Market Summary —
November 2007
November put all four of the major precious metals on a roller-coaster, with the biggest ride belonging to silver, which hit $16.22 on November 7, then zigged and zagged before closing at $13.93. Gold and platinum showed especially strong movement in the first 10 days of the month, and then rose again at its end. Gold hit its 28-year-high on November 8.
Platinum established an all-time high, in part due to problems in South African mines. Safety problems caused shutdowns and threats of worker strikes. South African gold mines were also targeted for strikes, but South Africa produces a smaller percentage of the world’s gold than its platinum, and a strike of gold mine workers was not expected to affect price of the yellow metal.
Palladium was the least volatile of the major precious metals, but the only one to end the month on an uptick.
Gold/Silver Ratio
During November, the gold/silver ratio – the quantity of silver (in Troy ounces) required to obtain one ounce of gold – saw a quick decline in the first week to 53. For the remaining month, the ratio rose back to trade in a range just below 56 at month’s end.
| November Spot Price Summary (U.S. Dollars) | ||||
| Silver | Gold | Palladium | Platinum | |
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| High | $16.22 | $846.00 | $388.50 | $1494.50 |
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| Low | $13.84 | $773.44 | $344.50 | $1384.00 |
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| Open | $14.47 | $795.50 | $377.00 | $1456.50 |
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| Close | $13.93 | $781.25 | $351.00 | $1442.00 |
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CONTENTS
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.
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CHARTS
The following charts display the daily low and high spot price of each metal for the month of November, 2007. Source: Northwest Territorial Mint spot prices as posted at nwtmintbullion.com.
The following charts display the daily spot price range of each metal for the six months ending November, 2007.
Buying Precious Metals On Volatility
by Ross Hansen
In recent weeks, precious metals have moved from the back page of the business section to Page 1, primarily because of the fast run-up in prices followed by at least two (much smaller) quick corrections.
From the last day of August to their November peaks, gold was up 25%, silver 32%, platinum 16% (hitting and exceeding record highs in dollars), and palladium 14%. All four of these metals slid mid-month, only to climb back and slide again.
They are still well above their price at the beginning of both this run and the year 2007.
Some buyers of precious metals are buying them to trade them, planning to profit on brief movements in dollar price. Such market-timers take huge risks, and sometimes profit — in dollars — but, just as often, lose. I’m sure you’ve read the same studies I have, which indicate that there is little practical difference in performance between buy-and-hold and market timing strategies.
All of which should be reassuring to you right now, even as the rest of the world’s major markets buffet the prices of silver, gold, and other metals like a glider in a gale. The factors driving the price of precious metals are many (subprime mortgage problems, the housing bubble, credit, dollar decline against foreign currencies, expensive oil) and the solutions, if they are to come, at least don’t seem to be appearing on the horizon. The Fed appears to be choosing inflation over recession, which means that dollar in your pocket today won’t buy next month what it will now, whereas the silver or gold you have purchased will buy exactly what it did (and, therefore, will buy more dollars).
Investing in precious metals is a long-term process, requiring the same discipline as dollar-averaging in other investment fields. You will ideally buy precious metals today because you are hoping to have them should you need them tomorrow— or, more accurately, 15 or 20 years from tomorrow.
Remember why precious metals make a good investment in the first place:
- They are durable.
- They are convenient and portable.
- They have industrial use that will add to their demand and may diminish their supply.
- They are a hedge against inflation.
- Their value is understood in every culture on the planet.
Yes, the charts show a choppy ride of late for precious metals. But there’s still no compelling reason to believe that gold will fall against any currency in the coming months.
Unless you think that we are in for deflation, or that the dollar will recover against the currencies against which it’s losing ground, your portfolio needs precious metals. Don’t calculate how many dollars you’ll get for what you own — calculate how much precious metal you’ll need as inflation worsens.
In January 2004, you paid $1.49 for a gallon of regular gasoline according to the Energy Information Administration of the U.S. Department of Energy. The latest figures from that agency peg a gallon of gasoline at $3.02, basically double. In 2004, the average price of an ounce of gold was $409.72, basically half of today’s price. Gold is keeping pace with inflation. Income, however, is not; the HUD Estimated Median Family Income for 2004 was $57,500; in 2007, it’s $59,000, an increase not anywhere near double. Even the euro has only risen 13.9% against the dollar in that time.
If you live in an inflationary world, having investments with intrinsic value is useful, but continuing to accrue them is even more important. Keep your eye on inflation; as long as the dollar is worth less than it was the day before, the metal you receive in trade for your dollar will help you keep more of your wealth.
Ross B. Hansen
CEO, Northwest Territorial Mint
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.
Technical Take: Two Looks in Precious Metals
by Joe Nicholson
Gold and silver tend to trade together, historically speaking, though the appropriate ratio between the two is a matter of contention. Over recent weeks and months, however, the relationship between these two metals has deteriorated such that Elliott Wave analysis of their corresponding charts now tends to point in opposite directions.
Assuming gold and silver will return to their longstanding approximation of parity in the long term, the likely implication of the current situation is that one of these metals is more accurately reflecting the intermediate-term future for both. Approaching year end, when metals tend to perform well, and considering the long-term prospects for gold and silver both remain significantly positive, the bias may lean to the bullish side, but understanding multiple possibilities predicted by technical analysis is the best way for investors and traders to remain vigilant in these evolving markets.
Gold has tripled in less than ten years and, with a chart like the one above, investors have lots to be thankful for and little reason to worry – in fact, gold is the more optimistic of the two metals. Its recent outperformance, largely based on weakness in the dollar, has created a bullish scenario that could see the yellow metal approaching $1,000 by year end. Even the worst possible scenarios still only put gold at strong support that keeps intact the powerful multi-year bull market in this valuable commodity.
The shorter term chart below shows gold in a normal consolidation pattern after an impulsive rally to new highs. The most bullish development would be for gold to continue holding support at its rising trendline and to trade in a triangle pattern that eventually thrusts upward to new all-time highs in an extended fifth. Overall, with such strong support below and significantly higher targets above, the outlook in gold is decidedly positive.
Silver, on the other hand, might have some investors worried. Despite outperforming gold over the past several years, silver has become a victim of its own volatility lately and has struggled to keep up its former pace. All is not lost, however, as there are still bullish alternatives for silver, and it may be that the white metal will be the one to watch as it could give the crucial “tell” on the fate of all precious metals.
The multi-year chart above shows what appears to be a classic ongoing corrective pattern from the May 2006 highs, a view that would interpret the most recent high in silver as a false rally that will only give way to new lows. But, while this is the easiest reading of the silver chart, thorough Elliott Wave analysis always allows for alternates because the most obvious count is seldom what is played out in volatile commodities markets.
A more detailed chart of the recent action shows the key levels in silver that will determine whether the pessimistic analysis is correct. A much more bullish alternate is possible as long as silver does not take out its summer 2007 low. This means finding meaningful support at either of the rising trendlines will begin to favor a running triangle pattern, a bullish scenario that could lead to a staggering breakout in silver after this protracted period of consolidation.
So, again, though the two primary precious metals have diverged lately, it’s unlikely we’ll see gold continue its explosive rally while silver breaks down to new lows. Instead, while gold now points higher and silver points lower, each chart has within it the seed of the opposite, as already illustrated in silver. In gold, Elliott Wave technicians are hugely undecided whether to begin their counts from 1999 or 2001, which would, of course, determine whether the November peak is the completion of five waves or merely the third of five with a fifth wave rally still to come. Notice in the second chart that the May 2006 highs now sit at a key Fibonacci retrace level, staying above which will be a key factor in labeling the current pattern as corrective rather than the start of an impulse down.
The bull market in precious metals is intact until proven otherwise. Bullish fundamentals, including seasonality and the likelihood of further accommodative action by the Federal Reserve, keep the long term outlook for gold and silver very positive and should have existing owners of precious metals holding onto their positions. New investors or those looking to add to positions, with the help of technical analysis, now have important information for planning their next purchases. And pardon the blatant self-promotion, but anyone looking to buy now is just in time to take a look at an impressive new piece of silver bullion soon to be on the market, a custom 5-0z. round designed in partnership between Trading the Charts and Northwest Territorial Mint.
The design pictured above will be available directly from Northwest Territorial Mint on impressive 2.5” diameter .999-fine silver rounds in minimum lots of 50. They’re also available as prizes for the annual Trading The Charts “Pick the Tick” contest. If you’re not currently a member, click here to participate for free in this unique opportunity to win a beautiful piece of silver bullion with no obligations. This gorgeous investment-grade bullion round, with considerable size and heft, is a testament to the craft of the Northwest Territorial Mint staff and to the priceless opportunity of striking your own custom design or message in timeless gold and silver.
Joe Nicholson is an independent analyst and the resident metals specialist at www.TradingTheCharts.com. His work regularly appears at Safehaven.com, Financial Sense University, Gold-Eagle.com, Market Oracle, Trader's Log, and Der Invest Informant, and was recently featured on the cover of Futures magazine.
My Metal Is Nobody's Business
by Mark K. Funke, Esq.
You work hard all your life; scrape together savings here and there and believe wholeheartedly that what you do with your money and property is your business. Let’s assume you have been buying gold and silver and platinum and palladium. How are you going to keep other people’s noses out of your business? How are you going to be sure that your precious metals make it to the right person after you die? The best defense against robbers, greedy potential heirs, intrusive bureaucrats and everyone else is lack of knowledge. Quite simply, if no one knows that you own precious metals, then no one can take them from you.
This lack-of-knowledge element is easy to control while you are alive – simply don’t tell anyone. Upon death, however, all your personal finances may become public record. If you die without a will (or even with one), the personal representative or executor of your estate is generally required, in many states, to file a complete inventory of your assets with the probate court. This inventory is a matter of public record. The inventory is available to anyone walking into your local courthouse, or may even be available online.
As an attorney helping clients through probate I am always amazed by how many real estate agents obtain my phone number to call about listing the property of a recently deceased. Those agents obtain this information from the court files -- and they aren’t the only ones snooping.
In some states, such as Washington, the filing of a probate inventory is no longer required -- unless, you have a cantankerous judge. I was recently working on the probate of a multimillion-dollar estate. We had not filed an inventory, as we are not required to do so. However, at a court hearing the judge became “concerned” over the handling of the estate and appointed a random attorney in the courtroom to “help oversee the affairs” of the estate. Part of the order appointing this other attorney required us to file an inventory with the court. No worries, there was no hanky-panky found by the court-appointed attorney. All that happened is that we now had a public record of all assets and the estate had to write a check to a court-appointed attorney for his time and efforts.
If you don’t have a will (or even if you do), its administration after your death is a public process that involves the whims of judges, court clerks and others. If the judge wants to know what the assets are, you’d better tell him. Your affairs are no longer private.
Fortunately there is a way to avoid probate for those of us who value our privacy: a revocable living trust.
A living trust is a legal document that, just a like a will, contains your instructions for what you want to happen to your assets when you die. But, unlike a will, a living trust avoids probate at death, can control all of your assets, and generally prevents the court from controlling your assets if you become incapacitated. You and your attorney transfer your assets into the trust while you are alive. For precious metals, the transfer into a trust is extremely simple – you just list those assets in the trust or include language that the trust governs “any and all precious metals owned” by you.
Legally you no longer own anything (don’t panic: everything now belongs to your trust), so there is nothing for the courts to control. While you are alive, you are your own trustee and can manage all of the trust assets seamlessly. You do not lose any control over your assets and can even revoke the trust at any time. There are no ongoing costs to pay a trustee. However, the initial setup costs of a trust will be more than a will. Upon your death, your trustee takes over and administers the assets under the terms of your trust. The trust continues to exist after death and can be administered without court involvement. No local government = greater privacy.
Many people believe that a living trust helps save estate taxes. That is not true. The exact same estate tax planning can be drafted in a will. The Internal Revenue Service (IRS) requires you to inform it of your assets if you die with more than $2 million in net worth. A living trust does not change this requirement. Unfortunately the power of the IRS is greater than any document a lawyer may draft (and anyone who tells you the Constitution does not require you to pay taxes may have a coherent argument, but I can assure you that no federal judge in this country will agree). What a living trust can provide you is privacy so that it becomes extremely difficult for anyone to verify what your precious metal investments are.
There are many advantages and disadvantages to a living trust. This article only addresses the privacy advantage of one. For additional information and to see whether a will or living trust is right for you, talk to your attorney.
Mark K. Funke is a real estate and estate planning attorney in Seattle, Washington; he’s also a gold-bug. For more information about his law practice visit www.funkelaw.com or call him at (206) 632-1535. He is licensed in Washington State only, but maintains a close network of attorneys around the country that could assist you. The aforementioned should not be construed as legal advice or advice to lie to any government official; that would be wrong.
Precious Metals Worldwide
News & Trends from Around the Globe
Golden Holidays For Some
The holiday season has a golden hue this year. Salvation Army volunteers have reported anonymous donors dropping gold coins into the well-known red kettles in at least three different cities.
In Ottumwa, Iowa, three British sovereigns were found. According to the Salvation Army there, this tradition is a number of years old.
In Prescott, Arizona, a gold American Eagle was recently donated, and two Krugerrands were found in a kettle in Omaha, Nebraska.
Miners Strike in South Africa
South Africa’s largest miners' union stopped work for one day in a safety protest that shut down platinum and gold mines, costing substantial production losses. Nearly a quarter of a million workers were involved in a protest against deaths in the nation’s mines. With a month to go in the year, deaths were up, despite stated intentions by the mining industry to reduce deaths significantly.
Norilsk Nickel Ownership in Limbo
A 28% stake in Norilsk Nickel, which owns 54% of Stillwater Palladium Company, and mines more than half of the world’s palladium, has been offered for sale to two potential investors.
Owner of the stake is Mikhail Prokhorov's Onexim Group. Prokhorov offered the stake to the investment firm Interros, owned by his partner, Vladimir Potanin, but gave Potanin just 45 days to close the deal. Prokhorov then offered his stake to the Russian aluminum company United Co. Rusal in exchange for stock and cash.
Potanin, who stands to control half the world’s palladium if he closes the purchase, now questions whether Prokhorov has offered a fair deal to Rusal. Interros said it will buy Prokhorov's shares only at “market terms” and wants an independent appraisal to determine the price.