The month of January was mixed for precious metals. Gold and Silver incurred slight pullbacks, while Platinum and Palladium gained at a steady pace. Pricing began to pick up at the end of the month as political unrest in the Middle East reaffirms the safe haven value of precious metals.
Gold opened the month of January at $1,420.92 per ounce, finishing the year at $1,339.35 per ounce. Gold reached a high for the month of $1,424.59 per ounce, and a low of $1,309.60 per ounce.
Silver prices in January opened at $30.90 per ounce, and closed at $28.26 per ounce. Silver hit a 30-year high of $31.23 per ounce, and a low if $26.46 per ounce. Silver has traded mostly in the $28.00 to $29.00 range for January.
Platinum began the month of January trading at $1,772.50 per ounce. It finished the month strong at a price of $1,806.00 per ounce. Platinum reached a 2-year high in the month of January, trading at $1,853.50 per ounce, and at a low of $1,713.00 per ounce.
Palladium continued its impressive run, opening the month of January trading at $804.50 per ounce. It finished the month at $824.75 per ounce. Palladium reached a high of $830.50 per ounce for the month of January, and hit a low of $743.00 per ounce.
The January gold/silver ratio—the quantity of silver (in Troy ounces) that one ounce of gold will purchase—finished at 47.39 (versus 45.97 at the end of December and 49.36 at the end of November). The ratio increased slightly in January, reflecting the slight pullback in gold and silver prices.
| Jan Spot Price Summary (U.S. Dollars) | ||||
| Silver | Gold | Palladium | Platinum | |
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| High | $31.23 | $1424.59 | $830.50 | $1853.50 |
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| Low | $26.46 | $1309.60 | $743.00 | $1713.00 |
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| Open | $30.90 | $1420.92 | $804.50 | $1772.50 |
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| Close | $28.26 | $1339.35 | $824.75 | $1806.00 |
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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 January, 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 January 2010.
Don't Get Trampled by the Precious Metals Hoarders
by Ross Hansen
Here it is, February 2011, and gold is trading well above $1,300 with silver pushing against $30, not to mention palladium well above $800 the ounce. Everybody, and I do mean everybody, has a reason or three as to why prices have reached these lofty levels. Some say it is demand from China and/or India. Or is it that Mr. and Mrs. Average Investor are investing in gold and silver because they want “honest money”? And some believe that 90% of all the silver ever mined has been lost through industrial demand, and that there may only be 10 years of silver left in the earth’s crust.” Et cetera, et cetera.
But I would suggest another possible “factor” in regards to why gold and especially silver prices are so high right now. In a word (actually a word and an acronym), the answer could be “speculators” and “ETF.”
A speculator buys something at a certain price in the belief that he or she can sell it later to someone else at a profit. “ETF” is an acronym for “Exchange Traded Fund.” An ETF is essentially an index that trades like a stock. Unlike a mutual fund which only trades once a day, an ETF can be bought and sold anytime during normal market hours. The first ones came onto the investment scene in the late 1980s and were designed to track stock indices like the S&P 500. Now there are precious metals bullion ETFs too, such as GLD (gold), SLV (silver) and WITE (silver, platinum and palladium).
One thing that ETFs have in common with each other is that when shares are purchased, the funds buy a certain amount of the underlying item, be it shares of a company, a commodity, or precious metals. A fund custodian issue shares (which the public buys). Then the custodian purchases and stores gold and silver bullion for the fund. When customers redeem their shares, the fund sells some of its bullion back into the open market. The first gold ETF began trading on the New York Stock Exchange in 2004. In 2008, the first silver ETF began trading. Since ETFs haven’t been trading through an entire market cycle (bull and bear) yet, we don’t know for sure just what kind of effects they are going to have – on a company’s shares or on the price of a commodity they buy and sell.
The above chart shows how the price of gold has shot from around $350 per ounce in 2003, with almost no gold ETF holdings to speak of. Fast-forward to late 2010. ETF holdings had increased by orders of magnitude, to over 2,000 metric tons, and the price of gold had shot up to $1,400 an ounce.
Certainly prices were pushed up by investor demand for gold bullion coins like the South American Krugerrand, Canadian Maple Leaf and American Gold Eagle, as well as Central Bank buying, and an increase in jewelry sales. But would gold now be trading at such a lofty level had over 2,000 metric tons had not been taken off the market? Consider that if GLD was a country, it would be ranked as one of the top 10 gold holders!
A similar situation exists with silver. Even when the idea of creating a silver ETF was just being discussed, the Silver Users Association commented that “the proposed silver ETF could be a legal way for investors to squeeze the silver market.”
About 350 million ounces of silver have now been gobbled up by SLV. According to the World Gold Council, the gold bullion figure for GLD is around 2,700 metric tons, worth $87 billion. The public has been buying a lot of shares in these ETFs lately, but what they may not realize is that speculators have been doing the same thing. The silver and gold in these ETFs is not being consumed, just taken off the market and stored... but for how long?
One must remember that sales to gold and silver ETFs are not sales of consumption, but sales of speculation.
What happens when the day comes – as it certainly will – that the “hot money” decides to sell a boatload of its SLV and GLD shares, sending a wave of silver and gold bullion back into the market? Will prices hold up or crater?
It’s good bet that one of these days we are going to find out. It reminds me of the housing boom that turned into a bubble. At some point, all those houses built on “spec” were supposed to get sold and lived in. And, at some point all that gold and silver that the ETFs have been storing must come back into the market to be used.
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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Is there a Legal Tender Silver Coin in Mexico's Future?
by Northwest Territorial Mint Staff
For a number of years, Mexican multi-billionaire Hugo Salinas Price has championed the cause of introducing a legal tender silver coin into his country’s monetary system. His proposal has been to monetize a one ounce bullion coin, the Libertad,so as to allow it to circulate freely alongside the Mexican Peso. The Libertad is currently minted by the Mexican Central Bank, not for use as legal tender, but as a numismatic coin only.
In 1979, an attempt was made by the President of Mexico to monetize a silver coin – called at that time a “Silver Scales Ounce.” A number, based upon the value of silver in the international precious metals market was assigned to the coin. In less than two years, the plan was abandoned because the value of the coin’s silver changed from day to day, thus making the coin a commodity rather than a unit of monetary exchange. Under the circumstances, when the price of silver dropped, the coin did not circulate; when the price of silver rose, it made sense to sell the coin to a refinery to be melted down, since the silver value exceeded what the coin could purchase when used as money.
Mexican Libertad 1 ounce Silver Bullion Coin
Price points out that since ancient days, sums of money were calculated for trading purposes on the basis of the weight of the gold or silver coins – different than is the case today for virtually all fiat money (money not containing or backed by gold or silver) – which have been assigned numeric values, e.g. the US $20 bill, the Chinese 100-yuan (meaning “lump” – originally of silver) note, etc.
Interestingly the Mexican peso was the first currency in the world to use the “$” sign – later adopted by the United States for its own use. Even more intriguing is the translation of the Spanish word “peso” – which in English means “weight.” It was first used in reference to pesos oro (“gold weights”).
As Price points out, since the days when the Chinese first invented it, paper money has always eventually declined in purchasing power to its intrinsic value – zero. Consider that due to inflation’s ravages the purchasing power of the 1913 US dollar is now about 4 cents. South Americans have fared much worse. Since 1930, Argentina has removed 22 zeroes from its currency.
Price summarizes his goal succinctly, noting: “The essence of the project to monetize the Libertad silver ounce and what gives it originality, is that it builds a bridge between real money as it existed in the world before 1914, and fictitious, or fiat money, which is in use all over the world today… This is the keystone of the bridge between fictitious money circulating in the world today and real money with silver content: a nominal value, attributed by the monetary authority, which cannot be reduced, but which may be readjusted upward according to the rise in value of silver.”
Restated this idea, the circulating silver coin would have no engraved value but would have a nominal engraved value – which could be raised (if/as the price of silver rises) – but would never be lowered.
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There's Still (big) Gold in Them Thar Hills!
by Northwest Territorial Mint Staff
For thousands of years, cross cultures and historic time frames, Gold has fascinated humankind. If even the subject of gold is intriguing, then the discovery of a large nugget really gets people’s attention!
Last spring, a 100 ounce monster was discovered near the site of the California Mother Lode Gold Rush mining camp of Washington. As was the case with a nugget several times larger discovered in Australia last fall, this one, labeled the “Washington” nugget, was uncovered by an amateur gold hunter using a metal detector.
At auction, this rare find will most likely go for 2 – 3 times gold’s spot price, now hovering just below $1,400/ounce. Factors influencing how much a nugget will bring include its purity, shape, size and esthetics. This last consideration is often in the eye of the beholder. Like a piece of real estate, a painting or even an automobile, people “know what they like”. If a bidder with a large enough bank balance takes a shine to this nugget and a bidding war ensues, the sky could literally be the limit.
The auction is being staged by Fred Holabird, through his Reno-based memorabilia company, Western Americana. Holabird believes this trophy is the largest California nugget still in existence, the rest having most likely been melted down and fashioned into gold bars.
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Precious Metals Worldwide
News & Trends from Around the Globe
Chinese Gold Demand
Figures for 2010 “Stun” Traders
Seizing upon what many seem to believe is a great “hopportunity” to buy gold during 2011 – the Year of the Rabbit – Chinese citizens are purchasing the yellow metal in quantities which have surprised traders in London and New York. Mineweb reports that buying volume during the start of the Chinese New Year has caused premiums in Shanghai to rise substantially. The normally staid (London) Financial Times quotes traders as saying, "The demand is unbelievable. The size of the orders is enormous.”
Looking back at import totals for the past year, it appears that in regard to domestic gold production (which remains in country) plus bullion imports, China soaked up about 650 metric tons - about 25% of global gold production all by itself.
Record Silver Eagle Sales for January 2011
The United States Mint reports that January 2011 sales of the one-ounce American Silver Eagle bullion coins were 6,422,000. This broke the previous monthly record set in November of last year by more than 50%. For nine years of the 24-year merchandising history of this coin, annual sales were less than what has been sold during the first month of this year alone.
CoinNews.net remarks: “Whether or not this sales trend will continue is uncertain. What is known is the fact that with just one month completed, 2011 already ranks as the 16th best year ever for the coins since they were first being introduced over a quarter of a century ago in 1986. In fact, the sales would only need to double for 2011 to become the fourth best annual record holder — a feat it should easily accomplish given that eleven months remain in the year.”
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Contents © 2011 Northwest Territorial Mint.
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.
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