Silver closed June 30 at $18.62. It closed July 1 at $17.88. This big drop led to silver spending the bulk of July at under $18.00. Silver carried through the month on a trading range of about $.50/oz. movement, closing up at $18.03.
Gold hit its high of $1245.12 on the first day of July, opening at $1241.35. The low was July 28 at $1157.80. Gold had traded for some time above $1200. It closed at $1182.50, down just over 5% from the high.
Palladium recovered back to its highs of June, but was still more than $70 below its year-to-date highs of April. It opened at $439.50/oz. and closed at $500.50/oz., just below the high.
Platinum continued in the trading range it has maintained since mid-May, and recovered much of what it had given up from the June highs. Platinum trended up during the last one-third of the month. It opened at $1514.50/oz. and closed at $1578.00, just below the same-day high of $1581/oz.
The July gold/silver ratio—the quantity of silver (in Troy ounces) required to obtain one ounce of gold—finished at 65.6 (versus 67.1 at the end of June, and 65.9 at the end of May). This represents a substantial narrowing of the spread during July, reflecting a higher relative silver value.
| July Spot Price Summary (U.S. Dollars) | ||||
| Silver | Gold | Palladium | Platinum | |
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| High | $18.69 | $1245.12 | $502.00 | $1581.00 |
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| Low | $17.37 | $1157.80 | $428.00 | $1491.50 |
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| Open | $18.50 | $1241.35 | $439.50 | $1514.50 |
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| Close | $18.03 | $1182.50 | $500.50 | $1578.00 |
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CONTENTS
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Market Summary - July 2010 |
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Ross Hansen: The Summer of '73 |
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Will Gold and the U.S. Dollar Continue to Tango, or Will Splitsville Return? |
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There’s Gold in Them Thar PCs! |
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Precious Metals Worldwide |
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CHARTS
The following charts display the daily low and high spot price of each metal for the month of July, 2010. 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 July 2010.
The Summer of '73
by Ross Hansen
In the summer of 1973 I was 12 years old. One day while reading a newspaper I saw an ad promoting investment in silver. Interested, I sent away for the free information kit. The modest book pictured here was in the kit that was sent to me. It convinced me that silver, and later gold, was my path to wealth, fortune and fame.
The author, Robert L. Preston, went on to write How to Prepare for the Coming Crash(1973), The Plot to Replace the Constitution(1974), and Wake-Up America, It’s Later Than You Think!(1973).
The reason I bring this book to your attention is that back in 1973 the public was in a near state of panic, feeling that our economy and the dollar were on the verge of collapse. The book was filled with charts and graphs showing the exploding national debt (1939 to 1971), plunging value of the dollar (1930 to 1972), and the sky-rocketing price of silver (1929 to 1973).
Because of this book, I purchased 51 ounces of silver, costing me a total of 212 lawn-mowing jobs ($212). Oh, how I’d like to buy silver for $4 per ounce again, or for that matter get my lawn mowed for a buck! The important fact is that this book talks about protecting your wealth against inflation, with silver. Mr. Preston’s explanation of ‘inflation’ is refreshingly simple:
When private individuals place paper money into circulation without any wealth behind it, it is called counterfeiting. When governments and central banks do it, it is called inflation. However, the effect is exactly the same; and one is just as dishonest and immoral as the other! …inflation is the increasing of paper money into circulation without putting any true value or wealth behind it. (p.44)
Today, ‘doomsday prophets’ are everywhere, talking about elitist conspiracies, fraud, theft, inflation, deflation, government duplicity, precious metals scarcity, you name it. But was it really any different when this book was written almost 40 years ago?
No, in my opinion nothing on the stage has substantially changed, just the players. Essentially, the problems remain the same, there are just more zeroes on the end of each problem. The debasement of the dollar continues. Ideas are put forward by those in power positions, but no real solutions result. The public continues to worry and stress over what is really going to happen to them, their retirements, their security.
When I bought my first silver for about $4 per ounce, my father questioned the wisdom of that purchase since silver had just recently tripled in price. Mr. Preston’s intuition and instincts about silver were correct. Silver has hedged inflation. Look at silver now hovering at $18! Where will it be 10,15,20 years from now?
“The more things change, the more they stay the same!”
Successful investing!
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.
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Will Gold and the US Dollar Continue to Tango, or Will Splitsville Return?
by Michael Trinkle
If the BP oil disaster in the Gulf of Mexico had a “golden” lining for Gold investors, it would be that it caused the global malaise of risk aversion to persist a bit longer after the debt crisis in Europe subsided. Although May seems to be in the distant past, ripples from the Greek shockwave still permeate global markets to a degree. Precious Metals 101 has taught us all that, in times of financial crisis, risk-averse capital will take flight and search for safe havens, primarily in U.S. Treasury Bills and precious metals. The European debt crisis followed textbook examples, and values for gold benefited accordingly due to increased demand in the market.
Precious Metals 201 tells us that gold is inversely correlated with the strength of the US dollar. As the price of gold rises, the dollar generally falls. Conversely, the opposite is also true. The academic underpinnings of this theory, however, are on shaky ground due to issues surrounding value. Ever since President Nixon terminated the dollar’s connection with gold in 1971, our greenback has floated in the global forex markets, as do all other major currencies, with perhaps an asterisk place over the Chinese yuan. From that day, the dollar lost its intrinsic value. Its value now is “relative” to another currency and the relative health of each respective country’s economy. Gold has always had and will continue to have intrinsic value.
Yet, there is still a tendency among analysts to draw comparisons between the value of gold and our currency markets.
The Market Oracle published a chart in early May that showed the strong divergence between the price of gold and the euro as the Greek Tragedy began to take center stage on our daily news channels.
The author, Bob Kirtley, opines on the seeming breakdown that was developing since December of last year. However, if you reversed the currency pair from “EUR/USD” to “USD/EUR”, you would suddenly see that Gold and the Dollar were joined at the hip since the first of the year, entwined in an elegant tango of sorts. Will this dance continue and what secrets lurk behind this counter intuitive behavior of late?
The change in dance partners that occurred last December is evident. News about the debt problems in Greece began to leak last November. It appears that risk-averse investors are not homogeneous in their respective reaction times to world events. Some had already begun to reshape their portfolios. As news spread and the depth of the problems became uncertain, the rest of the crowd began to rush for the exits.
The volatility of forex markets can be a testament to how swiftly capital can move from market to market when a threat is on the horizon. Forex traders were glued to their computer screens, either unwinding unprofitable carry trades or looking for quick gains from wild swings in the market. Demand for the US dollar increased as the flight to safe havens materialized, and heretofore strong currencies suddenly plunged to new depths, regardless of the nature of their respective fundamentals. The dollar and gold were dance partners that everyone craved, while other investment vehicles became spurned wallflowers.
Recently, markets have consolidated. Volatility has also lessened, but gold and the dollar continue to dance together. The speculators who are attracted to volatile markets have come and gone. Uncertainty about future prospects still exists, but actions in Europe seem to have quelled demands for major structural changes in the economies of their member states. The euro, after bouncing off support at $1.19 in early June, has headed in a 45-degree angle for $1.30, a sign of stability and far from parity with the dollar that was espoused by many. Spreads on Treasury Bills are tightening, suggesting that the iceberg of previously risk-averse capital has begun to thaw and find its way to stocks on the S&P 500.
All of these current events would also portend that the dollar will continue its weakening trend, once again resuming a relative value based purely on economic fundamentals rather than risk-based fads. The outlook for gold, however, is quite strong, sufficient enough to predict that the present tango may soon come to an end. The super profits tax in Australia, aimed at the mining industry, seems to have been watered down. Economies are heating up, such that a hedge against inflation will be a necessity in everyone’s portfolio, and with rising interest rates, money exiting from bonds will surely find a new home in Gold bullion.
Ongoing demand for gold does not necessarily abate once a crisis passes. Investors will always desire intrinsic value as a hedge against the ravages of inflation. The present sluggishness in gold prices represents a pause before an ascent to new record highs can begin.
...
Michael Trinkle has been interested in the stock market, investments, and spreading the word about currency trading for much of his life, and has most recently fulfilled this passion by working for is a writer for ForexTraders.com, an educational/informative resource center for the currency exchange market.
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There’s Gold in Them Thar PCs!
by Northwest Territorial Mint Staff
There is a new and novel way to get into the gold business, if you believe Tom’s Hardware Guide, an Internet source for computer hardware news.
- Assemble a huge pile of PC boards.
- Recover all pins and connectors (pliers and cutters needed).
- Grab a worktable loaded with special chemicals.
- Make an electrolytic cell using a lot of sulfuric acid.
- Collect the sediment in the bottom of the pan.
- Dispose of acid (be careful to avoid unpleasant “acid splash”).
- Filter the acid and gunk that is left over.
- Dissolve everything in more acid and bleach (beware the chlorine gas!).
- Filter again.
- Precipitate the gold using special chemicals.
- Recover a brown powder residue.
- Melt the powder in a crucible at 1947 degrees Fahrenheit (kitchen oven won’t work).
- Recover your tiny gold BB.
Is it safe? No. Is it viable? No. Is it gold? Yes.
As someone said, “don’t try this at home....”
On a more serious side, the ‘recoverable metals’ industry is a real source for precious metals. “Obsolete computers contain significant amounts of recoverable materials including metals from wires and circuit boards,”according to Encyclopedia of Earth. “One metric ton of electronic scrap from personal computers contains more gold than that recovered from 17 metric tons of gold ore.”
E-waste (as it is called) is the fastest growing municipal waste stream in the United States according to an Environmental Protection Agency (EPA) report (Municipal Solid Waste Generation, Recycling, and Disposal, Facts and Figures, Nov. 2008), experiencing an 8.6% annual increase, compared with only 1.2% for total waste volumes.
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Precious Metals Worldwide
News & Trends from Around the Globe
China Gold
Despite China’s status as the world’s largest gold miner, its production does not meet its own needs. Demand for gold from China’s largest sectors—jewelry and investment—reached a combined 423 metric tons in 2009, with only 314 metric tons being supplied by domestic mines (Source: World Gold Council).
The People’s Bank of China announced on August 3, that it would allow banks to hedge bullion positions in overseas markets, and urge banks to lend more to domestic gold firms looking to go abroad. Ellison Chu, managing director of precious metals with Standard Bank in Hong Kong, said, “Demand shows that basically they don’t have enough gold for themselves. Their production is not good enough to meet their demand” (Source: Reuters). Chu called it a natural step for the Chinese government to launch this kind of program and said that the country’s gold market would be opened up step by step.
An August 5 Mineweb story further asserted that, “There is perhaps more than anecdotal evidence that the Chinese government is buying gold, effectively surreptitiously, for its reserves, but not disclosing this until it reckons it is opportune so to do. Last time it announced an increase in gold reserves, it had in fact been accumulating the yellow metal for 6 years before it actually made the fact public.”
Gold to $1400, Silver to $21: Analyst Forecast
Merrill Lynch analysts are predicting silver prices of $21/oz and average gold prices of $1400/oz in 2012. They cited three developments that would have “significant impact” on these metals:
• Central banks have eased monetary policy, reflected in sharp rises of money supply;
• Government debt has soared to make up for the private sector consumption shortfall;
• Potential GDP growth rates have come under pressure.
“There is also a risk that government may ultimately try to inflate debt away, which should attract gold buyers, too,” they concluded.
Money Weekly, the UK’s best selling financial magazine, put forward its reasons for a continued rise in the price of silver based on a resurgence in its industrial use. Silver’s two special qualities are: it is the best thermal and electrical conductor available, and it is a super-effective sterilizer. The latter use is now appearing in sterile bandages, orthopedic implants and surgical clothes, and also as a biocide agent in food containers and vending machines ( Money Weekly).
Gold as a Reserve Asset: U.S. Tops List
The United States maintains the highest ratio of gold relative to total reserves of major countries. If the function of reserves is to act as a nation’s savings, the U.S. (along with France, Germany, Italy, and the Netherlands) stands best-prepared to use its gold reserves as liquidity. Commentator Julian Phillips (Gold Forecaster) believes a nation’s reserves should be at least three months of its international trade obligations.
| Country | Metric Tons | Percentage of Reserves |
| United States | 8,133.5 | 78.3% |
| France | 2,450.7 | 73.0% |
| Germany | 3,412.6 | 69.5% |
| Italy | 2,451.8 | 66.1% |
| Netherlands | 612.5 | 61.4% |
| Switzerland | 1,040.1 | 37.1% |
| Russia | 536.9 | 4.0% |
| Japan | 765.2 | 2.1% |
| China | 1,054.0 | 1.8% |
| I.M.F. | 3,217.3 | n/a |
(Source: International Monetary Fund’s International Financial Statistics, June 2009 Edition)
Reserves are composed of not just gold. Currency composition of official foreign exchange reserves (COFER) consists of: foreign banknotes, bank deposits, treasury bills, short- and long-term government securities, and other claims usable in the event of balance of payment needs. (International Monetary Fund, The COFER Database)
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