Except for gold, precious metals continued to rise in August. Even with gold’s performance for the month, it’s still up 8% on the year as investors continue to discover the value of its safe haven status. Precious metals with strong industrial and automotive use, such as silver and palladium, were pushed higher in August. The surge was driven by “less bad” economic data as well as rampant speculation activity in the equity markets as hopes of an economic recovery continued to build. Silver continued its gains from the previous month to end August up 7%. The government’s popular, if poorly managed, Cash for Clunkers program helped spur palladium up 11% to finish as the month’s most impressive mover. Platinum continued posting steady gains as it closed August up 3%.
Due to silver’s upward move in the month and gold’s holding pattern, August’s gold/silver ratio – the quantity of silver (in Troy ounces) required to obtain one ounce of gold – decreased to just under 64. The current ratio indicates silver’s growing strength as compared to gold.
| August Spot Price Summary (U.S. Dollars) | ||||
| Silver | Gold | Palladium | Platinum | |
|
||||
| High | $15.22 | $972.84 | $296.00 | $1296.50 |
|
||||
| Low | $13.54 | $931.82 | $263.00 | $1210.50 |
|
||||
| Open | $13.97 | $956.54 | $266.50 | $1217.00 |
|
||||
| Close | $14.96 | $955.20 | $295.50 | $1258.00 |
|
||||
CONTENTS
 |
Market Summary - August 2009 |
|
Ross Hansen: Silver, Gold, and China |
|
Summer’s Over |
|
A Tour of the Silver Summit |
|
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 |
|
Northwest Territorial Mint Mobile Bullion Web Site |
|
Request Free Investor Guide |
| |
Buying From Northwest Territorial Mint |
|
Selling To Northwest Territorial Mint |
|
The London Bullion Report |
|
The Gold Report |
|
Independent Commentary |
|
Bullion FAQ |
|
Bullion Reading List |
|
Online Store (For purchase of up to 3 ounces of gold, 5 ounces of palladium or 1 ounce of platinum, or up to 200 ounces of silver.) |
|
Order Status |
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 August Bullion Newsletter. Or, find past issues archived at our Precious Metals Monthly Web Site.
CHARTS
The following charts display the daily low and high spot price of each metal for the month of August, 2009. Source: Northwest Territorial Mint spot prices as posted at bullion.nwtmint.com.
The following charts display the daily spot price range of each metal for the six months ending August 2009.
Silver, Gold, and China
by Ross Hansen
Silver’s up 40% on the year, gold went past $1,000, and precious metals are all over the headlines. While the numbers make for flashy newscasts, if you already hold silver and gold in your portfolio you know that price doesn’t matter when you own the best investments on earth. And if you’re still considering whether to own real money, a look at what’s happening with the US dollar and China should be all the convincing you need.
In the midst of the global economic panic, the US government has done its best to print its way out of the black hole into which it’s thrown the economy. Unheard of amounts of US Treasury Notes are flooding the economy, and the dollar index is at a yearly low. Even with this massive pump-and-dump scheme, inflation is still very low and people are even officially declaring the “recession” over. Hooray?
Hardly.
Earlier last year, China moved past Japan as the largest owner of US Treasuries - holding a staggering $800 billion. Even so, the Chinese have stepped up the economic saber-rattling, questioning the dollar’s future as the world’s reserve currency. So what happens if the world’s most populous country stops financing the world’s biggest economy because it’s concerned about its investment? We may found out sooner than later. The New York Times reported China sold $25 billion in US Treasury securities in June, the most it had ever sold in a month. Yet, even if China is trying to head for the hills, it may have dug itself too deep as it needs to get some return on investment to avoid a huge hit to its own economy.
Though the Fed looks to continue spraying the dumpster fire better known as the US economy with billions of US dollars, this only works as long as the Chinese are there to finance the flow of funds. When they decide that those Federal Reserve Notes are really only useful as tinder, you can be assured this scenario won’t end well, or cleanly.
As for that so-called end-of-the recession talk, consider a couple of points:
- “Official” unemployment stands at just shy of 10% and the actual number, when factoring the underemployed, or those with part-time jobs that want full-time work, is north of 16%.
- The oncoming “prime” foreclosure crisis could make the subprime scenario look like a summer picnic. The Mortgage Bankers Association reported that prime fixed-rate loans now account for one in three foreclosure starts.
- Cash for Clunkers gave the US government the chance to rearrange some deck chairs and call the Titanic safe, but the decorating won’t matter much. Even adding in a small bounce from this auto welfare program, GM posted a 20% decline in sales in August and Chrysler saw a 15% plunge. And when the no-interest grace periods end and the car payments begin for the unemployed or underemployed who rushed out to buy too soon, will Uncle Sam be there to pay for that too?
- President Barack Obama’s recent 10-year budget forecast of a $9 trillion deficit is enough to make your mouth pucker even before you realize that this forecast assumes a full-economic recovery.
The meaning of all of this is that precious metals are the right choice for those who want to protect their wealth and future. Whether or not foreign countries stop financing our future, home prices no longer magically rise, or the dollar continues to buy less and less, silver and gold will still be the ultimate standard and the ultimate safe haven. Those who have bought precious metals in the past already know this and those that are about to buy will soon discover this truth.
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.
Summer’s Over!
by Northwest Territorial Mint Staff
As the seasons turn, those who seek to acquire precious metals may want to take into consideration the cycle of precious metals pricing.
For example, in 2006 and 2007, the average price for all of the precious metals – silver, gold, palladium, and platinum – finished the year higher than they finished the first half of the year.
In 2008, that trend reversed, but by February of 2009 gold, at $944.14, had eclipsed the mid-year 2008 average. (The other three metals have thus far lagged in their recovery.)
| Gold | Silver | Platinum | Palladium | |
|
||||
| June 06 | $597.66 | $10.83 | $1,191.76 | $318.44 |
|
||||
| Dec 06 | $629.37 | $13.31 | $1,125.36 | $330.05 |
|
||||
| June 07 | $656.08 | $13.14 | $1,289.36 | $371.45 |
|
||||
| Dec 07 | $807.37 | $14.41 | $1,497.90 | $355.17 |
|
||||
| June 08 | $891.14 | $17.06 | $2,049.05 | $454.10 |
|
||||
| Dec 08 | $824.62 | $10.42 | $850.89 | $179.50 |
|
||||
| Feb 09 | $944.14 | $13.51 | $1,042.95 | $209.29 |
|
||||
Source: Northwest Territorial Mint closing prices.
Looking longer term, the mean difference from the average for the second quarter of the year to the average for the fourth quarter of the year for gold has been 5.97% since 2001. That means the average price of gold has been nearly 6% higher at the end of the year than mid-year.
Silver hasn’t quite come back all the way from its highs of March 2008, but since 2001 it has averaged 6.42% higher in December than in June.
Of course, the future can’t be predicted solely on the past. Even using these data there are exceptions.
But there is a lesson here. Using this cycle of pricing may be a benefit to you once you have decided to invest in precious metal. As August ended — a month where gold closed slightly lower than it opened and silver gained 4% — market forces drove precious metals substantially higher in a matter of days. Those anticipating a fall move must feel a sense of satisfaction as they look at the mid-September prices.
Only time will tell whether this price rally will continue. But history, as well as lingering doubts about the nation’s (and the world’s) current economic circumstances, may lead one to rationally conclude that any investment made now in gold, silver, platinum, or palladium will hold its value. And that is one of the reasons to own precious metals, regardless of their current price in dollars, yuan, or euros.
A Tour of the Silver Summit
by Northwest Territorial Mint Staff
The 2009 Silver Summit, taking place Sep 24-25 in Spokane, WA, arrives at a pivotal point in the silver industry. Since the first year of the conference in 2003, silver has spiked from $5 to north of $16 per Troy ounce and the Silver Summit’s attendance has spiked right along, going from 80 attendees and six companies in the first year to over 1,000 attendees and over 50 booths expected this year. This year’s conference, located at the historic Davenport Hotel in downtown Spokane, promises to be an exciting combination of silver mints, mining companies, and the leading silver experts and analysts in the industry. Northwest Territorial Mint asked some of this year’s event organizers, speakers, and attendees about their thoughts on silver.
Silver in History
Silver has been used as money for thousands of years, by the greatest civilizations throughout history as Michael Dirienzo, Executive Director of the Silver Institute, points out. “As early as 700 B.C., the Mesopotamian merchants used silver as a form of exchange, “Dirienzo said. “The ancient Greeks mined the drachma, which contained one-eighth of an ounce of silver, and the Romans used the denarius, weighing one-seventh of an ounce, as their basic coin.” A.I. Macdougall, Silver Summit presenter and consultant to the U.S. Silver Corporation, points to silver’s fundamentals to explain its advantages as currency. “It’s easily recognizable, limited in supply, finely divisible, portable and accepted everywhere as valuable – it’s a very good money instrument.”
Silver in Industry
Much more so than gold, silver’s industrial applications see it used in a variety of technologies and industries. David Morgan, silver expert, occasional contributor to this publication, and author of the Morgan Report said, “Silver is essential to a high technology society. All electrical, electronic, and communications depend upon silver.” Silver’s unique healing properties keep it at the forefront of medicinal applications, according to Silver Summit co-founder David Bond. “Silver today is being rediscovered as a very effective, and non-invasive antibacterial agent that can treat many illnesses both external and internal. Unlike many drugs, the body and the bugs that attack it develop no tolerance to silver. So you don’t need bigger or more refined doses to treat an ailment.”
Silver as Investment
The gold/silver ratio, the quantity of silver (in Troy ounces) required to obtain one ounce of gold, is currently moving near 60 and closing in on 2008’s average of 58. As much as gold’s Labor Day move above $1,000 sent pulses racing recently, silver is still outperforming gold for the year. As a wealth-protector and as a means for portfolio diversification, silver offers investors an abundance of advantages according to Morgan. “It is a hedge for anything. In poor times silver is a safe haven; in good times, the demand increases due to higher wealth. The wealthier a nation, the more use of silver per capita.” Offering even more support for the future of silver as an investment, Bond notes, “We consume about 200 million more ounces of silver every year than we produce. The difference historically was made up from above-ground supplies (government holdings) but those now appear to be used up. I like any commodity we use more of than we produce.”
Silver’s Premier Investment Conference
Whether you’re a dedicated silver enthusiast or investor considering adding its wealth-preserving properties to your portfolio, the Silver Summit promises a wealth of information and knowledge. Shauna Hillman, Silver Summit Director, also points to the quality of attendees that makes the conference different from other precious metals events. “What really stands out at the Silver Summit is our audience – they might be some of the most well-educated precious metals investors in the world,” Hillman said. Those who attend are sure to increase their understanding of the important role silver plays in our society, while benefitting from being at the center of the industry.
And, if you are coming to the conference, don’t forget to stop by Northwest Territorial Mint to see our one-of-a-kind “Ton of Silver” event. (Bring your camera!)
Precious Metals Worldwide
News & Trends from Around the Globe
Gold Demand Remains High According to World Gold Council Report
Investment demand for physical gold remained very strong in the second quarter of 2009, rising 12% against year-earlier levels as investors continued a flight to quality according to the Q2’09 Gold Demand Trends report published by World Gold Council (WGC).
The report shows retail investment, which includes demand for physical gold in the form of bars and coins, had another healthy quarter. Net retail investment was up 23% relative to the previous quarter and 12% on the levels of Q2’08 as investors, specifically those in western countries, continued to seek out gold for its unique wealth preservation qualities.
Gold investment demand rose to 222 metric tons, a 46% increase against year-earlier levels, but less than the extreme highs experienced during the previous three quarters when the economic and financial crisis was at its peak.
Russian Palladium Reserves Decline May Boost Price
The depletion of Russia's stocks of palladium could boost the price of palladium according to Mining Weekly Online.
African Rainbow Minerals’ (ARM) CEO Andre Wilkens said that Norilsk of Russia, which ARM partnered in nickel with in South Africa, was currently down to its normal monthly levels of palladium production. "I have met with four of their senior directors in the week and they've assured me that they have no stockpile of palladium. They only have normal production in the pipeline," Wilkens said.
Industry analysts expect palladium to be in deficit when developed-world car sales take off and when combined with Asian growth. Analysts also expect palladium prices to approach $300 per Troy ounce after being as low as $150 per Troy ounce, but not expected to return in the near term to its heady level of $1,000 per Troy ounce at the start of the decade.
Best August Ever for Silver Eagles Sales
The United States Mint sold 2.13 million Silver Eagles during the month of August, its best month since the series launched in 1986 according to Coin News. Even though August is traditionally a weaker sales month, unprecedented investor demand drove the sales of the U.S. Mint-manufactured Silver Eagles. Through the first eight months of 2009, the US Mint sold 18,764,500 Bullion Silver Eagles. Should the U.S. Mint stop selling the silver coins today, 2009 would still rank as its second best year ever, right behind 2008.
Additionally, 838,500 Bullion Gold Eagles have been sold this year through the end of August — with four months of sales still left — placing 2009 in the fifth position for best yearly sales since 1986.
Gold Breathalyzer Developed for Cancer Detection
A team of researchers in Israel has developed a gold breathalyzer that may lead to a breakthrough in lung cancer detection, according to Science magazine.
By coating tiny nuggets of gold with a thin layer of organic material, the researchers have developed an “electronic nose” that, with some additional work, could spot lung cancer instantly by analyzing someone's breath. The research team discovered that with gold, patients don't have to avoid alcohol, coffee, tobacco, or food before tests, all of which had confounded previous devices.
Information provided here should not be considered as advice or as an offer or enticement to buy, sell or trade. The contents of this publication, including any opinions and analysis, are strictly intended for educational use. Opinions expressed in bylined articles are those of the individual author and do not necessarily reflect the views of Northwest Territorial Mint. Furthermore, information obtained from all quoted sources is believed to be reliable and is offered in good faith. Northwest Territorial Mint does not accept responsibility for any trading losses incurred from reliance upon this information. Readers are encouraged to consult with a financial advisor before making major investment decisions.
This is not an unsolicited e-mail. You were sent this newsletter because you have either purchased products from Northwest Territorial Mint or have requested receipt of promotional information. If you prefer not to receive commercial e-mail from Northwest Territorial Mint, or if you have changed your e-mail address, please reply to this e-mail and let us know. To help ensure that our messages go straight to your inbox and display correctly, add Announcements@nwtmint.com to your Address Book or Safe List.