 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
Market Summary —
September 2011
If you compare precious metals prices to a roller coaster ride, then September was the month they went over the hill and hit the downward slope. It’s a good thing we’re all strapped in.
The start of fall led to falling prices for all the precious metals. Gold, silver, platinum and palladium all saw double-digit percentage drops for the month after the highs of this summer, with silver and platinum seeing the biggest losses in terms of percentage. Gold got most of the attention but had the smallest losses in terms of percentage. The Fed’s inaction beyond Operation Twist, redemption of mutual funds, margin calls at hedge funds, and slowing growth for China are all behind the bearish turn for precious metals.
Gold was down more than $300 at times during the month. It opened at $1817.04 and continued to climb to a record high of $1921.80 before the market correction set in. Throughout most of the month it traded lower, as low as $1540.83, before closing at $1629.40 for an 11% loss for September.
September was also a tough month for silver, which fell 28%, leading to good deals for investors wanting to increase their silver portfolio. It opened the month strong at $41.49 and rose to $43.54 before the bottom fell out. Silver traded as low as $26.25 before rebounding to $30.11.
Palladium started out the month at $788.75, traded as high as $795 and then dipped to as low as $607.75. In the end it closed out September at $615 for a 23% drop.
Platinum fell 28% for the month to close lower than gold. It opened September at $1857 – a few dollars higher than gold – and traded up to $1901.50, about $20 off gold’s high for the month. Platinum dipped to as low as $1476.20 and closed out September at $1527, more than $100 lower than gold’s close.
The July gold/silver ratio – the quantity of silver (in troy ounces) that one ounce of gold will purchase – shot up during the month. It finished September at 54.11, a double-digit increase over August’s ratio of 43.85. The gold/silver ratio is still well below two years ago when the gold/silver ratio was 83, with gold selling at $804.60 per ounce and silver selling at $9.64 per ounce.
| September Spot Price Summary (U.S. Dollars) | ||||
| Silver | Gold | Palladium | Platinum | |
 |
||||
| High | $43.54 | $1921.80 | $795.00 | $1901.50 |
|
||||
| Low | $26.25 | $1540.83 | $607.75 | $1476.20 |
|
||||
| Open | $41.49 | $1817.04 | $788.75 | $1857.00 |
|
||||
| Close | $30.11 | $1629.40 | $615.00 | $1527.00 |
|
||||
CONTENTS
 |
Market Summary — September 2011 |
|
Ross Hansen: Divining the Future |
|
The End of the Precious Metals Bull Run? |
|
Weeding out the Weak |
|
Precious Metals Worldwide |
CORRECTION
In the August edition of Precious Metals Monthly we reported For the first half of 2011, Mexico’s total silver output was 1.88 million metric tons (66.3 million ounces), according to the National Statistics Institute. The conversion to ounces should have read 66.3 billion ounces. Northwest Territorial Mint apologizes for the error.
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 September 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 October, 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 October 2011.
Divining the Future
by Ross Hansen
Throughout the ages, people have been trying to predict the future for their personal and financial gain. Self-appointed prophets have even concocted a number of archaic rituals that they, and they alone, can divine the future from. For your historical curiosity, we’ve listed below some of the more popular ones:
Scapulimancy – This is defined as divining the future by observing how an animal’s scapula (usually from an ox) cracks when it’s heated by a fire or hot instrument. Also known as oracle bone, this prediction method has been used for over 5,000 years by the Chinese, Japanese, Europeans, Africans and North American natives. It’s even used today among Greek and Serbian farmers.
Haruspicy –The reading of animal entrails, usually from a chicken, to predict the future, was practiced by ancient Assyrians, Babylonians, and Etruscans, as well as by African and South American tribes. Shamans trained in the art of haruspicy would inspect the animal’s entrails and interpret the shapes, colors, and markings to determine the future.
Gastromancy –Those strange noises coming from your stomach could be the dead talking through you to tell the future. This other bizarre form of divination attempts to interpret guttural sounds as voices from the great beyond.
Tyromancy – This form of divination involves watching cheese curdle. In the middle ages the shape, number of holes, pattern of the mold, and other characteristics of cheese were used to predict everything from love, to money, and even death.
Astrology – This is the study of how the positions of the moon, sun, the planets and their movements affect human beings. In western cultures astrology usually involves a system of horoscopes that predict an individual’s personality or life history based on the positions of celestial objects at the time of birth. Indian, Chinese, and Mayan cultures have also developed elaborate systems for predicting events on earth from celestial observations.
Many of these might sound ridiculous to you, but many people still look for ways to predict the future. It’s usually in an attempt to get rich, whether it’s picking the winning lottery numbers, or timing the commodities market. When it comes to predicting how the markets will behave, here are two of the latest favorites:
The Elliott Wave Principle – This uses an analysis of financial market cycles to forecast market trends by identifying extremes in investor psychology. Professional accountant Ralph Nelson Elliott came up with the principles behind the Elliott Wave in the 1930s. He suggested that market prices unfold in a specific pattern – which is today known as Elliott waves or just waves. Elliott’s theory was that man follows a rhythmical procedure so calculations related to those activities can predict how man will act in the future.
And
The Fibonacci Sequence – If you’ve read The Da Vinci Code you know all about the Fibonacci sequence. It goes like this: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, and so on. Each number is equal to the sum of the previous two. Some investors believe the ratio of numbers in the Fibonacci sequence determines how the markets will react. There are numerous articles and how-to manuals on using the Fibonacci sequence to predict the market or particular stocks.
In my opinion, any one of these systems for predicting the future is as good as the other, which is to say, ridiculous. Many of these forecasting methods might work, until they don’t work. How many times have you seen the Elliott wave wiped out? I’m sorry, they say violated.
The Elliott wave and the Fibonacci sequence are the latest forms of predicting the future, but many times these become self-fulfilling. Often predictions come true because everyone is looking at the same chart and reacting in the same way. This never lasts.
The truth is the hucksters will always have some divine way of separating you from your money, whether it’s an ancient shaman with feathers in his cap or a Wall Street guru in a pinstripe suit. In the end, I want to preach my recurring theme that investing should be made from the fundamentals of the particular commodity and your individual situation, not what your chicken entrails tell you.
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 -
The End of the Precious Metals Bull Run?
by Northwest Territorial Mint Staff
You know the saying “what goes up, must come down.” Precious metals proved that the hard way in September. After a record-setting bull run for gold this summer and positive numbers for the other precious metals gold, silver, platinum, and palladium all fell steadily through the month of September to settle at more modest levels.
What caused this dramatic market correction, other than a self-fulfilling prophecy by analysts who’d been predicting since the start of the year that prices would eventually turn south?
The market plunge seemed to echo what we saw in 2008, but there’s a difference this time. There were no major bankruptcies or bailouts to precipitate the plunge. Central banks have also increased demand for the precious metal in the last three years and taken to buying on dips, such as now. Bloomberg News reports central banks are boosting reserves because of the international financial crisis. For the first half of this year central bank and government-institution buying totaled 192.3 metric tons, according to World Gold Council data. WGC numbers show gold accounts for 75.4% of US reserves and 72.7% of Germany’s reserves. Many banks are also turning to gold as collateral as they find it difficult to raise loans at reasonable rates.
As the markets grew increasingly volatile during the month of September the COMEX hiked margins on gold by 21% and by 16% for silver. Several commodities firms suggest these higher margins added to the volatility, but weren’t the leading cause behind the plunge in prices. Other factors contributed.
A consensus of commodities experts point to four reasons for precious metals to plunge so suddenly: inaction by the Federal Reserve, mutual fund redemptions, margin calls at hedge funds, and stalling Chinese growth.
The Fed introduced Operation Twist. It was meant to stimulate the economy, but many investors didn’t think it went far enough. Unlike QE1 and QE2, the plan doesn’t call for printing more currency. That would be expected to lead to a weaker dollar and, inversely, higher gold prices. Instead, this news was bearish for gold and other commodities.
With mutual fund cash levels at or near record lows investors weren’t prepared for the dramatic market selloff. According to Bloomberg, when the investors’ sell orders came in, mutual fund managers unloaded gold at higher prices and reaped some profits. Hedge funds also sold gold and silver for the same reasons but the move was mistimed and came after the correction.
Commodities in general have been hit hard because of China’s slowing growth and the quickly fading global economy. Since 2008 the fundamental demand by the Chinese for gold jumped significantly because of the emergence of China’s exploding middle class. The Chinese save up to 40% of their income and put as much as 7% of that into gold or silver. As China’s growth slows, so do its investments in precious metals.
When precious metals prices dropped in 2008, it took 18 months for spot prices to reach new highs – while other equity markets recovered, but simply reached levels from before the 2008 crash. Now, as investors learn from history, more are taking a cautious approach to investing and the investment markets. The expectation is that investor recovery will likely be faster – as well as more conservative -- with fewer investors holding risky positions for too long. Gold and precious metals, as always, will be the safer alternative once the rebound begins.
...
- top -
by Northwest Territorial Mint Staff
What the COT report says about strength in metals
September was a rough month for gold and silver investors. After rising during the summer months to record highs gold sharply corrected and silver followed suit.
Despite the lower prices gold still tacked on its 11th consecutive quarterly gain. That’s good news for investors and for analysts who say this so-called pullback will ultimately be good for precious metals.
The outlook for silver is looking strongly bullish according to a recent Commitment of Traders report (The Commodity Futures Trading Commission puts out the COT report each Friday, detailing the commitments of traders on the prior Tuesday). Part of the reason is because the weak silver speculative holders bailed out of the silver market when the price started to head south. This could signal the low of $26 we saw for silver in September was the white metal’s bottom.
The story is similar for gold where prices began stabilizing when there was no one left to sell and investors regained confidence in the fundamental reasons for investing in precious metals in the first place – because of their status as a safe haven.
September saw investors liquidate their gold and silver because precious metals were among the few commodities that saw gains this year. Gold and silver are also easy to sell because the market for both is very liquid.
Despite the recent price slumps there is still plenty of worldwide interest for precious metals. One example out of many is Qatar Holdings which plans to invest nearly $1 billion in European Goldfields which is developing the largest gold mining project in Greece. Qatar Holdings manages the wealth of Qatar’s royal family.
Long-term investors are also starting to pick up more silver and gold at the lower prices, which some observers say could bring about a rebound this month. Gold prices are holding steady above $1,600 an ounce and silver also appears to have stabilized just above $30.
Precious metals trading experts say the mentality that goes into investing in gold and silver won’t be easily shaken. Even with those weak investors who fled at the first sign of trouble likely coming back. Analysts say there would have to be a dramatic fundamental shift to change the overall view of gold and silver as a safe haven. Which is why those same analysts expect that gold and silver will rise again.
Gold and silver also got a boost from the plan to recapitalized European banks with the European Financial Stability Facility. This caused the euro to strengthen and dollar to weaken, which led the way to a gold and silver rally.
There is also long-term good news for precious metals. With the advent of precious metal ETFs five years ago, many analysts and investors thought the precious metals market would become more volatile because investors could now trade gold and silver like stocks. Instead, those investors seem to be more cautious and, with the European debt crisis far from over and the US economy still slowing down, are holding onto their gold and silver as a better long-term bet.
...
- top -
Precious Metals Worldwide
News & Trends from Around the Globe
Sunken Treasure Reveals Record
Precious Metals Find
The largest haul of precious metal ever found at sea was discovered early this summer aboard a sunken cargo ship in the North Atlantic. The shipwreck contains 200 tons (6.4 million Troy ounces) of silver, worth nearly $195 million at today’s prices. The US exploration firm Odyssey Marine discovered the SS Gairsoppa, a UK cargo ship sunk by a German U-boat sunk in 1941. Insurance documents from Lloyd’s War Losses Register detail how much was on board. The documents suggest the silver bars may contain 2.5% gold as well. The firm has a contract with the British government, allowing it to keep 80% of the cargo’s value.
The Most Expensive Car Model in the World
How do you make a Lamborghini even more expensive? Make it out of precious metals. German model car maker Robert Gulpen has built a 1:8 scale replica of the Lamborghini Aventador from carbon, platinum, gold, and precious stones. With a starting price tag of more than $4.8 million, it’s the most expensive car model in the world and 12 times more expensive than a real Aventador LP 700-4, which sells for a mere $416,000. The model has a carbon body, just like the real version, but had gold and platinum rims and diamonds added to the seats, steering wheel and headlights. In all about $2.7 million worth of precious metals went into making this eye-catching model.
Canadian Gold Producer Halts Mining in Peru
A work stoppage forced Rio Alto Mining Ltd. of Canada to temporarily stop operations at its La Arena gold mine in north Peru. The company says the stoppage is illegal and could have a negative impact on its total gold production for the year. Production at the La Arena mine began in May. Rio Alta had expected the mine to turn out about 75,000 Troy ounces of gold by the end of the year.
...
- 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.