The U.S. debt passed the $15 trillion mark this week. What does a trillion dollars look like? A trillion is 1 million multiplied by 1 million. 1,000 billion dollar bills in your pocket amounts to $1 trillion which is understandably inconceivable to most people. Americans should be alarmed about this $15 trillion debt when we learn that the ratio of U.S. debt to its GDP is now 102% and rising. When the debt-to-GDP ratio of a country hits 90%, it begins to become a drag on future economic growth. If this ratio climbs to 100% or higher, the economic growth becomes nearly impossible.
It appears that until Europe is fixed, its headlines will continue to drive the markets for the foreseeable future Robert Pavlik, Banyan Partners chief market strategist, expressed,“We’re capped, at least until we can knock Europe off the front page.” Gold fell more than $50/oz on Thursday as concerns of expanded contagion from the euro zone crisis caused large selloff in almost every market. There is a lot of fear, warranted or not, over the exposure of U.S. banks to the debt crisis in Europe. The concern is not over any of the countries we’ve worried about over the past few months; the concern is the exposure of U.S. banks to French and British debt. The exposure to Greece, Ireland, Italy, Portugal and Spain totaled a relatively manageable $50 billion as of Sept. 30th; however, the exposure to French debt is approximately $188 billion and exposure to British debt is approximately $225 billion.
German Chancellor Angela Merkel said that Europe could be facing its toughest hour since WWII. Greece and Italy both have new leaders but this does little to nothing in itself to solve the problem. Both new leaders are rushing to form new administrations and coalitions to stave off the damage of escalating debt problems. “Europe is in one of its toughest, perhaps the toughest, hour since World War II,” Merkel told her conservative party in Leipzig. “If the euro fails, then Europe fails, and we want to prevent, and we will prevent, this. This is what we are working for, because it is such a huge historical project,” Merkel said. Investors continue to look for decisive action from euro zone leaders.
This time of year, hedge funds and other investment firms are required to make regulatory filings with the SEC to report their holdings. These reports can give an indication as to the outlook of some of the world’s savviest investors. It appears that many are cautiously optimistic but are still avoiding risk, mainly due to fears of a contagion from Europe’s financial woes. Ryan Detrick, senior analyst at Schaeffer’s Investment Research, said, “We still think it makes sense to be cautiously bullish here. Don’t go overboard, obviously, because those Europe concerns are clearly still relevant.”
In an interview on Wednesday, Christopher Waller, research director for the St. Louis Federal Reserve Bank, warned that economic recovery in the U.S. is likely to be a process that will take several years and that the Federal Reserve can do little to shorten it. “Something’s happened in U.S. labor markets that we can’t overcome,” he said, adding, “No matter what we do, recovery is going to be slow.” Bullard has said the Fed shouldn’t engage in any additional easing of monetary policy unless the U.S. economy derails from its current modest growth, stating, “There’s no point in trying to say, ‘Cure cancer with monetary policy.’ It’s just not possible.”
Meanwhile, Chicago Fed President Charles Evans is pushing for a commitment from the Fed to do more to decrease the nation’s high unemployment rate. Evans, who has been pushing for more aggressive action from the Fed for some time, said, “I just think this is the time to stretch the boundaries a little bit more and take a few chances.” He is pushing for a plan that involves asset purchases (some form of quantitative easing (QE) as well as very low interest rates until the unemployment rate drops below 7% or until inflation rises above 3%. At the most recent meeting of the Federal Open Market Committee, Evans was the lone dissenter on the panel who favored more aggressive action, including a third round of QE. Now, two more Fed presidents have released statements supporting Evans’ ideas. But if Evans gets his way, how will the stimulus be paid for?
WEEKLY SPOT PRICES
Spot Gold prices opened this week at $1,778.40. The high was on Monday, Nov. 14th at $1,797.60, while the low for the week occurred on Thursday, Nov. 17th at $1,711.00. Gold ended the week down $50.40 at $1,728.00. 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 $34.10. Silver reached a high of $34.92 on Monday, Nov. 14th, while this week’s low for Silver occurred on Friday, Nov. 18th at $30.93. Silver ended the week down $1.64 at $32.46. 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 $1,646.40 and ended the week down $48.50 at $1,597.90. 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 $664.30 and ended the week down $57.80 at $606.50. Palladium investors preferred 1 oz. Pamp Suisse Palladium Bars and Palladium Canadian Maple Leafs this week at APMEX.com.
100 Corona Gold Coins & Gold 50 Pesos
For decades, these Gold coins have remained a world favorite for people interested in Gold investments because the premiums charged for these coins are normally lower than for most other Gold bullion coins. The 100 Corona coin contains 0.9802 oz. of 21.6-karat Gold. The Corona coins were originally issued from 1908-14, bearing the date of mintage; after the death of Austrian Emperor Franz Joseph, the coins were imprinted with the commemorative date of 1915. The Austro-Hungarian 100 Corona coin is no longer minted. The 50 Pesos coins were minted in Mexico City. The Peso coin contains 1.2057 oz. of 90% Gold and 10% copper that strengthens the coin to endure the wear of circulation.
Increase your Gold portfolio in thrifty fashion by adding Mexican Gold 50 Pesos bullion coins and Austro-Hungarian Gold 100 Corona coins to your holdings. While supplies last, buy Gold 50 Pesos and 100 Corona coins at only $24.99 per ounce over the Gold spot price at APMEX.com.
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