Gold continued to shine in analysts’ eyes this week as eurozone leaders scrambled to find a solution to Europe’s ongoing debt crisis. Adrian Day, president of investment firm Adrian Day Asset Management, reflected this week on reasons why people have been buying Gold the past two years, citing “concern and distress of fiat currency paper money.” Day said, “Gold is a solid asset which is going up.” Central banks around the world came up with an agreement to aid financial markets, while China made the unusual move to cut the reserve requirement ratio (RRR) for commercial lenders.
Earlier in the week, the International Monetary Fund (IMF) denied that it was in talks to provide monetary aid to Italy; many analysts still expect that the IMF will have little choice but to act if the European economic crisis comes to a boiling point. There was speculation that Germany might float additional bonds together with the eurozone’s five other triple-A rated nations and then use the proceeds to help Italy and Spain, but Germany quickly denied this speculation. Finance ministers from the eurozone gathered this week at the headquarters of the European Union in an effort to rescue the euro and thereby protect the rest of the world’s economy from a debt-related financial collapse. Also, global central banks reached an agreement to lower dollar-swap ratios to “ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity.” Alan Valdes, director of floor operations and vice president of trading at DME Securities, said, “The markets rallied with the news. But if you stop and think about it, you have to realize what kind of danger the world is in for all the central banks to get together and save Europe.”Some warned that this agreement could backfire and pose a risk to U.S. economic expansion.
Last week’s Black Friday deals brought record retail sales in the U.S., resulting in a strong start for the stock market this week. Concurrently, a report from the Organization for Economic Cooperation and Development (OECD) indicated that the global economy is slowing, the eurozone is in a mild recession, and the U.S. may soon follow. Although the economic news in the U.S. was somewhat rosier than the news from Europe this week, the opinion of many is that the European debt crisis is echoed in the U.S. by the inability of American leaders to conquer this country’s own debt crisis. The congressional Super Committee might return to attempt another deficit cut; the House Minority Whip said that he would like a 90-day extension for the Super Committee to reach an agreement. The jobs report showed 120,000 jobs were created in November, and that the jobless rate fell to 8.6%.
Credit ratings were predominant in the news this week as reports came out that France could lose its AAA credit rating as the result of a downgrade by Standard & Poor’s (S&P). Fifteen major banking institutions (including six in the U.S.) had their credit ratings downgraded by S&P this week. S&P also upgraded two Chinese banks, based on the view that banks in North America and Europe find themselves in greater danger of turmoil in the financial market, while Asia-Pacific banks have experienced relative stability. Ritesh Maheshwari, S&P’s lead analytical manager of financial services ratings across the Asia-Pacific region, explained, “Money is flowing into emerging markets, so the health of their financial systems is continuously improving, whereas in the West, banks are battling with so many issues.”
For the first time in almost three years, China’s central bank cut the reserve requirement ratio (RRR) for its commercial lenders to ease credit strains and strengthen an economy that is showing signs of weakness. China’s manufacturing sector shrink in November, which helped to clearly define that country’s decision to encourage commercial lending to boost the economy. Stephen Green, the China economist at Standard Chartered Bank in Hong Kong, said, “This is a big move — this is easing; it’s a clear signal that China is on a loosening mode. The next move will be another RRR cut in January.”
At least two analysts expressed the view this week that Gold could reach a price of $2,000 as investors consider an exit from riskier investments. During the week, Oliver Purshce, co-portfolio manager of the GMG Defensive Beta Fund, stated, “What will drive prices higher are fears of inflation … if you see the ECB print money, the Federal Reserve (ease), China change monetary policy — that would all be supportive of $2,000 Gold prices.” In addition, Bank of Montreal strategy adviser Don Coxe said that instead of equities tied to the economy, investors should consider buying Gold-mining stocks or the metal itself. Coxe said Gold would surpass $2,000 an ounce in the event of “a full-blown crash of the banking system in Europe.”
WEEKLY SPOT PRICES
Spot Gold prices opened this week at $1,714.00. The high was on Friday, Dec. 2nd at $1,767.10, while the low for the week occurred on Monday, Nov. 28th at $1,686.70. Gold ended the week up $33.10 at $1,747.10. This week, the most popular Gold bullion products were 2011 Gold American Eagles, 1 oz. Pamp Suisse Gold Bars, and 2011 1 oz. Gold Maple Leafs.
Spot Silver prices opened this week at $32.27. Silver reached a high of $33.74 on Friday, Dec. 2nd, while this week’s low for Silver occurred on Wednesday, Nov. 30th at $31.12. Silver ended the week up $0.41 at $32.68. The most popular Silver products on APMEX.com this week were 2011 Silver American Eagles, 2011 Silver Maple Leafs, 1 oz. Silver Buffalo Rounds and 10 oz. APMEX Silver Bars.
Spot Platinum prices opened this week at $1,545.30 and ended the week up $5.90 at $1,551.20. Popular Platinum products this week included, 1 oz. Platinum Bars, 1/10 oz. Platinum American Eagles, and 1 oz. Platinum American Eagles.
Spot Palladium prices opened this week at $583.30 and ended the week up $61.00 at $644.30. Palladium investors preferred 1 oz. Pamp Suisse Palladium Bars and Palladium Canadian Maple Leafs this week at APMEX.com.
2011 1 oz. Pamp Suisse Gold Bar
Pamp Suisse Gold Bars have been produced in Switzerland since 1979 and are the most highly sought-after Gold investments in the world. Pamp Suisse, the world’s leading independent refiner of precious metals, controls more than half of the world market for Gold bullion ingots weighing less than 50 grams from its headquarters in Castel San Pietro, Switzerland. Each .9999 Fine Gold ingot is encased in tamper-evident “Signed Certicard” packaging with an assay card that guarantees the quality, weight and assayed precious metal content of each bar.
Most Pamp Suisse Gold bars are die-struck and bear the company’s famous “Lady Fortuna” design on the bar’s front. The design, widely regarded as one of the most attractive designs in the marketplace, is based on the Roman goddess of fortune accompanied by her traditional attributes: the rudder of fate and the cornucopia of plenty. The back of each bar is hallmarked with its purity, weight and serial number.
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