9.23.11 Weekly Recap

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The $3 trillion deficit plan devised by President Obama was unveiled Monday; it featured a heavy emphasis on increased tax revenues from the wealthy. Today, the President stated, “”I will not support any plan that puts all the burden on closing our deficit on ordinary Americans. We are not going to have a one-sided deal that hurts the folks who are most vulnerable.” The President’s comments referred to the idea, often repeated during today’s remarks, that all Americans should pay a “fair share” of taxes, as well as his vow to veto any Medicare cuts unless Congress raises taxes on the wealthy and corporations.

Republican leaders were dismissive of the President’s plan. They were deriding it as a political stunt that is unlikely to ever be made into law. In response to the plan, Mitch McConnell, Republican Senate leader, stated, “Veto threats, a massive tax hike, phantom savings, and punting on entitlement reform is not a recipe for economic or job growth,” while Potomac Research Group’s chief political strategist Greg Valliere said, “This is purely politics, aimed at Obama’s demoralized base. It undoubtedly has been poll-tested, so now Obama has a populist campaign issue. There’s obviously no chance this could pass (on a vote in Congress).”

Monday also brought a credit rating downgrade on Italian bonds by Standard & Poor’s (S&P) on concerns that the on going debt crisiswill raise borrowing costs throughout the euro zone. This move surprised many and only puts more pressure on policymakers to lead. The chief commodity analyst at Oslo based SEB AB sees Gold prices going higher until political leaders implement effective action. Bjatne Schieldrop said, “Under current circumstances, a long position in Gold is highly recommended.”

The International Monetary Fund (IMF) released a report Tuesday which stated that the global outlook for economic growth was for a “weak and bumpy expansion,” which equates to a cutback to 1.5% from 1.8% and Europe being cut to 4% from 4.5%. The IMF’s Chief Economist, Olivier Blanchard, commented on the negative global outlook, “There is a wide perception that
policymakers are one step behind markets…Europe must get its act together
.” The IMF also forewarned the U.S. that hasty budget cuts could further weaken growth and added that the U.S. Federal Reserve should be ready to offer to further ease monetary policy.

The Fed released its plan for further easing on Wednesday, saying it will implement a plan known by the public as “Operation
Twist.” The Fed’s plan is to flatten the yield curve of U.S. Treasuries by selling short term bonds to buy long term bonds. This would push down the interest rate the government pays on 10-year T-Bills. Many other long-term loan interest rates (such as mortgage and business loans) are based on the rate of the 10-year Treasury bond. The net effect would be a reduction in borrowing cost for homeowners and businesses. If everything goes according to plan, the result would be job creation.  Following the announcement, both precious metals and stock markets fell sharply, with the Dow closing down 391 points on Thursday.  Precious
metals
continued their downward momentum on Friday with Gold down by as much as $100 by the time of this writing.

Typically, Gold follows the stock market down on days with significant downward momentum such as Yesterday. Traders have to sell whatever they can to raise cash and cover margin calls. They literally go by the motto coined by Art Cashin, “if you can’t sell what you want, then sell what you can.” Gold is liquid; they need cash, so Gold gets sold. Speaking of Art Cashin,
he is quoted today as saying stocks have not bottomed yet.

On Friday, the U.S. stock market was choppy, but precious metal prices continued to plunge. Hedge funds sold Gold and this is the number one reason why Gold prices were down. The big question: “Are they selling because they are no longer bullish on Gold or are they selling because they need to raise cash quickly and Gold is a highly liquid asset?” Hedge funds not only need to raise
cash to cover margin calls in turbulent times like these but redemption requests increase. Michael Gayed, Chief Investment Strategist for Pension Partners comments, “The tendency for individual hedge funds or anybody is to sell winners before they sell losers. What’s been one of the few winners this year? It’s been Gold.” Not all funds are selling and there are still some
strategists who predict Gold to reach $2,300. After all, even with the pullback, Gold is up over 20% for the year.

Art Cashin, Director of Floor Operations at UBS Financial Services, says there might be a Thursday–Monday scenario in play, that could cause a massive rally in the markets next week. Mr. Cashin explains that we might be about to experience this historical trading pattern. The Thursday-Monday pattern begins with a steep decline on Thursday with very high volume. Friday’s markets
turn choppy (high volatility) and then weekend news sets the market up for a massive sell-off (capitulation) on Monday. The sell-off usually ends by Monday, but can extend into Tuesday. Shortly thereafter, capitulation is followed by a massive rally.

Enjoy the weekend! Who knows what the markets will bring this Monday?

Weekly Spot Prices

Gold:
Spot Gold prices opened this week at $1,812.80. The high was on Monday, Sept. 19th at $1,832.90, while the low for the week occurred on Friday, Sept. 23rd $1,631.70. Gold ended the week down $152.90 at $1,659.90. 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 $40.73. Silver reached a high of $40.90 on Monday, Sept. 19th, while this week’s low for Silver occurred on Friday, Sept. 23rd at $29.85. Silver ended the week down $9.69 at $31.04. 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 $1,813.70 and ended the week down $193.20 at $1,620.50. 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 $736.30 and ended the week down $99.50 at $636.80. Palladium investors preferred 1 oz. Pamp Suisse Palladium Bars and Palladium Canadian Maple Leafs this week.

   2011 1 oz. Silver American Eagle

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2011 brought with it a newly designed Silver American Eagle. This current date of the Silver Eagle will only add to the coin’s legacy as the most popular Silver bullion coin in the world. Another interesting tidbit about the 2011 Silver American Eagle is the minting location. 2011 is the first year Silver Eagles have been minted at the San Francisco Mint since 1998.

The U.S. Mint began minting the Silver American Eagle (SAE) in 1986.  The 26 years of mintage have produced over 225 million SAEs.  Since 2000, demand for these coins has exploded.  These 2011 coins trade at premiums close to common-date Silver American Eagles, which makes their current date a bonus of sorts.  The 2011 SAE is a brilliant uncirculated coin that can be bought in bulk at APMEX.com and used in Precious Metals IRAs while potentially adding numismatic value to your investment.

Balance your portfolio with the 4th asset class of Gold today.

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9.16.11 Weekly Recap

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APMEX made national headlines this week when Donald Trump accepted 3 Gold bars for an APMEX New York City Office. Donald Trump stated, “The legacy of Gold as a precious commodity has transcended to become a viable currency and an accepted universal monetary standard. Central Banks around the world are holding Gold as a reserve asset. It is also a terrific, potentially lucrative diversifier in a portfolio, especially with such volatility in the stock market.”

Gold is closing this week lower than it started, having backed off the record highs of the previous few weeks.  Earlier in the week, Gold dipped with stocks due to traders who cashed in on their Gold holdings to cover losses in other markets.  Later in the week, with more optimism surrounding Europe, investors became more comfortable with riskier assets.  This is reflected in the current higher stock prices and lower Gold prices.  Despite the optimism in the market, there are still many concerns yet to be addressed in the U.S. and world economies.

Concerns in Europe are set up like dominoes.  There were rumors that Greece would default on its debt this past weekend. While that didn’t happen, the issues in Greece are well-known.  French banks are at risk of large losses if Greece does default. Germany’s finance ministry is planning to bail out its major banks if Greece defaults.  Last Friday’s resignation of the European Central Bank’s Chief Economist, Juergen Stark, has a place in the situation also.

Traders were worried about credit downgrades for European financial institutions. After a recent review, Moody’s Investors Service downgraded the credit ratings of two prominent French banks, Societe Generale and Credit Agricole.  The credit review was part of the reason for the recent tumbling European stocks.

It seems the market may be growing more comfortable with the Greek debt situation.  World leaders are working diligently to keep Greece from economic ruin; they are creating a plan to provide much-needed liquidity to European banks.  Traders’ confidence seems to be buoyed by the news.  Global stock indexes rose today as investors sell some of their safe havens (like Gold) to purchase riskier assets.  David Wilson, an analyst at European bank Societe Generale, told CNBC, “[T]here must be a bit more positivity for holding riskier assets… I still think the general trend for Gold is upward, but it’s a saw-toothed pattern and at the moment, we’re on the downside.”

The European Central Bank (ECB) has announced that it will coordinate with several of the world’s most prominent central banks on a campaign to provide banks with the U.S. dollars needed to avoid funding deficiencies.  With U.S. money market funds and other dollar lenders worried about the threat of default by Greece, some banks have found it difficult to get dollar funding for extended periods.  According to the ECB, “The European Central Bank has decided, in coordination with the (U.S.) Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank, to conduct three U.S. dollar liquidity-providing operations with a maturity of approximately three months covering the end of the year.”  In response to the ECB announcement, both the euro and shares in European banks jumped dramatically.

Concern is growing that the job plan proposed by President Obama last week could lead to another showdown with Congress over increasing the debt limit.  The President’s job plan would lead to $447 billion in additional spending before the November 2012 election.  This would cause the deficit to go over the amount agreed upon back in August of this year.  According to Robert Bixby, the Concord Coalition’s executive director, “The irony of all this is that…they may have to confront it (raising the debt limit) again soon because the deficit might be a great deal higher than we were anticipating.”

The Federal Reserve will reportedly discuss “Operation Twist” at their meeting next week.  This is a plan to shift weight in the Fed’s balance sheet more towards long-term securities as opposed to short-term debt. Michelle Meyer, an economist for Bank of America Merrill Lynch, said, “That sends a signal the Fed is still active in supporting growth.”  The Fed is keeping a close eye on the debt situation in Europe as well as problems in the U.S., such as the troubling 9.1% unemployment rate.

Weekly Spot Prices

Gold:
Spot Gold prices opened this week at $1,861.70. The high was on Monday, Sept. 12th at $1,865.20, while the low for the week occurred on Friday, Sept. 16th $1,765.40. Gold ended the week down $48.30 at $1,813.40. 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 $41.50. Silver reached a high of $41.60 on Monday, Sept. 12th, while this week’s low for Silver occurred on Friday, Sept. 16th at $39.46. Silver ended the week down $0.77 at $40.73. 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 $1,838.50 and ended the week down $24.80 at $1,813.70. 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 $739.20 and ended the week down $2.90 at $736.30. Palladium investors preferred 1 oz. Pamp Suisse Palladium Bars and Palladium Canadian Maple Leafs this week.

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The 2011 Gold Mountie is the newest in the line of The Royal Canadian Mint’s top-notch Gold products.  At .99999 fine, the Gold Mountie is among the purest coins ever minted.

Issued to honor the rich history and tradition of the Royal Canadian Mounted Police, the 1 oz Gold Mountie is a perfect marriage of rough and regal, of tenacious and triumphant. The reverse of the coin embodies the true spirit of the Mounties. An upright, smartly-dressed officer rides at a full gallop proudly displaying the colors of the Royal Canadian Mounted Police. The front of the coin shows Queen Elizabeth II surrounded by the national symbol of Canada, the maple leaf.

The Royal Canadian Mint used their incredible talents to construct a brand-new design for the 2011 Gold Mountie coin. Surrounded by a 12-sided border, both Queen Elizabeth II and the Mountie hold their heads high. A mesh design behind the figures adds a sense of depth and movement to the coin. At .99999 fine, the 2011 Gold Canadian Mountie coin is a marvel of modern minting.

Balance your portfolio with the 4th asset class of Gold today.

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Video: Donald Trump takes Gold for APMEX New York City Office

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Donald Trump, for the first time ever, accepted Gold bullion as a security deposit on the commercial office space that APMEX will occupy in the Trump Building at 40 Wall Street. “The legacy of Gold as a precious commodity has transcended to become a viable currency and an accepted universal monetary standard,” said Trump. “Central Banks around the world are holding Gold as a reserve asset. It is also a terrific, potentially lucrative diversifier in a portfolio, especially with such volatility in the stock market.”

Michael Haynes, CEO of APMEX commented, “New York is one of the major financial and precious metal capitals of the world and 40 Wall Street is a landmark building. We are experiencing significant growth as more and more investors realize that precious metals such as Gold, Silver, Platinum, and Palladium, may provide balance to a portfolio as a part of the asset allocation. We are pleased that Mr. Trump has agreed to accept Gold as a deposit on this lease, and in doing so expresses his confidence in Gold as a valuable, long term asset.”

The lease signing made headline news in the financial community, including The Wall Street Journal and TheStreet.com TV.

Balance your portfolio with the 4th asset class of Gold today.

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Donald Trump to Accept Gold Bullion in Lieu of Dollars on APMEX Lease at 40 Wall Street

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For the first time in the history of The Trump Organization, Donald J. Trump will be accepting Gold Bullion as a security deposit. APMEX, one of the largest U.S. precious metals dealers, will give Mr. Trump Gold Bullion today as a deposit on a 10 year commercial lease for the entire 50th floor at 40 Wall Street, also known as the Trump Building. At the signing of the lease today, APMEX CEO Michael Haynes will present Donald Trump with three, one kilo, .9999 pure Gold bars, weighing in total approximately 96.45 troy ounces.

Donald Trump said, “The Trump Organization has always strived to be ‘the gold standard. We welcome APMEX as our tenant at 40 Wall, a prestigious and historical location. The legacy of Gold as a precious commodity has transcended to become a viable currency and an accepted universal monetary standard. Central Banks around the world are holding Gold as a reserve asset. It is also a terrific, potentially lucrative diversifier in a portfolio, especially with such volatility in the stock market.”

Click HERE for the entire press release.

 

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The U.S. Dollar is the World’s Reserve Currency -Does it Really Matter?

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The short answer is yes.  America has advantages with the U.S. dollar as the world’s reserve currency that other nations, such as China, would love to enjoy. Since the U.S. dollar is the medium of exchange in worldwide transactions, the U.S. pays for transactions in its own currency.  Other countries are required to exchange their currency into the U.S. dollar which results in additional transaction fees with each exchange. This means they will pay slightly more for the same commodity than the U.S. would pay. This reserve currency status also allows Americans to borrow at advantageous rates because our dollar is in a higher demand.  Last but not least, the U.S. can always print more dollars to pay its global bills.

We hear on occasion of appeals that America must go back to the Gold standard. Although I am not opposed to this idea; I do not see this happening. If we went back to the Gold standard monetary system, the participating nations would lose their ability to print more money to pay their bills.  I do see the possibility that the world reserve currency may actually become a basket of different currencies which would include Gold.  If you do not understand by now that Gold is a currency and not a commodity, you should. Central banks around the world began exchanging U.S. dollars for Gold back in late 2009; in 2011, they have only picked up the pace. I think the direction is that reserves for currency will be a possible basket of U.S. dollars, Gold, perhaps euros and maybe remnibi. You cannot count the Chinese out; they intend to be a global financial power.

As we watched the price of Gold break $1800 per ounce recently, many people directly attribute this to the loss of faith in government-backed paper money – more accurately, it is a loss of faith in paper money by their own central banks! What do they know that perhaps we should know?   

 By Peter LaTona, Vice President of Sales at APMEX

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40 Year Anniversary of the U.S. Coming Off the Gold Standard!

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Forty years ago today, President Richard Nixon signed into a law a bill that took the United States off the Gold standard and signaled to the world the end of the Bretton Woods agreement. The Bretton Woods agreement, an international agreement created to stabilize the currencies of participating countries, had fixed the price of the U.S. dollar to Gold and to the Gold price of $35 an ounce. The Gold-fixed U.S. dollar had been the foundation of the global economy.

Prior to 1971, there was an unspoken agreement amongst foreign treasuries not to ask for Gold, which could produce a Gold run. However in 1971, with the U.S. facing accelerating inflation and the expense of the Vietnam War, other countries began to lose faith in the U.S. dollar and began asking for payments in Gold. The Nixon administration went off the Gold standard in order to devalue the U.S. dollar. They feared that a run on Gold could deplete their Gold reserves and they were concerned about a deficit trade imbalance with Japan. By lowering the value of the U.S. dollar, they marginally offset the trade imbalance and there was no run on the U.S. gold supply.

 Over the last 40 years, Gold prices have climbed upwards 5000%, while the purchasing power of the U.S. dollar has continually declined. Would a return to a Gold standard bring greater value to the U.S. dollar and help resolve the U.S. debt crisis?

By Peter LaTona, Vice President of Sales at APMEX.

Balance your portfolio with the 4th asset class of Gold today.

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Investors Worldwide Choose Gold as 4th Asset Class; Gold Hits $1800 per oz. on Wednesday

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In Wednesday’s video message, Michael Haynes, CEO at APMEX, discussed why foreign investors buy Gold in greater quantities than the U.S. investors and how the worldwide acceptance of Gold as the 4th asset class has established Gold as a global asset. Gold Prices reached record highs over the past few weeks as investors worldwide flock to Gold as a safe haven.

Historically, investors buy Gold and Silver to balance and diversify their portfolios during high inflation periods. With the value of the dollar continuing to spiral downward, many investors have chosen to invest in precious metals.

Michael R. Haynes is a 30-year veteran of the precious metal and rare coin markets. He has served as a board member, president, COO or CFO of nine different public and private companies engaged in the specialty retail, distribution, e-commerce and manufacturing businesses.

Balance your portfolio with the 4th asset class of Gold today.

Keep up with APMEX news throughout the week with subscriptions to the

 APMEX Commentary via RSS feed and the  APMEX Blog via RSS feed.

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