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

FEARS RETURN TO CONTAGION IN EUROPE INVESTORS “MORE BULLISH THAN EVER” ON GOLD

In overnight trading, precious metals spent time making up for the moderate losses experienced yesterday.  U.S. stock futures are pointing towards a high open today, and were pushed higher by the release of retail sales data that blew past expectations.  Particularly strong were the numbers for the auto industry, which typically holds a positive correlation to platinum and palladium.  The industrial precious metals both added to gains after the release.

Members of the Group of 20 are meeting today to discuss the European debt crisis.  The fears in Europe have returned to contagion, as Spain’s credit rating downgrade has officials worried that a much larger economy than Greece could be in serious trouble.  Pravin Gordham, South Africa’s Finance Minister, said, “The resources available in the [European Financial Stability Facility (EFSF)] and [International Monetary Fund (IMF)] are not adequate if the contagion is going to spread any further.”  Regarding the EFSF, Wilbur Ross, chairman and CEO of WL Ross, said that European leaders “are always a couple of pages behind.”  He continued, “I don’t think that the 440 billion euros by itself is nearly enough.  I think you need a trillion or a trillion and a half firewall in order to be convincing to the markets that this thing can be played out without disasters to the markets.”

Bloomberg reports that the late-September decline in gold prices have investors “more bullish than ever.”  Central banks are continuing their recent trend and buying more gold.  Thailand, Bolivia, and Tajikistan combined for 18.2 tons purchased in August, according to the IMF.  One analyst explained, “There’s … risk in the world and there’s no sign of that going away any time soon. All the factors that drove gold to a record are still there … There’s strong physical demand globally.”

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

Gold gains, eyes biggest weekly rise since September

Gold edges higher but strong rupee limits upside

Gold Gains on European Debt Woes, Physical Purchases

  Gold falls with riskier assets after China data

Closing Gold & Silver Market Report – 10/13/11

GOLD CAUGHT BETWEEN SAFE HAVEN AND COMMODITY FITCH IS AT IT AGAIN

Precious metals have recovered slightly since the mid-day report, as stocks ended the day weaker after the earlier release of worse-than-expected economic data from China.  Gold seems to be caught in an interesting situation, according to Forbes.  It’s a situation where a historical safe-haven asset is also grouped together with commodities, which tend to be more on the risky side of investing.  The author, Agustino Fontevecchia, explains that the metal is up about 20% this year, even after the rapid drop seen in September that most investors saw as an excellent buying opportunity.  He continues to say that most analysts remain bullish on the metal.

The U.S. trade deficit (the negative difference between what we’re exporting and what we’re importing) remained steady in a report released early this morning.  However, after removing inflation, it does show an increase in that gap, up to $47 billion.  The trade deficit with China widened to a record $29 billion in August, possibly providing new fuel to the threatened “currency war” between the two economic powers.  The third-quarter gross domestic product growth is still expected to come in higher than the sluggish 1.3% it grew in the second quarter, possibly lending some relief to investors looking for life in the recovery from recession.

Fitch Ratings is in the news again after placing a number of American and European banks on review for possible downgrades.  In the U.S., the banks in question are Bank of America, Morgan Stanley, and Goldman Sachs.  In a statement, the credit ratings agency said, “These institutions’ business models are particularly sensitive to the increased challenges the financial markets are facing.  These challenges result from both economic developments, particularly in the euro area, as well as a myriad of regulatory changes.”

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

Gold reverses early gains physical demand up

Gold Retreats as Strengthening Dollar May Cut Into Demand From Investors

Richard Russell - CB’s Buying Here, Swapping Dollars For Gold

James Turk - More Bank Collapses to Cause Gold & Silver Spike

Morning Gold & Silver Market Report – 10/13/2011

CHINA DATA ADDS TO GLOBAL ECONOMIC WOES

Precious metals have traded mostly lower since yesterday’s close, and stock futures are joining them in the red after the release of economic data from China that was weaker than expected.  China’s trade surplus contracted in September, with lower-than-expected imports and exports.  This is yet another sign of global economic weakness.

In the U.S., the jobless claims report was released and was relatively unchanged, showing a drop of only 1,000 to 404,000 after an upward revision from two weeks ago.  To keep things in perspective, 300,000 claims is a target number for rapid economic growth.  This falls in line with other data that shows that the U.S. is adding jobs, albeit at a frustratingly slow pace.

A European Central Bank (ECB) Governing Council member said that the ECB will consider cutting interest rates at its next meeting, but that they are not pre-committed to actually making the cut.  There are also inflationary concerns coming out of the euro zone, though most policymakers are shrugging it off.  The current inflation rate is 3%.  Slovakia’s central bank chief Jozef Makuch said, “I expect inflation to drop below 2% next year.”

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

Closing Gold & Silver Market Report – 10/12/2011

FED MINUTES SHOWED SOME MEMBERS PUSHED FOR QE3

Silver and gold have slipped slightly since the Mid-Day Commentary, but both are up more than 1% for the day.

The minutes from the most recent Federal Open Market Committee meeting were released today.  They show that two of the ten committee members pushed for much bolder stimulus action.  These two (the minutes do not say exactly which ones) pushed for another expansion of the Fed’s balance sheet, which has been referred to by the public as “QE3,” since this would be the third round of quantitative easing.  This is a program in which the Fed would create an amount of money, and use that money to purchase treasury bonds, pushing down yields and adding to the money supply.  In the end, the Fed chose not to adopt the QE3 suggestions, but to perform “Operation Twist,” in which the Fed will sell short-term treasuries to finance the purchase of long-term treasuries, pushing long-term interest rates down and making it cheaper to borrow money.  However, the minutes clearly indicate that there is a general feeling of unease about the economy, and that there is still support for strong action by the Fed.

Meanwhile, traders and investors are becoming more optimistic about the sovereign debt problems plaguing the Euro zone, and markets have responded positively to recent news.  Politicians in Slovakia have struck a deal allowing the approval of the expansion of a bailout fund for European banks.  This would shift risk a default by one or more Euro zone nations (namely Greece, for now) from the banks to the taxpayers of Euro zone countries.  There is also talk of requiring the banks to raise their cash holdings to prevent them from becoming insolvent in the event of a default.

At 4:09 pm (CT) the APMEX precious metals prices were:

politico.com
OCTOBER 12, 2011

 

Closing Gold & Silver Market Report - 10/11/2011