silver's long-term prospects.
Ross Hansen is the founder and CEO of Northwest Territorial Mint and has more than 30 years of experience as a precious metals trader and broker.
What Is the Best Way to Store Bullion?
by Northwest Territorial Mint Staff
For anyone new to bullion investing, the question of how and where to store precious metal bullion coins and bars can be a perplexing one. When making this decision, investors should consider the following three factors: size, security and liquidity.
Size
Bullion products come in a variety of sizes and weights, which often determines their suitability for certain storage locations. Some precious metal bars, for example, can weigh up to 70 pounds. For practical reasons, those interested in purchasing bulk quantities of bullion will probably want to enlist the services of a registered precious metal storage facility. Those looking to keep their investment closer at hand may want to consider purchasing smaller-sized precious metal bars or bullion coins, which can be stored and transported more easily.
Security
If an investor's greatest concern is security, registered storage facilities, as well as many banks, offer vaults devoted exclusively to safeguarding bullion commodities. Typically, these facilities offer additional insurance policies for a nominal monthly fee.
Liquidity
The major attraction of owning physical metal for some investors is its liquidity. For those who put a premium on having ready access at all times to their bullion investments, home storage is certainly an option. However, with the advent of modern technology, many bullion banking facilities offer investors 24-hour access to their private accounts. Investors can check their account status, or buy and sell bullion online from the convenience of home.
What Is Money?
by Mark Burgess
Money Wars
For thousands of years of human history, mankind has struggled over the kind of "money" used in society. In the free interchange of people, silver and gold have been chosen time and again for their inherent value, rarity, and practicality. By contrast, governments have long favored a paper money system.
Though the tension between these two inherently different kinds of money has gradually ebbed over time — as paper money has come to dominate as the accepted currency of modern life — recent world crises have thrust gold and silver back into the spotlight. Existing today as whispers, drowned out by the din of central bankers and makers of monetary policy, the voices of gold and silver backers may one day rise to the level of an enthusiastic roar.
Precious Metals and Paper Money Compared
Even when judged solely on appearance, gold and silver are quite distinct from the paper money we carry around each day. But a deeper comparison of the two — based on three factors — quality, durability, and verification — demonstrates in a more fundamental way just how different the two forms of money are.
Quality
With regard to money, quality refers to the degree of purity of the money's constituent material. In the case of gold and silver, purity is the fineness measured in percentage terms. Metals can be refined to exacting purities; the standard of silver and gold is .999-fine, meaning the metal is 99.9% pure.
By comparison, the quality of paper money isn't the paper medium itself; rather, the quality is in the financial position (debt, credit, etc.) of the government issuing the currency. As long as people have confidence that paper money can be exchanged for other goods, then it has quality. Once that confidence is shaken, the quality is reduced.
Durability
As metals, gold and silver are physically durable and robust. They can survive disasters such as floods, fires, and exposure to harsh chemicals, retaining their integrity and value.
Paper money does not stand up well to gold and silver on the basis of durability. Susceptible to fire and other natural disasters, as well as gradual material degradation over even short periods of time, paper notes are extremely fragile when compared to precious metals.
Verification
Silver and gold have distinctive physical traits and characteristics that make it easy to certify their authenticity and ultimately determine their value. These physical properties have also ensured steady demand for these metals over thousands of years. As conductors of electricity, for example, gold and silver have proven extremely useful from ancient times to our modern age.
The value of paper money is derived not from any of its physical properties, but from its statutory backing by the government that prints and issues it. If the government decides to increase the money supply by printing more paper notes, the real value of the money it issues is diminished.
Moreover, the fineness of gold and silver can be measured by a full range of assay methods, such as rubbing the metals on a "touchstone" (a dense, black marble like stone that renders a distinct color pattern for each metal), or by sophisticated electro-chemical analysis. Though paper money can be tested to verify its authenticity, these tests are meaningless if those holding paper money lose their confidence in the government's ability to redeem the value of the notes they hold. Currency crises have arisen many times throughout history and many analysts have expressed concern that America's rampant deficit spending may be creating the conditions for such a crisis here in the not-so-distant future.
Ultimately, paper money is as valuable as a government's citizens agree. During chaotic economic and political times, gold and silver are often embraced by the public because of their intrinsic value and proven reliability. During historically cyclical periods of upheaval, those who owned precious metals did profit. A number of experts currently believe we may be on the brink of such a period now.
Mark Burgess has been an active trader of precious metals for over 30 years.
Precious Metals Worldwide
News & Trends from Around the Globe
Silver Summit 2006 Begins September 21 in Coeur d'Alene, Idaho
The annual Silver Summit, a gathering of silver-mining CEOs, silver market analysts, and investors from around the world, is scheduled to get underway in Coeur d'Alene, Idaho, on September 21. Topics for discussion for the four-day event will include silver mining, silver stocks, silver as money, and the future of silver in society. Among the speakers at Silver Summit 2006 will be Ross Hansen, founder and CEO of Northwest Territorial Mint.
Platinum Judged Successful in Treating Cancer
According to a recent studied conducted by a team of Harvard University researchers, platinum-based chemotherapy is successful in treating certain types of cancer when used in combination with standard radiation therapy. The findings of the study indicated that response rates among patients to a regimen of platinum-enhanced radiation therapy were up to 50% higher than response rates of patients not treated with the platinum-enhanced therapy.
Valencia to Acquire 100% of Chile's Largest Silver Mine
Canadian-based Valencia Ventures, Inc. has signed a letter of intent to purchase the Chanarcillo Mine in Chile from Compania Minera Calcia Ltda. ("Calcia"). An epithermal bonanza-style mine, Chanarcillo is Chile's largest silver-producing mine, yielding more than 100-million ounces of silver since it was first discovered in 1832.