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AGE Gold Commentary is our regular report analyzing trends in precious metals and rare coins. We monitor domestic and international markets and extrapolate from our 30 years in metals to place current events into a hard asset perspective. View archives.

9/27/2001: Gold ready for major breakout.


Best wishes from Dana Samuelson, Owner, American Gold Exchange.

In this gold market update:

Gold ready for major breakout.
Safe haven buying escalates.
The impact of the crisis.
Our recommendations.
Silver and platinum.

Gold ready for major breakout.

Currently trading between $293 and $294 per ounce, gold has surged and held its gains since the tragic terrorist attack of September 11. Media outlets from CNN to NPR to the NY Times are heralding gold’s return as a safe haven investment during these volatile times. Investment demand is WAY up.

The gold price is now pushing right up against the crucial $295 upside resistance barrier. As we’ve told you in previous updates, a movement above $295 signals a technical breakout. When gold moves above $295, we anticipate gold will run VERY QUICKLY to the next resistance level in the $320 to $330 range. A move above $330 confirms a major breakout. After that, the next upside resistance level will occur somewhere in the $375 to $400 range.

We are now at a critical juncture. The next few weeks (perhaps days) will reveal whether this major breakout is going to occur. A few dollars higher from here ($294 per ounce today) is likely to mean an abrupt spike upward.

If the breakout occurs, the gold price will move higher almost immediately, offering little reaction time. We strongly advise our customers to act now. If you’re inclined to buy gold, now is the time!

Safe haven gold buying escalates.

Although last week’s absolute frenzy of physical bullion buying has subsided a little, the public continues to acquire gold at a record pace. Bullion sales are up substantially across the country. Prices for gold bullion coins are now rising above their previously depressed levels; dealers have been completely cleaned out existing inventories since the crisis. We’re back to relying on government mints to supply bullion coins to dealers.

The impact of the crisis.

The negative financial impact of the terrorist attack on the United States is now becoming fully understood. The U.S. stock market, which was already weakening, has fallen drastically in the wake of the attack. The financial health of the airline industry has been badly damaged as people remain at home. Consumer confidence has reached a new low.

Many businesses have lost a full week or two of normal revenue. This is revenue that most cannot afford to lose. It was reported this morning on National Public Radio that television advertising was virtually nonexistent for over a week as channel after channel carried nothing but news of the terrorist attack. As a result, a profitable third quarter for several major broadcasting companies and many other major companies is almost impossible.

In this environment of declining consumer confidence and spending (the main engine of our incredible economy over the last ten years), and with the accelerated weakening of the U.S. economy, gold is once again coming into focus as a financial safe haven. The media in the U.S. and Europe are once again reporting on the traditional safe haven status of gold on radio, television, and in the printed press. This level of attention will only increase and intensify if gold enters into breakout mode, which now seems very likely at this point in time.

Our recommendations.

1. Prices for classic European gold coins remain VERY attractive right now.

The premiums (price over gold content) have not yet caught up with the surge in demand for bullion gold and classic U.S. $20 gold coins, and prices remain below normal levels. But prices and premiums are destined to increase, in our opinion. Classic British gold Sovereigns, French 20 Franc Angels and Swiss 20 Franc Helvetias are our three top recommendations right now. The current lag between this demand and premiums is providing a great buying opportunity. Classic European gold coins are one of the best bulk gold buys available today.

Please see our Specials page for details.

2. Classic U.S. $20 Liberty and $20 Saint-Gaudens gold double eagles have surged in price by up to 15% in the last two weeks!

Market supply was fairly low prior to September 11, but demand has now completely overrun existing supplies. Reports from two separate regional coin shows last weekend indicate that dealers are buying U.S. $20 gold double eagles as fast as possible, driving up their bid prices.

Kudos to all of our “Power Pair” customers, those who bought our special combo of Pre-1900 $20 Liberty (MS62) and $20 Saint-Gaudens (MS63) prior to this surge. But it’s not too late. Our prices remain low relative to the 5- and 10-year price histories of these coins. When the gold breakout happens, these coins are likely to sky.

Again, if you are inclined to buy, DO NOT HESITATE! You are likely pay more, perhaps a lot more, as time passes. Please see our Specials page for details.

Silver and platinum.

Silver has rebounded in price from the $4.20 - $4.30 per ounce August trading range to today’s price of about $4.61 per ounce. The market ran up into the $4.75 range several days ago, pulled back to current levels and now looks like it will attempt to push higher again.

Platinum is currently trading in the $445 - $460 range. Today’s market close is $447. The prospects for platinum remain uncertain in my mind. Industrial metal demand has clearly subsided due to economic weakness. If gold rallies further, platinum is likely to rise in sympathy. I continue to believe that platinum offers substantial liability at the present level and is likely to fall 10% or more based on a considerable decrease in industrial demand due to a weakening economy.

I’m putting my money in gold and recommend that you do the same. I am also cautiously long on silver. Platinum leaves me on the sidelines.

That is all for now, thanks as always for your time. We’ll report again as events warrant.

Dana Samuelson

Owner, American Gold Exchange

P.S. – Please give blood if you can!


Metal Ask      Change
Gold $1,788.83           $1.07
Silver $18.30           $-0.11
Platinum $847.41           $5.71
Palladium $1,995.33           $11.49
In US Dollars