Closing Gold & Silver Market Report – 10/19/2011

FEAR OF EURO ZONE CALAMITY DRIVES MARKETS IN LATE DAY TRADING

Gold and silver have remained relatively unchanged since the mid-day report.  However, stock markets, which were calm in early trading, have sold off somewhat this afternoon.

Greece is expected to pass more austerity measures despite protests in the streets by the Greek populace.  Greece was basically shut down today due to mass strikes.  Meanwhile, negotiations for bailouts for debt-laden EU countries have broken down and French President Nicolas Sarkozy is heading to Germany to continue the talks.  The situation spreads far beyond Greece, as Moody’s has downgraded 16 more entities within Spain, one day after downgrading the Spanish government as a whole.  This adds to the tension within the talks by increasing the stakes and the urgency for Europe to come to a final agreement.

The Federal Reserve released its Beige Book, prepared for the next meeting of the Federal Open Market Committee, shows very weak economic growth in the U.S.  Among the weakest sectors of the economy were Banking & Finance.  Analysts expect the current easy-money stimulus policies from the Fed to continue for some time.

At 4:15 pm (CT) the APMEX precious metals spot prices were:

Morning Gold & Silver Market Report – 10/19/2011

PHYSICAL METALS STILL DESIRED OPTIMISM IN EUROPE, BUT WHY?

Gold and U.S. stock futures are fairly flat this morning.  In the U.S., inflation data was mainly in line with expectations in a report released this morning.  Higher hopes of a resolution to the European debt crisis has investors more interested in risk, and in some cases away from safe haven investments like gold. 

A meeting of euro zone leaders this Sunday could bring about changes to investors’ appetite, according to VTB Capital.  They explained, “The situation with gold could well change should risk aversion escalate after 23 October, provided the broader market is disappointed by the EU’s debt crisis management with policymakers failing to leverage the [European Financial Stability Facility] substantially and avoid a structural Greek default.”  They added, “…physical buyers were active above recent dips,” confirming the still-present desire among investors to hold physical metals.

With all the optimism coming out of Greece, one might think there was some good news to report.  As Greek citizens protest in the streets of Athens, Prime Minister George Papandreou vowed to successfully implement another round of austerity measures.  The strikes are seeing empty classrooms and businesses as students, workers, and business owners alike are among those protesting the proposed measures.  The European Commission was busy as well, raiding banks (such as Deutsche Bank) in a widespread probe into suspected fixing of lending between banks.  This is the third major investigation of the finance sector by the Commission this year.

At 8:00 am (CT) the APMEX precious metals spot prices were:

Closing Gold & Silver Market Report – 10/18/2011

Silver & Palladium Prices Go Positive, While Gold & Platinum Recover - The stock market boomed again today, on reports that Germany and France are moving closer to an agreement on how to fix the European debt crisis. This news also turned precious metal prices around with silver and palladium making positive gains. (There are rumblings in the market again about Russian palladium stockpiles running low, which could cause a global supply shortage of palladium.) Investors continue to look for an actual plan to solve the euro debt crisis, but markets have been moving on any signs of optimism.

A less optimistic report shows that Moody’s Investors Service has downgraded Spain’s government bond rating from A1 to Aa2. The agency said that a declining global economic picture is hurting Spain’s chance of their own economic recovery. They also stated that, “no credible resolution of the current sovereign debt crisis has emerged.”

U.S. Federal Reserve Chairman, Ben Bernanke, said in a speech today that the Fed may need to halt future asset bubbles with monetary policy. Prior to the financial collapse of 2008, Mr. Bernanke, as well as most central banks, would not have considered interest rates as a tool to burst asset bubbles. Although those views may have softened, Mr. Bernanke said that regulation, supervision and monitoring would remain the first line of defense.

At 4:00 PM (CT) the APMEX precious metals prices were:

Morning Gold & Silver Market Report – 10/18/2011

KWN Special - Is Silver the Next Apple?

Closing Gold & Silver Market Report – 10/17/2011

GOLD AS A FOURTH ASSET HELPS PROTECT AGAINST BLACK SWANS

Precious metals have recovered slightly against mid-day numbers as the stock market selloff gathers steam but held back as the dollar grew stronger on news out of Europe.  Many investors are still bullish on gold as a fourth asset class due to its inverse relationship with the stock market as well as currency values.  It does well to help balance out an investor’s portfolio so as to protect against “black swan” events and market declines.

While some look at the selloff in gold as a negative thing, hedge fund managers and long-term investors recognize that when gold goes down it usually means positive things for the other components in a well-balanced portfolio.  This is what makes it such a great asset class to hold onto during troubling times.  David Kudla, the Chief Investment Strategist at Mainstay Capital Management, comments on the protection of gold, “It’s a defensive hedge…People buy gold to hedge against inflation, against deflation, against economic or political uncertainty.  We have all of those concerns -- and real concerns about the debasing of currencies worldwide right now.”  Tony Roth, Head of Wealth Management Strategies at UBS, adds that he feels investors should hold anywhere from 5% to 20% of their portfolios in gold for “downside protection.”

James Moore, Research Analyst at FastMarkets.com, shares an ideal situation where gold is serving its investors well as a hedge, “Inflation remains stubbornly high in India, over 9% for the 10th month in a row…and this is leading to continuing store of wealth demand from Indian buyers.”

At 4:00 PM (CT) the APMEX precious metal prices were:

goldseek.com
OCTOBER 17, 2011

 

 

Morning Gold & Silver Market Report – 10/17/2011

Precious Metals Prices Continue to Drift Upwards - No Quick Solution to the Euro Crisis in Sight - Precious metals prices are up since markets opened Sunday at 5PM (CT). Gold is at a 3-week high. U.S. equity markets were heading for a strong opening, but have since retreated on the comments of German Chancellor Angela Merkel, who made it clear that those who were hoping for a quick solution to the euro crisis would be disappointed. For the time being, it seems that European leaders may be content to have a plan to come up with a plan. Steffen Seibert, Merkel’s chief spokesman, commented in Berlin today, that a search to end this crisis will extend well into next year. European leaders at the G20 had implied that a new strategy would be in place by October 23.

The Empire State manufacturing index just came out and it remains in negative territory for the fifth month in a row. The index did inch up slightly to a negative 8.5 in October, but analysts had been expecting greater improvement to negative 5.0. Stock futures continued to lose ground on the publication of this report.

At 8AM (CT) the APMEX precious metal prices were:

goldseek.com
OCTOBER 14, 2011

 

 

kingworldnews.com
OCTOBER 14, 2011

With gold and silver surging today, King World News interviewed acclaimed money manager Stephen Leeb.  When asked what he sees happening, Leeb responded,  “We don’t need gold for any kind of industrial use, gold is a currency.  Gold’s move this decade has been an anticipation of inflation.  Once we get inflation you really have to look at the 1970’s as to how far gold could go.  I mean no matter how you look at it, Eric, you are going to have to add another digit to the gold quote.”

goldseek.com
OCTOBER 14, 2011

...

Gold is marginally higher in most currencies today and continues to consolidate at the upper end of the range between $1,600 and $1,700/oz. Physical demand for coins and bars remains very strong with GoldCore experiencing a notable increase in demand this week.

...

Gold is up nearly 3% on the week and looks set to post its biggest weekly gain in more than a month. Markets remain nervous about the risk of contagion ahead of a G20 meeting whose agenda will be dominated by the euro zone debt crisis and steps to tackle the contagion.

Gold should be supported by global inflation data this morning which remains stubbornly high particularly in emerging markets. 

Inflation in China and India remains very high. In India, inflation exceeded 9% for the 10^th  month in a row and in China inflation is at 6.1% but the key food component of inflation rose 13.4% year-on-year in September.

European inflation accelerated the fastest in almost three years in September on soaring energy costs, complicating the European Central Bank’s task as it combats the region’s sovereign-debt crisis. The euro-area inflation rate jumped to 3 percent last month from 2.5 percent in August. Inflation in Germany also surprised to the upside this week.

...

Central banks, the biggest gold holders, have expanded reserves due to the international financial crisis. Central bank and government-institution buying totaled 192.3 metric tons in the first half of 2011, World Gold Council data show. Gold accounts for 75.4% of the U.S.’s reserves and 72.7% of Germany’s. 

The ratio is just 1.6% for China and 8.2% for Russia, WGC data show.

“Governments in many places like Asia and South America are rapidly embracing gold as a security mechanism,” said Wendt, who expects gold at $2,500 in 2013. “The value of their U.S. dollar foreign reserves has drastically fallen over the past decade.” Thailand, Bolivia and Tajikistan raised reserves in August, according to the International Monetary Fund.

China's foreign exchange reserves, the world's largest stockpile, rose by $4.2 billion in the third quarter to $3.2 trillion, the People’s Bank of China said on Friday.

Central bank demand due to concerns about currency debasement and contagion remains a primary driver of gold’s bull market and means that the foundations of the bull market are very sound.

Central bank demand is strategic leading to gradual accumulation and it is long term meaning that official sector demand will provide support to prices for the foreseeable future.

Thus, continuous suggestions that gold is a bubble today and in recent years and of a gold bubble bursting and prices falling sharply as seen in 1980 is uninformed and misguided. 

...

goldseek.com
OCTOBER 14, 2011

 

 

Closing Gold & Silver Market Report – 10/14/2011

The U.S. Rejects Plan to Participate in the European Bailout – Proposals floating about suggest the size of the International Monetary Fund should be doubled with the help of the broader international community, is not going to be supported by the U.S., Canada or Australia. This clearly puts the burden back on Europe. The message seems to be that first they should put their own house in order, before requesting additional funds.

Over the past 30 days, gold has experienced a (negative 24%) correlation to the stock market, while silver has shown a (positive 25%) correlation. At a positive 25% correlation, silver would still be considered a strong, non-correlated asset to stocks “That is exactly what precious metals are supposed to do in a diversified portfolio,” writes Nicholas Colas, Chief Marketing Strategist at ConvergEx. Assets with a negative correlation to stocks are essential in managing risks. Portfolio diversification is all about creating balance by managing risk within the portfolio. This data over the past 30 days does not support recent talk that gold is no longer a hedge against turbulence in the equity markets. When taking a more long term view, gold maintains its safe haven status, as demonstrated by its continued negative correlation to stocks.

Could gold go to $10,000 an ounce? Before answering this, our first question should probably be, in what time frames? Next year? I do not think so. Ten years from now? Who knows? According to Paul Brodsky of QB Asset Management, it would happen if we went back to the gold standard. In a global economy that forces nations to debase their currency in order to kick-start their economies, it is a possibility. If this plan does not work, then the 40-year run of fiat currencies might end (it has only been the past 40 years that currencies have not been backed by gold). Mr.Brodsky reasons that since the U.S. monetary base has tripled to $2.68 trillion, since the end of QE2 if you divide this monetary base by the 261.5 million ounces of gold in the U.S. Treasury, you get $10,000 per oz. Mr. Brodsky’s theory may or may not be correct, but if currencies continue to be devalued, it could be bullish for gold.

At 4PM (CT) the APMEX precious metals prices were:

Gold, other metals rally after retail sales

cnbc.com
OCTOBER 14, 2011