Platinum and gold set new price records for the second month in a row, with gold surpassing $1,000 on March 17, and platinum starting out the month in record territory. Palladium also peaked at the beginning of the month, while silver peaked just ahead of gold.
All metals declined notably during March. During the week of March 17, gold dropped 9.2%, silver 16.8% Both recovered somewhat, with silver showing more volatility. The Fed’s announcements on March 18 contributed to the decline.
Platinum dropped 17% and palladium 25.7%. They were buffeted not just by inflation-driven speculation, but supply concerns as mines in South Africa dealt with various shutdowns; and economic worries, as investors and speculators tried to gauge demand for industrial use in autocatalysts in the face of a potential recession. At months’ end, platinum edged up again as supply concerns resurfaced.
Gold/Silver Ratio
During March, the gold/silver ratio – the quantity of silver (in Troy ounces) required to obtain one ounce of gold – began the month below 49; swung back and forth to 48 for two weeks; then climbed to near 53 before easing then regaining that number.
| March Spot Price Summary (U.S. Dollars) | ||||
| Silver | Gold | Palladium | Platinum | |
|
||||
| High | $21.37 | $1032.50 | $597.50 | $2303.00 |
|
||||
| Low | $16.77 | $905.48 | $422.00 | $1805.50 |
|
||||
| Open | $19.84 | $973.40 | $570.00 | $2168.00 |
|
||||
| Close | $16.89 | $907.40 | $432.00 | $1945.50 |
|
||||
CONTENTS
 |
Market Summary - March 2008 |
|
|
Ross Hansen: As Demand Skyrockets, Precious Metals Still Plentiful – Facts and Figures |
|
|
Joe Nicholson: A Great Time to be in Silver |
|
|
Precious Metals Worldwide |
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.
DID SOMEONE SEND YOU THIS NEWSLETTER?
Sign up here to receive your own copy every month, and get a free Investor Guide as well.
LINKS
|
|
Northwest Territorial Mint Bullion Web Site |
|
|
Request Free Investor Guide |
|
|
Order Status |
|
|
Buying From Northwest Territorial Mint |
|
|
Bullion FAQ |
|
|
Bullion Reading List |
|
|
Online Store (For purchase of less than 5 ounces of gold, palladium or platinum, or less than 50 ounces of silver.) |
FEEDBACK
Think we’re right? Think we’re wrong? Know something that we don’t? As always, your feedback is welcome. Send us an e-mail with your questions about investing in precious metals or request your very own Investor Guide, a free resource packet chock full of useful information.
Missed last month’s newsletter?
Request the March Bullion Newsletter. Or, find past issues archived at our Precious Metals Monthly web site.
New improved Charts
Our charts at www.nwtmintbullion.com have changed. They contain more information about precious metals and are easier to read. You can now see not just the bid and ask price at the moment, but the day’s low and high, and see the change since the previous close. Price movement up will be displayed in green type; price movement down will be displayed in red type. See here.
CHARTS
The following charts display the daily low and high spot price of each metal for the month of March, 2008. 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 March, 2008.
As Demand Skyrockets, Precious Metals Still Plentiful — Facts and Figures
by Ross Hansen
Over the past six months, increasing numbers of consumers worldwide have sought precious metals as a ‘safe haven’ investment, a reliable hedge against inflation or an alternative to stocks and bonds — and suddenly, the shelter of choice over even real estate. With angst over a multitude of negative economic indicators, there has been, in effect, a run on precious metals.
More interesting than the demand, though, are the demographics of the investors: many of them are first-time buyers. For example, a veteran New York stock broker called Northwest Territorial Mint just the other day to make a six-figure investment in gold and silver bars. The metal purchase was the first ever for this seasoned investor whom, I might add, for decades had advised his clients to shun metals in favor of the stock market.
He, like so many others, now sees the light: If you’re looking to retain your wealth, you should be holding metals, and holding them long-term. And many more people are finally accepting the wisdom of responsible financial planners who have long recommended that 10-20% of one’s investment portfolio should be in precious metals. Increasingly today, the question many investors are asking is not if they should invest in precious metals but whether 10-20% of their portfolio in hard assets is enough.
Precious Metals Are Plentiful
As investors add more precious metals to their portfolios and first-time buyers keep dealers’ phones ringing off the hook, rumblings of a metal shortage – mostly rumor-mongering on the Internet – predictably arise. Is there any truth to the rumors? Absolutely not.
To be sure, all of us in the industry, both buyers and sellers, have been experiencing a momentary stretch in shipping delivery times as demand has skyrocketed – putting a strain on the supply chain of retail investment products, from minting production facilities to sales and shipping departments.
The entire industry is swamped – and is scrambling to increase production, extend sales hours or expand sales teams and revamp shipping departments to keep up with demand. Indeed, both the U.S. Mint and Royal Canadian Mint have temporarily halted sales of their popular silver American Eagle and Canadian Maple Leaf coins while they catch up with the monumental demand. So dealers of those coins have consequently had to indefinitely stretch their delivery time to customers.
Basically, what we have now is a simple case of more and more people realizing they should invest in precious metals to protect their nest egg – and putting the current squeeze on the pipeline. The market is experiencing a temporary shortage of finished products, not a shortage of gold or silver.
To those pundits prone to “the-sky-is-falling” mentality who have wildly jumped to the conclusion that the high demand has resulted in a silver and gold shortage, I say: That conclusion is like finding a long line at your favorite restaurant, and exclaiming, “There must be a food shortage!”
Your dealer or brokerage may temporarily be out of your favorite coin and your order may take longer than anticipated to get shipped to you, but gold and silver are still plentiful worldwide and supply is still meeting demand.
Facts and Figures
According the Fortis Bank’s “The Silver Book” (January 2008), “For 2008, we envisage the market in substantial surplus, with supply exceeding demand; metal available to the investor … in a strong market as we have recently experienced, appears to be relatively easy to absorb.”
Also, the Silver Institute’s figures for the past decade (through the latest available year’s figures, 2oo6), show that mine production of silver is up 24% and the total supply is up 9%.
Source: The Silver Institute
Some silver mines are further increasing production in 2008. Pan American Mining Corp. said earlier this year that it would increase silver production by 14% in 2008. The precious metals consultancy GFMS estimated a 4% increase in mine output for 2007 and expects a 7% increase in 2008.
The World Gold Council shows that annual gold production has fallen since its recent peak in 2001, but the decrease is insignificant when compared with the huge amounts of gold central banks have put into the market. Though platinum production may dip in 2008, this is only a short-term problem due to power problems that South Africa should resolve in the next few years.
As investment demand for precious metals has increased, prices have risen to reflect that demand. And, as the law of supply and demand dictates, production will go up accordingly.
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:
A Great Time to be in Silver
by Joe Nicholson
It’s commonly said these days that markets are characterized by uncertainty and volatility, and this is apparent in almost any chart. Silver has been no different: an ounce of the white metal selling for over $21 one day sold for less than $17 a few days later. Traders obviously make very fast decisions about relative value, but these short-term moves can often be entirely divorced from the fundamental realities of supply and demand. Investors looking to build a position in physical metals can take advantage of these dislocations by using technical analysis to identify the most prudent buying opportunities.
Simple Moving Averages help to identify support and resistance within trends. A change in the trend may be signaled when price crosses the SMA line.
The weekly chart above shows a three-wave correction that culminated with a 50% retracement to a previous resistance level. (Elliott Wave analysis, which tracks price movements in terms of predictable patterns made of waves, is a particularly powerful tool for discerning favorable entry opportunities. Movements in the direction of a trend are called “impulses,” and these alternate with counter-trend waves said to be “corrective.”) Notice that also reinforcing the idea of support at the recent lows was the convergence in MACD and the 50 line in the RSI. All of this suggests the minimum criteria for a correction have been met and, though silver may consolidate within the recent range for weeks or months, that a bottom is in place.
The sort of confluence of indications in the weekly chart was more than enough to get aggressive traders to attempt long positions and was a good place to add to physical holdings. And it may not be too late. Certainly the nimble traders able to take advantage of intraday lows have had a great time in silver. These fast-moving speculators are known to take relatively quick profits and send prices lower. The daily chart below reflects such a scenario, suggesting the current strength may only be an oversold bounce.
While the recent bottom was an excellent buying opportunity, even lower prices might be temporarily available in the future. Short positions remain risky while RSI holds support at December 2007’s level.
Notice the RSI indicator dipped below December levels, even if it has since risen back above. New lows can be harbingers of yet newer lows. A look at MACD reveals not only a bearish crossover, but a failure at the zero line. The wave count on the chart suggests further strength can follow, even new highs, without necessarily precluding eventual declines. But, most likely, the best immediate indication for the possibility of ongoing short-term strength in silver will be whether the 5-day simple moving average can cross back above the 50-day moving average as it did in December at the onset of a huge run.
The recent softness in silver has been an excellent opportunity to initiate new tentative buying to ensure at least some exposure to one of the hottest investments of the decade. At the same time, it has created technical damage in the daily chart that may never appear in the weekly chart if a full recovery ensues — but which could also be a sign of even lower prices ahead.
In either case the bull market in silver is alive and well, and monitoring developments in the technical indicators on multiple time frames will give the savvy investor advance warning of future price action. Those seeking to accumulate silver can minimize their risk by purchasing at technical support levels as illustrated in the weekly chart, but should remain able to take advantage of additional downside that could occur. Buying in any market involves risks that can make investors uncomfortable, but over the last several years of the precious metals bull market, those who’ve waited on the sidelines for a risk-free entry have been left out of the rapid ascent altogether.
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, and Trader’s Log, and has written for Futures magazine.
Precious Metals Worldwide
News & Trends from Around the Globe
New Find Shows Gold Made Into Jewelry 600 Years Earlier Than Thought
Anthropologists unearthed the earliest-known example of gold jewelry in the Americas from a site in Jiskairumoko, Peru. Fashioned in 2155 to 1936 B.C. — 600 years earlier than any previously discovered gold artifact — it has changed perceptions about the yellow metal in early societies. According to the Proceedings of the National Academy of Sciences, gold metallurgy is almost exclusively associated with societies with the ability to create agricultural surpluses and capital to acquire raw materials. Though Jiskairumoko was a subsistence community 4,000 years ago, someone was able to hammer the metal and shape it in order for a “societal elite” to display the piece.
Rising Precious Metals Prices Yield More Theft
On the heels of reports of are catalytic converters being stolen from automobiles comes the announcement of the theft of recycled silver from Eastman Kodak. Hundreds of pounds of silver, including a single 425-lb. bar, were swiped from a recycling center to which one of the alleged thieves had access. Police officials were quoted as attributing the theft to the rising price of silver, which is used in creating traditional photographic film.
Future Fuel Cells May Not Require Platinum
As hydrogen-based technologies such as fuel cells become more essential in the 21st century, alternatives to noble metals such as platinum and palladium have been sought in order to reduce costs. Research conducted at Laboratoire de chimie et biologie des métaux (metal chemistry and biology, CEA-CNRS-Université Joseph Fourier, CEA’s Grenoble site) and reported in the journal Angewandte Chemie International Edition indicates that cobalt can be used in fuel cells, reportedly at greater efficiency than platinum, rhodium, or palladium.