Following a record-setting 2009, gold and silver opened up 2010 strongly before cooling off to end the month. Palladium and platinum maintained strength to finish the month slightly up. After its early-month surge, gold finished the month down 1% and silver finished down 4%. Gold and silver both peaked mid-month, up 8% and 18% off their respective lows. Palladium and platinum also saw their highs in the middle of month, reaching 17% and 13% respectively when compared to their January lows.
Gold/Silver Ratio
The gold/silver ratio — the quantity of silver (in Troy ounces) required to obtain one ounce of gold — finished above 66, inching up from its January close of just under 65. The last time the gold/silver ratio reached this level was in August 2009. Silver continues to be priced relatively cheaply compared to gold, but it is slowly making up ground.
| January Spot Price Summary (U.S. Dollars) | ||||
| Silver | Gold | Palladium | Platinum | |
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| High | $18.92 | $1162.97 | $476.25 | $1658.00 |
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| Low | $16.04 | $1076.10 | $409.50 | $1470.50 |
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| Open | $16.93 | $1098.80 | $410.50 | $1470.50 |
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| Close | $16.30 | $1084.26 | $419.50 | $1519.00 |
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CONTENTS
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Market Summary - January 2010 |
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Ross Hansen: Own Gold, Don't Idolize It |
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Palladium 101: A Closer Look at a Lesser-known Metal |
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The DJIA, the Dollar, Gold, and the Recovery |
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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.
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CHARTS
The following charts display the daily low and high spot price of each metal for the month of January, 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 January 2009.
Own Gold,
Don't Idolize It
by Ross Hansen
The story of the Golden Calf has been on my mind lately.
In the Bible, when Moses went up Mt. Sinai to receive the Ten Commandments, he left the Israelites in the desert for 40 days and 40 nights. Fearing Moses had abandoned them, the Israelites built a golden calf and began to worship it. Moses came down the mountain with God’s Word in hand and, upon seeing his people worship this false idol, threw down and broke the Ten Commandments in disgust.
Now, the Israelites had just been driven out of Egypt and knew Moses was on his way to receive God’s Word. They were right on the edge of the Promised Land. Yet, because they grew a little impatient, they condemned themselves to pain and suffering.
As I survey our current global financial wilderness, I see others who have taken to idolizing the calf of gold. Out of fear, greed, or both, they’re so quick to put every ounce of their faith into precious metals that they don’t stop to think why they’re doing it.
The passions of people idolizing gold are being inflamed by those looking to profit from hasty decisions. These trumpeters push trouble, terror, or calamity and offer up precious metals as the cure for what ails you, whether it’s:
1. The Government
2. War
3. Debt
4. Global Warming
5. Next Tuesday’s Apocalypse
Whatever the problem is, the answer is always BUY GOLD RIGHT NOW! There’s quick comfort in immediate gratification, but there’s not an investment strategy.
Some things to remember instead:
Precious Metals Are an Investment
Gold is an investment and should be treated as such. Own it. Use it to diversify. Have a strategy and stick to it. If the sky IS falling, yes precious metals are attractive because they are a safe haven in times of crisis. However, to reap the true benefits of precious metals, a plan to buy and hold has its own rewards. True investment requires careful analysis backed by reason, not blind belief or fanatical devotion…even to gold.
Precious Metals Are Real Wealth
For over 5,000 years man has looked to gold and silver as real money. That’s because they exhibited all the traits of real money – durable, portable, divisible, and uniform in value. The current financial crisis hasn't changed that; in fact it’s made that even more clear than ever.
When Moses came down the mountain he burned the golden calf, sprinkled the gold in water, and then forced the idolizers to drink it. Be careful of making the same mistake the idol worshippers did.
Gold’s greatest value comes when it is owned, not worshipped. This was true in the time of Moses and just as true today.
Ross B. Hansen
CEO, Northwest Territorial Mint
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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.
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Palladium 101: A Closer Look at a Lesser-Known Metal
by Northwest Territorial Mint Staff
While gold, silver, and platinum get the lion’s share of attention in the precious metals world, it may pay to take a closer look at the lesser-known palladium. Known primarily as an industrial metal, palladium’s popularity as an investment has grown significantly. Indeed palladium’s spot price was up 120% on the year to end 2009 – far outpacing gold, silver, and platinum.
Investors looking to diversify their portfolio could discover that this useful metal offers them an attractive buying opportunity. Let’s take a look at palladium’s fundamentals:
One of the “Noble” Metals
As a member of the Platinum Group Metals (PGMs), palladium is known for its malleability and resistance to corrosion. Some are surprised to discover it is actually 30 times rarer than gold. Palladium is mined as a byproduct with other metals such as platinum, copper, and nickel. The world’s main palladium production occurs in Russia, South Africa, and North America. Of these locations, Russia accounts for nearly half of the world’s total palladium supply.
Uses
Over 50% of the total supply of palladium and its sister metal platinum goes into the manufacturing of catalytic converters for the auto industry. This technology converts up to 90% of harmful gases from auto exhaust into less harmful substances. Palladium is also an essential jewelry metal as it's one of the three metals most used (nickel and silver) to produce “white gold.” Other applications include use in dentistry, watch-making, the production of surgical instrument and electrical contacts, and in hydrogen fuel cell technology.
Physical Investment
Because of its industrial applications and supply concerns, palladium bullion has been viewed a volatile investment market. In 2009, amidst the auto industry’s worst sales in three decades, palladium opened at a low of $185/oz., before coming back to finish 2009 at $410/oz. In 2001, based on fears that Russia would stop exports, its price spiked to an all-time high of more than $1,100/oz. Though the metal has come down significantly from those highs, its recent history may indicate a strong opportunity to buy before supply issues occur again in the future.
There are several means for investors to take physical ownership of palladium bullion. The Royal Canadian Mint – the only government mint to manufacture palladium bullion – offers a .9995-fine palladium Maple Leaf. Private mints are another option. PAMP (Produits Artistiques Metaux Precieux) is acknowledged by commodities experts and investors alike to be one of the premier producers of palladium bullion products in the world. PAMP palladium bars contain a purity of .9995 and have been trusted and traded in world investment markets for over 20 years.
2010 Outlook
According to Johnson Matthey’s Platinum 2009 Interim Review, investor demand for palladium is forecast to grow by 51%. The report also suggests that a decline in palladium supply and decline in auto demand for palladium will lead to lower prices which will drive investors to palladium bars and rounds. The report also pointed to the possibility of Russian stocks of palladium to diminish in the next two to five years.
Time to Diversify and Buy?
So does this mean it’s time commit funds to investing in physical palladium bullion? If choosing to expand the variety of precious metals in your portfolio, palladium may offer you an effective means to do so. As in all investments, pursuing careful research should be the centerpiece of any precious metals buying strategy.
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The DJIA, the Dollar, Gold, and the Recovery
by Northwest Territorial Mint Staff
As the Dow Jones Industrial Average (DJIA) gained 59% from its 2009 low to its 2009 close, it permitted casual observers to begin to speak about the recovery of the economy.
The Global Times pinned the start of the recovery of the Dow to better-than-expected first-quarter results from banks. Bloomberg said that 72.3 per cent of S&P 500 companies beat the expectations set by analysts. This was not only the highest proportion to do so in 17 years, but it was additional fuel for those seeking to return to the stock market.
Gold, which traditionally moves opposite the DJIA, spent the year moving upward with it. The Dow-to-Gold ratio was 8.3 at the end of March 2009, and 9.3 at the end of December, with both measures at notable levels. (The DJIA closed at the year’s high, 10428.1, while Northwest Territorial Mint gold closed at $1,098.80, just off the year’s highs above $1,100.)
As you can see in the chart below:
In three years’ time, gold has outperformed the DJIA by more than 2:1, falling from a DJIA/gold ratio of more than 19 to 9.31 at the end of January 2010.
The dollar index...
...however, continues to trade inversely with gold, underscoring the concern investors have about keeping their wealth in American fiat. Note how the gold-to-dollar ratio increased in 2009:
The dollar declined most of 2009; only toward the end did it show strength, temporarily drawing investors away from gold.
The recent strength of the DJIA and the dollar are noteworthy, but both are still well off all-time highs, while gold has smashed through its historic high from 1980 and now lives well above that level. While no investor should make decisions based on relative price, it is prudent to conclude that gold (and with it, silver, palladium, and platinum) has returned to the investors’ mindset as a logical place to store wealth.
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Precious Metals Worldwide
News & Trends from Around the Globe
U.S. Mint Bullion Revenue Hit Record High in 2009
The U.S. Mint achieved a record $1.7 billion in sales revenue from gold, silver, and platinum bullion coins in fiscal year 2009 according to MineWeb.
Investor demand, driven by inflation concerns and uncertainty around traditional investments, resulted in 27.6 million ounces of gold, silver, and platinum bullion coins sold. This marked a 132% increase over annual U.S. Mint bullion sales since FY 2005.
Sales of American Eagles, which comprised more than 75% of total bullion sales, increased 184% to nearly $1.28 billion in FY 2009 from FY 2008. The Mint reported that 28,766,500 one-ounce silver Eagles were sold last year, smashing the previous record of 9 million coins sold in FY 2008. American Eagle platinum sales revenue increased 5.8% in FY 2009 from $22.4 million to $23.7 million.
Fresnillo Hits Silver Output Record
Fresnillo, a unit of Mexican miner Peñoles, posted a 9 percent rise in 2009 silver output to a record 37.9 million ounces, according to Reuters.
The world’s largest primary silver producer advised that production in 2010 was expected to be flat.
Annual gold production gained 5 percent to 276,584 ounces, higher than expected.
World’s Largest Palladium Producer Expects to Increase Output in 2010
Norilsk Nickel, the world’s largest nickel and palladium producer, hopes to see palladium output exceed 2.830 million ounces in 2010 according to Platinum Today.
That would exceed its 2.805 million ounce output in 2009 as well as its 2.82 million ounces achieved in 2008.
Norilsk also noted that it expects to produce between 690,000 oz and 695,000 oz. of platinum in 2010. This would exceed the 661,000 oz produced in 2009 and the 2008 figure of 650,000 oz.
China Remains World’s No. 1 Gold Producer in 2009
The China Gold Association said Chinese gold production increased domestic gold output 11% to a record 312 metric tons last year, maintaining the country's position as world's largest gold producer for the third year in a row, according to MineWeb.
The association said that China's top ten gold companies mined 148.55 metric tons of gold for 47.31% of China's total production.
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Track Your Precious Metals Investment with MyBullionTracker
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