Is Your Portfolio Ready for 2012?

Accelerating U.S. Debt Load Could Mean A Riskier Economy

Many economists and investors have been focused on the debt crisis in Europe. But did you know that debt in the United States is now more than 90% of GDP, a sign of increasing economic risk? In fact, the gap between debt and GDP has narrowed considerably over the past two years (see Chart 1 below). This is placing increasing strain on the U.S. economy. Is your portfolio prepared to weather this uncertainty? Now is the time to review your portfolio and make sure you’re adequately diversified among stocks, bonds, cash and Gold — the fourth asset class.

In today’s video, APMEX Chief Executive Officer Michael Haynes talks about how growing debt levels in the U.S. are creating greater uncertainty in our financial markets. He also explains how a diversified asset allocation may help minimize risk in your portfolio.

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1.6.12 Weekly Recap

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Gold prices started the week trading higher amid New Year optimism in global markets. It was a volatile week for the precious metal yet prices were still above $1,600 per ounce as the week came to a close.  Analysts remain optimistic over Gold’s performance in the coming year, with many expecting demand for the precious metal to see a boost in response to any quantitative easing by the Federal Reserve and/or European Central Bank. Analysts from Merrill Lynch said this week that they “believe the high cost structure of the global Gold sector should provide support” to the price of the metal.  They expect the price of Gold to average $1,850 an ounce in the coming year.  Even Dennis Gartman of the Gartman Letter changed his view on Gold, becoming “officially bullish” again. He wrote, “The bear run that began in August has now officially ended.”

Geopolitical tension strengthens Gold’s appeal as a safe-haven asset. This was apparent during the past 13 months, with the start of the Arab Spring that spread to Tunisia, Egypt, Libya, Bahrain, Yemen, and others. Now, there are many other situations at play. The ongoing conflict with Iran over the Strait of Hormuz, combined the news that Iran produced its first nuclear rod this week, brought about some safe haven buying of Gold. As the U.S. continued to hit Iran with sanctions, the Middle-East country threatened the United States Navy with military action if a departing U.S. aircraft carrier returns.  Iranian army chief Salehi said, “I advise, recommend, and warn [the U.S.] over the return of this carrier to the Persian Gulf because we are not in the habit of warning more than once.” Meanwhile, the financial sanctions imposed by the United States and the European Union (EU) started to affect Iran negatively by cutting off the ability of Iran to collect payment for oil exports. The European Union came to a preliminary agreement with the U.S. to ban imports of Iranian oil. However, many countries in the EU are dependent on the oil imports. Paul Stevens, economist and emeritus professor at Dundee University in Scotland told CNBC, “”Greece’s economy is already mired in deep recession and could feasibly collapse entirely if the sanctions were imposed. But the impact that would have on countries like Italy and Greece would be enormous, and the Greeks are not going to slit their own throats for the sake of an EU sanction when Iran is the only country willing to offer them oil on favorable terms. It would utterly destroy the Greek economy.”

With the European Central Bank (ECB) continuing to lend money at a very low 1% interest rate to European banks, the opinion is divided over whether that cash flow is actually helping Europe’s sovereign debt crisis, or if the money is just being hoarded by banks. Of issue is a lack of trust in lending between banks, and that lack of trust has the ECB fearing a potential credit crunch within the eurozone, which would be detrimental to the hopes of climbing out of the debt crisis. Renewed concerns about European economic issues caused the euro to plunge to its lowest point in 16 months on Thursday, resulting in a corresponding downturn of global stocks and commodities. Against the U.S. dollar, the European currency dropped below $1.28 today, a level not seen since September 2010. Explaining the euro drop, Marc Chandler, chief currency strategist with Brown Brothers Harriman, said, “I think the market’s primarily concerned about the rollover (of debt) risk from the sovereigns as well as the banks’ capital. You also had weaker European economic data.” Chandler said these concerns, although not new, have flared in response to efforts by Unicredit, Italy’s largest bank, to attract investors by offering a 43% discount on new shares. According to Chandler, “People expect a downgrade any day. Next week, you have Spain and Italy coming to the bond market. Full liquidity hasn’t really returned to the market. The euro is falling against the dollar and also making new lows against sterling and the yen.” European Central Bank policymaker Athanasios Orphanides said that he thinks banks are paying too much for the economic collapse in Greece.  He recently asked leaders in the eurozone to go back on plans which would make private sector investors – the banks – take a large share in reducing Greece’s debts.  Orphanides said that although the Greek government might suffer, “by restoring trust in the eurozone, it would reduce the financing costs of other eurozone governments.” This idea is unlikely to gain much steam, however, as the main force in the eurozone now is Germany, the country that was very much behind the banks taking a haircut on Greek debt.

Germany sold 4.06 billion euros of government bonds this week, with a higher demand than previously recorded in November. Also this week, France sold 8 billion euro’s worth of higher-yield bonds, and the European Financial Stability Fund sold 3 billion euros in three-year bonds. This past December, Standard & Poor’s warned German and French governments of possible bond rating downgrades, and some economists have said that France might be the first to lose its AAA credit rating. French President Nicolas Sarkozy and German Chancellor Angela Merkel plan to meet next week to review Europe’s new fiscal agreement before the EU summit planned for the end of this month. Europe seems to be heading towards a recession with the austerity measures in place, which has caused citizens to be more hesitant to spend money accompanied by an increased unemployment rate. Jennifer McKeown at Capital Economics commented on the down fall of Europe by saying, “Things are really starting to slow down. There’s an underlying economic downturn going on at the same time as the peripheral debt crisis continues. Even the strongest parts of the euro-zone economy are beginning to falter. We see the euro zone beginning to break up, perhaps as soon as this year.”

A key U.S. manufacturing index for December was released that shows evidence of growth. The demand for automobiles and an increase in holiday sales has helped pave the pathway for a U.S. economic recovery. The U.S. housing market  has been a concern since 2008. The Mortgage Bankers Association reported that applications for U.S. home mortgages fell 4.1% in the last week of December, along with a 9.6% drop in purchase loan requests and 2.5% drop in refinancing requests. The housing market is an important facet of the U.S. economy and should reflect positive numbers to show a full economic recovery. U.S. stock futures rose on Friday after the nonfarm jobs report by Automatic Data Processing Inc. was released. Economists expected the number of jobs added in December to reach 150,000, and the report showed 200,000 jobs added. The value of the U.S. dollar also rose.

There were many factors driving uncertainty in the market in 2011. With a new year to tackle new problems, the eurozone crisis remains intact with no solution in sight. This ongoing crisis has driven borrowing costs to unsustainable levels and created concern for a banking crisis in Europe. In an outlook note on 2012, David Simmonds with the Royal Bank of Scotland wrote, “The eurozone crisis is life-threatening because there is too much debt, too little growth and huge intra-zone trade imbalances — belated resurrection of fiscal rules is no panacea. We are in a multiyear de-leveraging world with multiyear low-growth consequences, so mistrust most the quick-fix, free-liquidity addicts who seize on each emergency monetary policy response as a cure-all.”

WEEKLY SPOT PRICES

Gold: Spot Gold prices opened this week at $1,600.50. The high was on Friday, Jan. 6th at $1,632.30, while the low for the week occurred on Tuesday, Jan. 3rd at $1,566.80. Gold ended the week up $17.90 at $1,618.40. 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.

Silver: Spot Silver prices opened this week at $29.52. Silver reached a high of $29.74 on Wednesday, Jan. 4th, while this week’s low for Silver occurred on Tuesday, Jan. 3rd at $27.91. Silver ended the week down $0.74 at $28.78. 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.

Platinum: Spot Platinum prices opened this week at $1,429.40 and ended the week down $22.40 at $1407.00. Popular Platinum products this week included, 1 oz. Platinum Bars, 1/10 oz. Platinum American Eagles, and 1 oz. Platinum American Eagles.

Palladium: Spot Palladium prices opened this week at $663.60 and ended the week down $46.40 at $617.00. Palladium investors preferred 1 oz. Pamp Suisse Palladium Bars and Palladium Canadian Maple Leafs this week at APMEX.com.

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Certified Morgan Dollars

One of the most famous and collectible American coins is the Morgan Silver Dollar, produced from 1878-1904 and in 1921. The 90% Silver coin was also popular for trading. The coin is labeled in reference to the celebrated design by George T. Morgan, a pupil of William Wyon of the Royal Mint in London. The coin’s obverse depicts a profile of Lady Liberty wearing a band on her head with the word “LIBERTY” inscribed. Her profile is surrounded by the words “E Pluribus Unum” and the date of mintage. The coin’s reverse features an eagle carrying an olive branch and arrows. Morgan’s initial, M, can be found both on the front and back of the coin, but this well-known design is easily distinguishable among other Silver Dollars.

The Morgan Dollar is also valued for its high-quality strike. For many collectors, the coin provides a fun, yet challenging collecting experience because of the many varieties and overdates available. Many have survived in relatively high grades considering their age and their use as a common currency. APMEX offers high quality certified Morgan Dollars ranging from MS-62 up to the rare MS-68 from PCGS and NGC grading services. APMEX Certified Morgan Dollars are excellent options for expanding your collection of American numismatic history. APMEX makes it easy to buy Silver Dollars by offering competitive Silver prices on all Silver products.

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12.30.11 Weekly Recap

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APMEX Wishes You a Prosperous New Year!

The price of Gold has been heavily affected by the euro zone crisis this week. In the words of one analyst, “The developments in Italy have perked up the dollar, and that is pushing Gold down.” The long-term outlook for Gold continues to be supported by consistent purchases of Gold by central banks. Although there has been a recent correction in the Gold price, the viewpoint is still positive for the asset. According to James Moore of TheBullionDesk.com, “Precious metals have been hit, as traders and investors continue to lock in profits and bolster cash positions in the run-up to year-end. But, it is worth remembering that despite the recent correction, Gold is still on course to post its 11th consecutive year-on-year gain. And that, given the ongoing debt problems facing many economies, record-low interest rates and the highs in Gold this year, those with a longer-term outlook could view current levels as a buying opportunity.”

Gold demand in China caused the Chinese central bank to step in and ban most Gold exchanges, with the exception of the Shanghai Gold Exchange and the Shanghai Futures Exchange. The People’s Bank of China claims that illegal activity and lax management caused risks to emerge; the bank is now leading a team to clean up problems. Chinese citizens will still be able to buy the Gold they covet, however through limited means. Chinese officials and Japanese Prime Minister Yoshihiko Noda agreed to start directly trading their respective currencies with each other. This has been an ongoing issue between the United States and China, as China views the current currency landscape as too dependent on the U.S. dollar. The short-term effect is relatively limited to helping the current U.S. trade deficit with China; however, the long-term effect could be a devaluation of the U.S. dollar.

The situation in Syria escalated to a point where the Arab League finally intervened this week. The Arab League monitors tasked with observing the situation in Syria said that they saw “nothing frightening” in Homs, the city of 1 million people who has been the epicenter of protests. Some estimates have indicated that one-third of the 5,000 people killed in the Syrian crisis were killed in Homs. Many independent video reports have shown parts of that city that resemble a war zone. The Arab League’s worry has been that their monitors would not be allowed to search during their observation; this initial report only supported those fears. Despite continued observation by the monitors throughout the week, 10 people were reportedly killed Friday morning during protests. Activists hope to meet with the monitors soon to discuss the government crackdown on the protests.

The European Banking Authority set a June 2012 deadline for European banks to raise more than 114 billion euros in fresh capital in order to assure that European banks will have enough cash on hand after the price drop in European sovereign bonds.  The Italian debt auction showed no promise after Italy’s announcement of an austerity package and the recent lending done by the European Central Bank (ECB). Spain also benefited as its six-month debt costs were halved to 2.4%. The ECB has flooded euro zone banks with almost 500 billion euros in the hope that it would be used toward sovereign debt. Last week, markets rallied on the news in the hope that banks would buy sovereign debt or loan money to other banks and businesses to stimulate the economy.

The euro, clearly dealing with a significant lack confidence, experienced a rapid and drastic drop this week, falling through an important price point of 1.30. The euro fell relative to the U.S. dollar; Gold and Silver followed their historical trend to move down as the dollar moved up. There are several opinions as to why the euro fell so rapidly. One opinion is that the European Central Bank (ECB) might still decide to roll the printing press. Another opinion is that the weaker euro has to do with the rapid expansion (10%) of the ECB balance sheet. European banks took the money loaned to them by the ECB. Instead of investing the money, they risked less by parking the money in the ECB overnight depository. A third opinion revolves around the Italian bond market, which has been very unstable lately. All three of these scenarios may very well be playing a part, but the increase in the ECB’s balance sheet is probably the current driving factor.

U.S. analysts expected that the struggling housing market was in recovery. However, data released this week indicated that U.S. single-family home prices dropped significantly in October. The focus in the U.S. has been on improving the housing market to strengthen the overall economy. The number of people contracting to buy existing homes in November went up 7.3%, higher than the 1.5% expectation. Currently, mortgage rates are at all-time lows, while housing prices continue to fall. This provides strong stimulation for increased demand. Most economists see an improved housing picture as essential for job growth and a recovering economy.

Weekly jobless claims in the U.S. rose more than expected but the unemployment claims amount remained below 400,000. Initial claims for jobless benefits went up 15,000 to 381,000. Economists polled by Reuters had forecasted 375,000 claims. Although this did break the streak of three weeks of declining claims, most analyst expect a gradual positive trend to continue.

WEEKLY SPOT PRICES

Gold: Spot Gold prices opened this week at $1,595.20. The high was on Tuesday, Dec. 27th at $1609.20, while the low for the week occurred on Thursday, Dec. 15th at $1,523.90. Gold ended the week down $27.20 at $1,568.00. This week, the most popular Gold bullion products were  Gold American Eagles Pamp Suisse Gold Bars, and Gold Maple Leafs.

Silver: Spot Silver prices opened this week at $28.71. Silver reached a high of $29.22 on Tuesday, Dec. 27th, while this week’s low for Silver occurred on Thursday, Dec. 29th at $26.15. Silver ended the week down $0.77 at $27.94. The most popular Silver products on APMEX.com this week were Silver American Eagles, Silver Maple Leafs, Silver Buffalo Rounds and APMEX Silver Bars.

Platinum: Spot Platinum prices opened this week at $1,437.40 and ended the week down $36.20 at $1,401.20. Popular Platinum products this week included,  Platinum Bars Platinum American Eagles, and  Platinum American Eagles.

Palladium: Spot Palladium prices opened this week at $665.50 and ended the week down $8.70 at $656.80. Palladium investors preferred  Pamp Suisse Palladium Bars and Palladium Canadian Maple Leafs this week.

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2012 Gold Australian Kangaroos

The Perth Mint in Australia released the third product in its 2012 Australian Gold and Silver Bullion Coin Program: the Australian Gold Kangaroo. Much like the previous products in this series, the Gold Kangaroos are issued as Australian legal tender guaranteed by the Commonwealth Government of Australia. The 2012 Australian Gold Kangaroos are offered in sizes of 1/10 oz, ¼ oz, ½ oz and 1 oz, as well as the larger 1 kilo size.

The Australian Gold Kangaroos have been offered by the Perth Mint since 1989, with each year featuring a different reverse design. The jeweler to Queen Elizabeth II, Dr. Stuart Devlin, created the 2012 design, which features a single kangaroo with a bush scene and windmill in the background. The kilo coin differs slightly, in that the image is instead a hopping Red Kangaroo. The mint mark “P” appears on the reverse of each coin, along with the inscriptions “Australian Kangaroo,” the date, the size of the coin, and the purity, “9999 Gold.” The obverse of each coin shows the Ian Rank-Broadley likeness of Queen Elizabeth II, as well as the coin’s monetary denomination, 100 Australian dollars.

The Perth Mint originally opened in 1899 as a branch of Britain’s Royal Mint to help supply Gold sovereigns and half sovereigns, which were used as everyday circulating coins throughout the British Empire. In 1970, control of the mint passed from Britain to the Western Australian Government, which still owns it today.

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12.27.11 Weekly Recap

Gold prices have been affected by the ongoing European debt issues.  The precious metal is tied closely to the fate of both the dollar and the euro. Moves by the two currencies this week have been reflected in the price of Gold.  The recent trend for Gold has been to track the euro and move opposite the dollar.  Although there has been a correction in Gold prices over the past few months, most experts are unfazed and see the precious metal rising again in 2012. Jeffery Wright, a senior research analyst with Global Hunter Securities, said that Gold prices of $2,000 are likely if Washington lawmakers continue to be at odds on how to address fiscal problems in the U.S.  Wright also said, “Once we get back into those discussions, there will be further pressure on the U.S. dollar and a refocusing on Gold as a safe-haven asset.”

Leo Larkin, a metals and mining analyst with S&P Capital IQ, said, “Gold has been going up without interruption for 10 years.” Larkin said the current dip in prices is “totally normal” and stated that he expects this upward trend to continue in 2012. Over the past 10 years, Gold has experienced an average rise of 17% annually.  The demand for the metal continues to surge, and according to commodities strategist Sabine Schels, “The negative outlook for sovereign debt coupled with easy monetary conditions in the eurozone, the U.S. and Japan, meant Gold would retain its safe-haven status while still offering comparatively strong returns. Gold will also benefit from a continued need for central banks in emerging markets to diversify their holdings.”

The death of North Korean leader Kim Jong Il was at the forefront of the news.  Il’s death only adds to the list of uncertainties affecting the world economy; there is concern about the effects his passing will have on North Korea’s economy and its relationship with South Korea.  Stock markets slipped over comments made by European Central Bank (ECB) President Mario Draghi regarding the ECB not being able to step in to buy bonds based on the founding treaty of the eurozone. Other news causing concern was England’s refusal to participate in an increase of the IMF’s resources to help the debt crisis.  There are still plenty of hurdles and difficulties within the eurozone, including Finland’s resistance to how the European Stability Mechanism is run, which could cause issues as early as July 2012. Fitch Ratings stated that it is too late for a comprehensive solution to be reached in Europe’s debt crisis.

The business sentiment in Germany rose sharply in December, which went against expectations that such sentiment would decline. This was looked on as a good sign for the eurozone, as Germany is often considered the workhorse of the European economy. As the markets stabilized, investors wondered what would happen as events continued to unfold in North Korea. Regional tensions were on high alert, even as U.S. Secretary of State Hillary Clinton said the U.S. is ready to help the North Korean people create lasting peace and security on the Korean peninsula. Also, the U.S. House of Representatives voted on extending the payroll tax cut.  Although an agreement to extend the tax cut and unemployment benefits had previously passed in the Senate, congressional Republicans, unhappy that requested cuts to President Barack Obama’s health care law and changes to the unemployment insurance system were removed from the bill passed in the Senate, rejected the proposed two-month extension.

The European Central Bank (ECB) announced that its lending program would be giving eurozone banks a total of 489 billion euros to meet liquidity needs.  The announcement jump-started the markets, as the expectation was that those banks would use some of the loaned money to buy sovereign debt. However, Europe’s initial rush of excitement faded quickly after it was realized that would not be the case.  The eurozone news pulled all major indexes down, although by the end of the day Gold and Silver had climbed back near their Wednesday morning levels.  In the U.S., Republicans and Democrats reprised their roles in a drama similar to the debt ceiling issue earlier in the year, with both sides blaming each other for halting the extension of the payroll tax cut.  Also on Wednesday, the National Association of Realtors announced that existing home sales increased by 4% in November. However, those results were muddied after the association revised its calculations for 2010, saying the housing crash was, in fact, about 14% worse than previously thought.

Thursday began with both U.S. stock futures and the U.S. dollar rising in response to the release of the weekly jobless claims report. The report showed that 4,000 fewer people filed for unemployment benefits the week before. Third quarter Gross Domestic Product numbers for the U.S. reflected a revision downward of 0.2%.  The numbers also indicated that consumer spending had been weaker than originally reported. Fitch Ratings placed the U.S. on warning again  regarding its AAA credit rating, though it said a decision likely wouldn’t come until 2013. Also on Thursday, Republican and Democrat lawmakers in Congress continued their fight over the payroll tax cut extension.

The debt issues in Europe continued to hobble efforts for economic recovery, and there were talks of a ‘Quantitative Easing’-like effort within the European Union. Such a program, which would involve the European Central Bank (ECB) stepping up and buying debt, goes against the principle set forth for the ECB and is a touchy subject with ECB President Mario Draghi, who has indicated that he feels instilling trust in Europe should be the priority. Draghi said in an interview, “We won’t achieve that (trust) by destroying the credibility of the ECB.” The International Monetary Fund showed no signs of stepping in with any sort of financing plan for European debt, either. Former ECB board member Juergen Stark said, “Practically, I don’t see any countries other than eurozone states that want access to the money. It is an attempt to circumvent the ban on direct monetary financing in Europe.”  The domestic economic news on Friday was that U.S. manufactured goods rose quite a bit in November, based on aircraft demand. However, business spending decreased in an indication that investing might be starting to wane.  In other U.S. news, after a week of fighting between Republicans and Democrats, Congress finally passed a two-month extension of the payroll tax cut.

Each year around this time, we begin to see stock and Gold price predictions for the coming year. Last year, most of the predictions for stocks were bullish, and Gold predictions were more modest. But there was no way to predict the Arab Spring, the earthquake and tsunami that hit Japan, the downgrade of the U.S. credit rating, the continued lack of jobs or the severity of the European debt crisis. In the end, it has been a poor year for stocks and another robust year for Gold, despite the recent price decline. It makes one wonder what the unexpected (Black Swan) events might be in 2012. According to an article by Patti Domm, CNBC news editor, there are five geopolitical risks we need to watch for in 2012:

  • The conflict with Iran. Tensions already are escalating as Western countries seek to push sanctions on Iran for its nuclear weapons program.
  • North Korea. Who is this new 28-year-old leader? There is very little known about Kim Jong Un, who leads a secretive and closed country that possesses nuclear weapons.
  • Iraq’s civil war. The exit of U.S. forces leaves behind an unstable situation that creates even more uncertainty amid the world’s major oil supplies.
  • Deteriorating Pakistani-U.S. relationship. The U.S. relies on Pakistan to assist in the ongoing war on terrorism. However, the U.S. also needs India as an ally, which creates quite a balancing act.
  • Russian elections. There could be a shift of power in Russia, and this brings added uncertainty. Russia still carries economic clout and remains the world’s largest oil producer.

WEEKLY SPOT PRICES

Gold: Spot Gold prices opened this week at $1,596.30. The high was on Wednesday, Dec. 21st at $1643.70, while the low for the week occurred on Monday, Dec. 19th at $1,585.50. Gold ended the week up $13.40 at $1,609.70. 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.

Silver: Spot Silver prices opened this week at $28.85. Silver reached a high of $30.21 on Wednesday, Dec. 21st, while this week’s low for Silver occurred on Tuesday, Dec. 20th at $28.70. Silver ended the week up $0.32 at $29.17. 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.

Platinum: Spot Platinum prices opened this week at $1,411.10 and ended the week up $21.10 at $1432.20. Popular Platinum products this week included, 1 oz. Platinum Bars, 1/10 oz. Platinum American Eagles, and 1 oz. Platinum American Eagles.

Palladium: Spot Palladium prices opened this week at $617.10 and ended the week up $43.40 at $6660.50. Palladium investors preferred 1 oz. Pamp Suisse Palladium Bars and Palladium Canadian Maple Leafs this week at APMEX.com.

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12.9.11 Weekly Recap

Gold this week was heavily influenced by the European debt crisis, with prices rising or falling based on the latest the news from Europe.  Tuesday morning saw gold reach its lowest point for the week, with the price dropping as low as $1,708.  The highest price for gold during the week came late Wednesday afternoon, when the precious metal rose to more than $1,744.  By week’s end, Gold was responding to the European news positively, rising along with the euro.  Oliver Pursche, co-portfolio manager of the GMG Defensive Beta Fund, said, “When you have so much retail and ETF interest (in Gold), you’re not going to trade on the fundamentals on the short term. (But I) would not be surprised to see higher Gold prices longer term.”

Monday started with the focus still on the debt crisis in Europe, with Gold prices dipping and U.S. stock futures rising amid optimism regarding a resolution to the eurozone debt crisis.  With a European Union summit planned for the end of the week, Rockwell Global Capital’s Peter Cardillo said, “The (stock) rally continues, but it’s all about Europe and any disappointing news out of Europe later in the week could mean an about-face for this market.”  French President Nicolas Sarkozy and German Chancellor Angela Merkel found themselves under fire to agree on a “master plan” regarding the budget for the eurozone. They announced their proposal for the “Stability and Growth Pact” treaty to assist with strengthening the eurozone financial policy to reinstate confidence in the shared currency.  Commerzbank, in response to news that the European Central Bank (ECB) was expected to cut interest rates, stated in a note, “This should lend support to the Gold price, since the opportunity costs of holding Gold will remain low.”  Also, the Institute for Supply Management (ISM) reported that the U.S. service sector performed at a slower pace than expected in November.  Standard & Poor’s (S&P) came out with very harsh wording in its credit rating review for the eurozone, warning fifteen countries (including France and Germany) about a possible credit downgrade.

On Tuesday, optimism that eurozone leaders would come up with a concrete plan to shore up the debt crisis continued to spread, spurred on by investor belief that Standard & Poor’s (S&P) downgrade warning to 15 European countries the day before would help that process along.  In a commentary written for Marketwatch, author Satyajit Das stated, “What happens in Europe will not stay in Europe.  The shock will be rapidly transmitted through trade, investment and the financial system to the rest of the world.  It may truncate the nascent U.S. economic recovery.”  There was fear that the European Financial Stability Facility also might face a downgrade of its respected credit rating if even one of the bailout fund’s six guarantors (Germany, France, the Netherlands, Finland, Austria, and Luxembourg) was downgraded from a rating of AAA.  U.S. Treasury Secretary Tim Geithner was in Germany Tuesday to attend the three-day eurozone summit aimed at finding a European economic resolution.  He indicated his support for the German-French initiatives pushing closer European financial cooperation, and urged policymakers to look to central banks to help provide protection from the growing debt crisis.

Wednesday saw many investors waiting on the results from Thursday’s European Central Bank meeting, in which the result is expected to be a lowering of interest rates.  The big card on the table for the meeting was the proposed new EU treaty that would include tougher budget rules.  Treasury Secretary Timothy Geithner headed to France to continue promoting the American agenda while meeting with French, Italian, and Spanish officials.  Geithner stated, “I have a lot of confidence in what the president of France and the minister are doing, working with Germany to build a stronger Europe.”  The U.S. senate appeared to put “too-big-to-fail” banks back on its radar, with Senator Sherrod Brown holding a hearing Wednesday regarding “new oversight authority to shield Main Street from Wall Street megabank risk.” Comments made by German officials and the new economic figures had diminished hopes that a resolution would come out of the EU summit planned for Friday.

News about the European Union drove major market movement during this past week. Precious metals prices and U.S. stocks were both down Thursday morning after the announcement from the European Central Bank (ECB) that it would be cutting its key lending rate from 1.25% to 1%, while also introducing further measures in an effort to ease lending for banks.  Investors appeared to be hoping for news that the ECB would aggressively begin to buy bonds.  However, ECB President Mario Draghi announced the oppositeEuropean Union leaders meeting in Brussels came to an agreement on new fiscal rules for stricter budget discipline in the eurozone.  However, EU leaders were unable to come to an agreement on how to shore up the EU’s future permanent rescue fund, and the looming question about whether any new agreement would require major changes to the EU treaty wasn’t even brought up.  French President Nicolas Sarkozy stated, “Never has the risk of Europe exploding been so big.” The German Chancellor Angela Merkel offered, “The euro has lost credibility, and this must be won back.  We will make clear that we will accept more binding rules.”  Not everyone was convinced.  Scotia Capital economist Alan Clarke said, “One step forward, two steps back.  The eurozone leaders might as well not bother.  Pack their bags, go home, enjoy the weekend, and do their Christmas shopping.”  In the U.S., weekly jobless claims fell by 23,000 to 381,000, a better number than the expected drop of 9,000.

By Friday, after overnight talks in Belgium, 23 European nations (including all 17 eurozone members) were planning on a new intergovernmental treaty for fiscal discipline, which would include caps on Gross Domestic Product deficits, consequences for deficits exceeding 3% of GDP, additional contributions to the International Monetary Fund, and other features.  However, not every EU member was on board for a revision of the treaty.  British Prime Minister David Cameron, after telling journalists present that Britain “would never join the euro,” argued for regulatory exemptions that would protect the United Kingdom’s financial services industry. He said that the ideas proposed by French President Sarkozy and German Chancellor Merkel were not something he could “in good conscience” take back to the UK and put to a vote in parliament.  In response, President Sarkozy said, “Our British friends made unacceptable demands.”  Also on Friday, Moody’s Investors Service downgraded three French banks based on the continued negative economic outlook in Europe, explaining, “The probability that the (banks) will face further funding pressures has risen in line with the worsening European debt crisis.”

WEEKLY SPOT PRICES

Gold: Spot Gold prices opened this week at $1,735.00. The high was on Thursday, Dec. 8th at $1,760.50, while the low for the week occurred on Friday, Dec. 9th at $1,704.90. Gold ended the week down $22.10 at $1,712.90. 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.

Silver: Spot Silver prices opened this week at $32.36. Silver reached a high of $33.09 on Monday, Dec. 5th, while this week’s low for Silver occurred on Thursday, Dec. 8th at $31.43. Silver ended the week down $0.08 at $32.28. 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.

Platinum: Spot Platinum prices opened this week at $1,533.60 and ended the week down $16.60 at $1,517.00. Popular Platinum products this week included, 1 oz. Platinum Bars, 1/10 oz. Platinum American Eagles, and 1 oz. Platinum American Eagles.

Palladium: Spot Palladium prices opened this week at $643.80 and ended the week up $43.50 at $687.30. Palladium investors preferred 1 oz. Pamp Suisse Palladium Bars and Palladium Canadian Maple Leafs this week at APMEX.com.

2011 Kilo Silver Aztec Calendar coin

Honor the rich heritage of Mexico and its people with the 2011 Kilo Silver Aztec Calendar coin, now $100 off the regular price. With a full 32.15 oz. of .999-fine Silver, these incredibly detailed coins were minted in limited quantities. APMEX ships them with a magnifying glass, mint-issued box and certificate of authenticity. Order yours today, while supplies last.

Harder to Find than Many Kilo Coins

The Sun Stone (also known as the Aztec Calendar) was unearthed in Mexico in 1790. The original Sun Stone measures 12 feet in diameter and weighs 24 tons. The Banco de Mexico minted only 1,500 of the 2011 Kilo Silver Aztec Calendar coins.

Given the coin’s large size, Banco de Mexico was able to recreate this historic artifact in stunning detail. The 2011 Kilo Silver Aztec Calendar coin:

  • Comes with a mint-issued box and certificate of authenticity with a unique serial number
  • Includes a magnifying glass so you can fully appreciate the coin’s beauty
  • Packaged in a beautiful, laser-etched wooden display box

The front of the coin features the Mexican national shield (an eagle on a cactus with a snake in its beak) surrounded by previous Mexican national shields used throughout history.

Order Silver online today at APMEX.com!

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12.2.11 Weekly Recap

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Merry Christmas from everyone at APMEX!

 

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

Gold:
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.

Silver:
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.

Platinum:
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.

Palladium:
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.

 

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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.

APMEX provides many opportunities to add this beautiful, world-class Gold investment to your precious metals portfolio. The bar selection ranges from 1 gram to 10 ounces. Best of all, APMEX customers now have a super opportunity to buy Pamp Suisse 1 oz. Gold bars at a great discounted price during the “12 Days of Christmas” promotion! Buy Gold Pamp Suisse bars for ONLY $39.99 over spot while supplies last. And there are no limits!

Don’t miss this low Gold price! Purchase Pamp Suisse Gold that is affordable, beautiful and secure. – order Gold online now!

Order Gold online today at APMEX.com!

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10.28.11 Weekly Recap

Gold is becoming an increasingly important portfolio balancing tool. The World Gold Council reports that even if investors hold alternative assets, they are not a substitute for the protection offered by a distinct allocation to Gold. The council commented,  “Even a small allocation to Gold, by mitigating risk, can consistently increase the returns from a portfolio.”

Gold has had a good week with solid positive gains. “Nobody really wants to go short on Gold,” said Bernard Sin of MKS Finance SA. “I don’t think Europe will be out of the woods yet.” Currently, there is physical demand in India due to the Diwali festival. Nick Trevethan of Australia & New Zealand Banking Group Ltd. said, “We’re seeing some progress in Europe, but the market’s been  disappointed before. There’s still a lot of good reasons to be holding Gold. The world is still relatively shaky; we’re a low interest rate environment in  many parts of the world.”

Leaders in the euro zone have agreed upon a plan to shore up Greece’s debt burden and to contain the debt crisis in the whole region. In the agreement, private bondholders will take a 50% write-down on their holdings of Greek debt, the European Financial Stability Facility will be increased to over 1 trillion euros, and there will be a recapitalization of European banks.

However, even with a plan in place to help contain the euro zone debt crisis, naysayers are already coming out of the woodwork saying the measures taken are short term at best and expect doubts to return. “The very best you can hope for is it buys you time,” said Jonathan Loynes, Capital Economics’s Chief European Economist. “It avoids an imminent catastrophe and means Greece should be able to meet its obligations in the near future, and it may restore a bit of confidence. But it won’t prevent the debt crisis overall from rambling on and indeed escalating.” Greek Prime Minister George Papandreou came out in support  of the plan as well, saying, “The crisis gives us the opportunity and this agreement gives us time. We negotiated and managed to erase a very important  part of our debt. Tens of billions of euros have been lifted from the backs of the Greek people.”

The U.S. weekly first-time jobless claims report showed a drop of 2,000 while the four-week moving average fell closer to the pivotal 400,000 mark. In an optimistic report, the U.S. gross domestic product rose by 2.5% in the third quarter, showing that the economy is expanding at a rate nearly double that of the second quarter. Inflation is also believed to be down to the 2.0% level, which lowered from the 3.3% level in the second quarter.

Lawmakers may be becoming complacent in their efforts to close the federal spending gap; Reuters reported that many lawmakers do not think another credit rating downgrade could affect the economy. Congressman Michael Grimm said, “There have been some that think we can absorb another [downgrade] and they hide behind the fact that the credibility of the ratings agencies has been called into question.” The attitude that the United States is the “cleanest dirty shirt” may cause paralysis in a congress that is  divided on such a hot-button issue.

Hedge funds seem to be betting against another recession. Many have placed bets on commodities which generally increase in value while coming out of a recession. “People are looking around saying, ‘You know what, the world isn’t ending,’” said John Stephenson, SVP and Fund Manager for First Asset Investment Management Inc. Silver, Platinum, and Palladium are all very industrial metals with many uses as raw materials and an increase in manufacturing levels may mean increased demand for those as raw materials.

WEEKLY SPOT PRICES

Gold:
Spot Gold prices opened this week at $1,638.40. The high was on Friday, Oct. 28th at $1,754.00, while the low for the week occurred on Monday, Oct. 24th $1,636.60. Gold ended the week up $107.10 at $1,745.50. 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.

Silver:
Spot Silver prices opened this week at $31.23. Silver reached a high of $35.70 on Friday, Oct. 28th, while this week’s low for Silver occurred on Monday, Oct. 24th at $31.23. Silver ended the week up $4.18 at $35.41. 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.

Platinum:
Spot Platinum prices opened this week at $1,509.50 and ended the week up $140.10 at $1,649.60. Popular Platinum products this week included, 1 oz. Platinum Bars, 1/10 oz. Platinum American Eagles, and 1 oz. Platinum American Eagles.

Palladium:
Spot Palladium prices opened this week at $616.40 and ended the week up $52.60 at $669.00. Palladium investors preferred 1 oz. Pamp Suisse Palladium Bars and Palladium Canadian Maple Leafs this week at APMEX.com.

Sunshine Gold Bars

APMEX is proud to offer Sunshine Minting Gold Bars in 5 gram, 10 gram, and 1 ounce sizes. Sunshine Minting is one of the premier minting companies in the world. Based in Idaho, Sunshine Minting is an American company that produces 24k (.9999  pure) Gold bars. These little pieces of inflationary protection come in their own tamper-evident packaging to ensure quality control and convenient storage.

APMEX and Sunshine Minting have come together to offer our customers high quality Gold bullion at affordable prices. Log on to APMEX.com to grab your own self-contained piece of perfection today.

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