The Central Bank of the US Federal Reserve released a memo on June 18, which calls for the reclassification of gold from a 50% weighting to a 100% weighting. Currently, for every $1.00 held by the banks or central bank only 50 cents can be claimed as book value. By changing gold to a 100% weighting, it would retain full value just like other financial instruments. This would enhance gold’s appeal to the banking community and possibly drive up demand.
Friday’s big jump in the stock market was a reaction to news that European leaders are going to come up with a viable bailout plan. Although this was welcome, it is still a bailout and the European economies are still desperately struggling. U.S. companies are affected as well, and this is expected to show in the upcoming earning reports. Many U.S. companies are issuing warnings and they site Europe as a key factor for their disappointing numbers. Second quarter reports will show the euro debt crisis, weak European and Chinese demand, decline of the euro and the overall global economy will affect the earnings of many U.S. firms.
At 9AM EST the APMEX precious metals prices were:
- Gold price – $1,594.50 – down $11.20
- Silver price – $27.53 – down 15 cents
- Platinum price – $1,439.50 – down $11.40
- Palladium price – $580.90 – down $4.70