 |
 |
 |
 |
 |
 |
 |
As Precious Metals Monthly went to press, gold hit record highs, surging above $1,580 an ounce.
Gold’s mid-July surge follows on a disappointing June, which produced lower prices for the four precious metals. Silver, gold, palladium and platinum all finished lower from May’s close, with silver seeing the biggest drop.
Gold and silver lost ground amid Greece’s approval of austerity measures to secure emergency funding and avoid a debt default. Gold also traditionally trades weaker during the summer months.
Gold opened the month of June at $1,533.59 per ounce, finishing at $1,501.01 per ounce, down 2.1%. Gold saw a high during June of $1,559.42 and traded as low as $1,493.30.
Silver has tumbled steadily from 31-year highs in late April and early May. It opened the month at $38.31 per ounce, closing at $34.63 per ounce, falling 9.6%. It traded as low as $33.55 and as high as $38.57.
Platinum began the month trading at $1,830 per ounce. It finished out the month down 6.1% at $1,718. It traded as low as $1,671 and as high as $1,852.50 per ounce.
Palladium began the month trading at $779.25 per ounce. It closed the month at $755.25 per ounce, a 3.1% drop. Palladium reached a high of $821.75 per ounce for the month of June, and hit a low of $724.00 per ounce.
The June gold/silver ratio — the quantity of silver (in Troy ounces) that one ounce of gold will purchase — rose for the second month in a row. It finished the month of June at 43.34, compared to 40.05 in May. The last two months follow steady declines for the gold/silver ratio (32.57 for the month of April, 38.03 at the end of March, 41.56 at the end of February and 47.39 at the end of January). Despite the recent rise, silver is still showing a dramatic increase in value relative to gold. As a comparison, two years ago, the gold/silver ratio was above 83, with gold selling at $804.60 and silver at $9.64.
| Jun Spot Price Summary (U.S. Dollars) | ||||
| Silver | Gold | Palladium | Platinum | |
 |
||||
| High | $38.57 | $1559.42 | $821.75 | $1852.50 |
|
||||
| Low | $33.55 | $1493.30 | $724.00 | $1671.70 |
|
||||
| Open | $38.31 | $1533.59 | $779.25 | $1830.00 |
|
||||
| Close | $34.63 | $1501.01 | $755.25 | $1718.00 |
|
||||
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.
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 |
|
MyBullionTracker |
|
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 June 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 June, 2011. 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 June 2011.
I'm Not Unemployed, I'm a Day Trader
by Ross Hansen
Every day millions of people put their own money on a bet, hoping to win big. They’re not at the roulette wheel or black jack table in Las Vegas or Atlantic City. Many are sitting right in front of their own computer, trading stocks and commodities online.
The rise of online day trading began with the advent of the Internet and was quickly fueled by the dot-com boom of the 1990s. When the dot-com company bubble burst many of these new day traders lost substantial sums of money and the electronic speculative surge took a well-needed breather.
However, since the dot-com mania bubble burst, electronic trading has been on a steady march, gaining in popularity and surging to all-time highs. Stocktrading.com says just in the last year the number of people trading online increased to five million.
Many of these “day traders” are amateurs -- fueled by get-rich-quick seminars, a plethora of books and a ceaseless hailstorm of advertising -- who’ve been caught up in the casino that is online trading. Many of these new day traders are the recently under- or unemployed professionals who are not only motivated by a common aspect of human greed, making money as quickly and easily as possible, but by pride. It’s much more face-saving to tell friends and neighbors you’re a day trader than still looking for a job.
But here’s the good news. This massive increase in stock volatility, while not making the day traders rich, has sure helped the profits of the financial institutions. The financial sector once rarely accounted for more than 20 percent of total corporate profits. Now, it is America’s most dominant sector, making up one-third of U.S. profits, while accounting for less than ten percent of the value added to the economy.
Day traders aren’t exactly reporting similar profits. Several studies show that most day traders lose money. The “Reality Based Trading Company” says the ratio of losers could be as high as 95% with merely one percent making an actual profit. Most of these “losers” are among new day traders, especially amateurs who aren’t fully knowledgeable about the stock market.
Even at professional firms, a high percentage of day traders lose money. Several industry insiders have also suggested that day traders who use software at home are among the biggest losers, compared to professional day trading firms. The difference between the amateur loser and the professional loser is the amateur is losing his own money. The professional is losing someone else’s money.
Like Las Vegas, Wall Street does not build all of those shiny, expensive buildings to give the money away. Like a card room, Wall Street rakes a portion of the pot off each hand, taking in its own profit.
So, if you’re into gambling, I would suggest that you go to Las Vegas -- at least in Vegas, the drinks are free.
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.
- top -
by Northwest Territorial Mint Staff
As we enter the summer months, many people are more concerned with planning vacations than with trading gold. As a result, not much usually happens to precious metal prices from June through August. Any big rallies tend to happen in the fall. Summers in the metals markets are referred to as “slow.”
Most summers haven’t had as many major economic events taking place as the summer of 2011 does, however. Debt problems are looming in Greece, Portugal and Ireland. The second part of the Federal Reserve’s Quantitative Easing program, dubbed QE2, ended in June, with no definite plans to launch a third round. And Congress must find a solution to raising the debt ceiling or risk the almost unmentionable possibility that the U.S. may itself default on its debt for the first time. Normally, any one of these could cause significant movements in precious metals prices. The combination could be enough to make this summer an uncharacteristically eventful one.
To find a time in the past that was an exception to the “Slow Summer” rule, one has to look back nearly thirty years to another period of debt problems: the summer of 1982, when Mexico defaulted on its debt in August of that year. Here’s how that summer played out. Movement in the price of gold was slow during June. The metal started the month around $319 in London and June prices ranged from a low of $297 to a high of $329. On July 12 gold passed the $340 mark and got as high as $367 before finishing the month back where it started at $343 an ounce. The big upward action started on August 18, when gold climbed to $358. It finished August at $412 (an increase of 29% over the June 1 price) and the rise continued into September, when it reached a high of $466 for the year on September 9.
June and July trading seems unruffled by the end of the Fed’s quantitative easing program, during which the Fed has been buying back long-term Treasury bonds in order to push down their yields and, effectively, lower interest rates on loans for businesses and consumers. If the Fed does not institute a new third round of quantitative easing, interest rates may rise, which could have a negative effect on gold prices. Any signs of renewed weakness in the US economy could lead straight to a QE3 program, in which case, one would expect gold prices to rise.
Greece’s debt problems are still unresolved, with a chunk of money needed by the end of July to make it possible for Greece to pay wages or pensions by month’s end. A failure by the Greek government to find a way to pay back the debt could create big shockwaves in the world’s financial system and cause a rise in gold prices. While there is no official timeline for the Greek debt saga to be resolved, it continues to cast a shadow over the financial markets this summer and may very well be brought to a head. Spain, Portugal and Ireland are also struggling to service their high levels of debt and credit rating agency Moody’s has speculated that a default by Greece could lead to defaults by Portugal and Ireland.
The third financial drama unfolding this summer is the U.S. government’s own. The government reached its borrowing ceiling on May 16 and can’t issue more debt to pay its bills. Since then, Treasury Secretary Tim Geithner has stopped making payments to some Federal retirement funds and is using that money to keep the government functioning until August 2. Although the government could make drastic spending cuts to keep from defaulting on its debt for some period of time after that, many analysts believe that an agreement to raise the debt limit must be reached before the August date in order to prevent a major negative reaction by the world financial markets. This could send gold soaring, since it would cause the dollar to plunge.
Precious metals investors could also likely see prices jump because real interest rates are deeply negative. This means the rate of inflation is higher than Treasury bond yields. Historically, commodities - especially precious metals - outperform hugely in a period of negative real interest rates. Because inflation will certainly erode the return on bonds, investors would rather hold gold.
If government bond yields move back up to the point where bondholders are making more than inflation, then analysts predict gold will become a sell commodity.
All of these have the potential to shake up the precious metal markets’ normally sleepy summer. It could be a bad time to take your eyes off of gold.
...
- top -
Proposed Legislation May End Capital Gains Tax on Precious Metals
by Northwest Territorial Mint Staff
Utah Senator Mike Lee proposed legislation to end capital gains taxes for gold or silver coins. Senator Jim DeMint of South Carolina and Senator Rand Paul of Kentucky introduced the Sound Money Promotion Act in late June to do just that. The legislation would treat gold or silver coins the same as U.S. currency in transactions, making it legal tender.
Right now the Internal Revenue Code defines gold, silver, platinum and palladium as “collectibles” when held in the form of coins or bullion. This puts coins and precious metals in the same category as other collectibles such as stamps, fine wines, antiques and fine art.
The proposed legislation follows in the footsteps of recent changes in Utah, which became the first state in the nation to make gold or silver coins functional as legal currency. The state also removed any state capital gains taxes. Now, 12 other states are considering making gold and silver legal tender alongside U.S. dollars, or are already taking steps to do so. Those states are: Washington, Montana, Colorado, Iowa, Oklahoma, Missouri, Indiana, Tennessee, Georgia, New Hampshire, South Carolina, and Vermont.
Senator Lee hopes the legislation before lawmakers in Washington, DC will be a step toward what he calls a more stable and sound currency. Lee says the U.S. dollar has lost about 98% of its value since the creation of the Federal Reserve nearly 100 years ago, mostly from what Lee says is the Fed’s printing press.
The law would not reinstate the “gold standard,” in which paper money, or electronic digits, would represent the value of the precious metals that are held and owned by the central banks. Instead, with gold and silver as legal tender, people would actually own the metal. Gold and silver could be used alongside U.S. currency as legal tender, with the same convenience.
Utah Republican state Rep. Brad Galvez backed the landmark bill in his state, mostly to serve as a protest against the Federal Reserve’s monetary policy. Galvez says Americans who are losing faith in the dollar and angry about government debt should just stop using cash and start using their gold and silver. The goal wasn’t the “gold standard” but rather an alternative currency.
The goal, Galvez hopes, isn’t to pass a law that’s merely symbolic. Rep. Galvez wants to strengthen and put the law to practical use. That’s likely something precious metals investors, other states, lawmakers, and the Federal Reserve will be watching closely.
For now, the Utah law doesn’t require merchants to accept the coins at either face value or market value, and there’s no indication the coins will eventually be adopted at face or market value. Plus, walking around town with pockets full of gold and silver isn’t practical. That could lead to the rise in banks where members can leave their gold and silver deposits and use debit cards that are backed by those deposits.
One thing that is clear is that sales of precious metal coins will no longer be subject to state taxes on capital gains in the Beehive state. Backers of the Utah law as well as the law before the U.S. Senate hope it sends a strong signal to Congress and the Federal Reserve that their monetary policy is failing.
...
Northwest Territorial Mint does not advise on any personal income tax requirements or issues. Material discussed in this article is meant to provide general information only and does not represent personal tax advice, either express or implied.
- top -
Greek Crisis Comes Up Gold
by Northwest Territorial Mint Staff
The ongoing European debt crisis could be a golden opportunity for precious metals investors.
Over the last several months gold has seen major benefit from investor anxiety over the situation in Greece and its potential to affect the rest of Europe’s economy, along with the economic effect from the earthquake, tsunami and nuclear crisis in Japan. Gold prices have risen nearly 8% over the past six months, with prices rising fairly steadily until a sharp spike in May amid concern about Greece’s ability to pay back debts. Gold briefly tumbled from May’s high of $1,557.51 and remained on an up-and-down, though mostly upward, trend through June. It tumbled into July on the COMEX before rebounding sharply recently.
Gold spot prices rose on worries about the Greek situation and, despite recent dips on news the debt could be resolved, one analyst suggests it will continue to do well in the months ahead. The reason being is when gold dips, places in an economic upswing, like China, will divert more money into gold. Where the euro was once seen as a safe-haven currency, shaky deficit financing in Greece, Ireland, Spain and Portugal -- with hints of even more countries -- is turning more investors to gold as a safer, alternative asset.
One asset management firm compares gold to a mirror that reflects concerns over global economic and political events. Investors have always fallen back on gold during troubled times. With gold up more than $1,000 from five years ago, newer precious metals investors are taking interest, hoping to ride the wave of annualized returns of around 25%.
Even after the Greek debt crisis passes, gold is likely to still be seen as a safe haven. The volatility of Europe’s debt crisis could make gold the premier asset to own. If the European Central Bank were to mark the Greek debt to market (in other words revalue the debt at its current market value) it would take a hit of 25 billion euros. That would bankrupt the ECB unless it got large capital inflows from the rest of the member nations, or issued more bank notes to cover the deficit. That would fuel inflation and reduce confidence in the euro as a major currency. While neither option would be good for the euro, both would lead to large gains for the US dollar and gold.
Traditionally the dollar has an inverse relationship to gold. This is because gold is typically used as a hedge against inflation through its intrinsic metal value. As the dollar’s exchange value decreases, it takes more dollars to buy gold, increasing the price of gold. Lately, that hasn’t been the case. The past few years gold and the dollar have at times risen together. Analysts suggest this is because both the dollar and gold are seen as safe havens away from equities that could lead to a market meltdown.
...
- top -
Precious Metals Worldwide
News & Trends from Around the Globe
South African Gold Miners Threaten Strike
Just as spot gold prices hit new highs, South Africa’s main gold miners were preparing for a strike.
The country’s National Union of Mineworkers said wage talks had deadlocked with the big three gold miners. The NUM is looking for 14% raises for workers. AngloGold Ashanti, Gold Fields and Harmony are offering raises of between 5 and 5.5%.
The big three miners are the world’s third, fourth and fifth largest producers of the precious metal. A strike could lead to disruptions in production, and could factor into price increases.
Platinum, Palladium Supply Affected
By Japan Earthquake
The earthquake that struck Japan is leading to speculation of a surplus of platinum. The impact of the March earthquake lowered the country’s auto production to its lowest level in nearly three decades. Platinum is an essential component in making catalytic converters for automobiles.
Supplies of palladium, which is also heavily used in the production of catalytic converters, could also rise.
Bernanke Faces Off with Ron Paul Over Gold
Federal Reserve Chairman Ben Bernanke had this to say to Texas Republican Ron Paul: “Gold isn’t money.”
During Bernanke’s monetary policy report to Congress on July 11, Representative Paul publicly pushed Bernanke out of his comfort zone, bombarding him with questions about gold.
Asked if he thinks about the price of gold when he wakes up in the morning, Bernanke responded that he pays a lot of attention to it. When Rep. Paul bluntly asked Bernanke if he thinks gold is money, the head of the Central Bank responded, “no, gold is not money, it’s an asset. Treasuries are an asset, people hold them, but I don’t think of them as money.”
...
- top -
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.
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.