1.13.12 Weekly Recap

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Molten Gold Pour. photo: Flickr.com- Ashvin Mistry

Gold broke the recent trend of following the euro’s movements against the U.S. dollar, thanks to safe-haven investment demand that originated from the renewed jitters in Europe. Economic expectations are pessimistic with inflation rising internationally and economic growth declining globally. Investors are searching for a safe-haven investment, such as precious metals. According to Sundeep Sikka, with Money Manager (India) Inc., “The current global macroeconomic environment is very conducive for higher Gold prices.” Frank Holmes of U.S. Global Investors echoed this sentiment, saying, “People get so caught up with the next three minutes for Gold, and they should really be focused on the next three years. Does anyone really believe in the long-term strength of the U.S. dollar?” Holmes said the Gold price could double within the next five years. Investors are buying U.S. bullion coins at the fastest pace in over two years, and China is importing more Gold than ever.  One analyst noted, “The thing that’s caught people’s minds is the massive increase in Chinese buying.  Gold has demonstrated time and time again its ability to hold purchasing power.” A poll of 164 investors conducted by Nomura showed that 19.5% of them prefer to buy Gold and hold it until the end of the year. The poll compared Gold, bonds and stocks as investment choices.

The United States reached a “symbolic tipping point” as the country’s national debt surpassed $15.23 trillion, which is nearly equal to the value of its entire economy. Debt projections estimate that the U.S. economy grew to around $15.3 trillion in December, a figure the debt level is expected to surpass in January. Estimated retail sales figures for December were not quite to the levels anticipated, and a reported increase in jobless claims defied expectations. The U.S economy is facing several obstacles to successful growth, including a high unemployment rate, low demand in the housing market, and the European debt crisis. Economists will be evaluating their fourth quarter gross domestic product estimates after data was released Friday morning showing that U.S. exports declined in November, and imports rose.  The U.S. trade deficit is at its widest in six months, and is higher than the consensus expectations of economists.

The Federal Reserve’s modifications to its communication approach are drawing favorable reviews, with the Fed indicating that it will provide updates four times a year on its plans for short-term interest rates. According to the Fed, the U.S. economy is expanding at a modest pace. The main crux of further improvement continues to be a less-than-stellar jobs market, which has prevented incomes from rising. Residential real estate is still viewed as sluggish, but commercial property markets have shown improvement. Consumer confidence was generally “characterized as firmer than in recent reporting periods.” Transcripts released from the Federal Reserve policy meeting showed that as late as December 2006, top Fed officials including Chairman Ben Bernanke believed that the housing market was stabilizing and failed to anticipate the subsequent housing crash. Fed policymakers were seemingly oblivious to the threat housing represented to financial markets and the economy. The housing market’s crash resulted in a U.S. banking crisis and the biggest recession this country has seen since the Great Depression, as well as a corresponding increase in the price of Gold.

The German Chancellor Angela Merkel and French President Nicolas Sarkozy met to discuss Greece’s unresolved debt issues and to create a plan to ensure that the euro survives a potentially failing banking sector. The announcement was made that Greece would not receive its second bailout package (which would prevent a debt default in March) until Greece reaches an agreement with creditor banks on a bond swap. This week’s bond sale in Italy was not as successful as investors had anticipated. Even though Italy met the planned amount of 4.75 billion euros, hopes had been that the sale would bring in twice as much. The European Central Bank (ECB) decided to keep its key lending rate at 1%.  Afterwards, ECB President Mario Draghi warned of the “substantial” downside risks to the eurozone’s economic outlook, including increased debt market tensions, and stated that although there are “tentative signs of stabilization,” uncertainty remains “very high.” Fitch Ratings expressed that the ECB needs to do more to help Italy, the next big euro zone country seemingly in danger of default. The head of sovereign ratings for Fitch, David Riley, described a potential collapse of the euro as “cataclysmic.”  A French newspaper published a story that said that Standard & Poor’s would be downgrading France’s “AAA” credit rating by one notch.  Although the paper didn’t cite any sources and an official announcement wasn’t scheduled until late Friday afternoon, stocks experienced a triple-digit drop.  Gold and Silver saw drops as well, although they quickly climbed back up to the levels they were at before the news was released.  The expectation is that several other euro zone countries will be downgraded; this could force investment funds to sell bonds because they have a requirement that a set percentage of their bonds be AAA-rated. For those countries that would be affected, this could raise their borrowing costs. At a time when debt is rising and GDP (income) is declining, the last thing these countries need is for borrowing costs to rise.

Several hedge funds indicated that they are not willing to accept International Monetary Fund (IMF) proposals to bring Greek debt down to affordable levels by taking a voluntarily 50% loss on bond holdings. Instead, the hedge funds would prefer to either let Greece go bankrupt in the hopes that the hedge funds will be covered by the credit insurance they bought to protect against loss, or to get others involved and force the issue so that the funds will get paid in full. It’s a dangerous game being played by two parties with completely different interests. The hedge funds are focusing on what is best for their clients, and the IMF is trying to fix the entire sovereign debt problem in Europe. Greece is preparing to start final talks that could affect whether that country stays in the euro zone. In a move that will probably not sit well with German constituents already opposed to Germany’s role in the Greek bailout, German Chancellor Merkel announced that Germany would be willing to pay more funds to help conclude negotiations over the European Stability Mechanism (ESM) permanent bailout fund. The Greek bailout is viewed as the key solution before the European Union can work toward growth and job creation.

Tensions continued to grow in Iran, as one of the country’s nuclear scientists was killed by a car bomb on Wednesday. The bombing came as sanctions were being toughened on Iran because of its nuclear program. Although no one has claimed responsibility for the attack, Iran immediately blamed the U.S. and Israel.  U.S. Secretary of State Hillary Rodham Clinton has denied any American role in the slaying, and the U.S administration condemned the attack. However, Israeli officials, without admitting involvement, have hinted at covert campaigns against Iran, and Israel’s military chief of staff said that similar “unnatural” events could be expected this year if Iran continues along its path of nuclear development. The U.S. is looking for support from the Japanese government on imposing economic sanctions against Iran for its nuclear development program, as Japan is one of the top-three buyers of Iranian oil. President Barack Obama announced this week that the U.S. would freeze out financial institutions that deal with Iran’s central bank.

Recent data from China shows an increase in that country’s trade surplus for December.  Although expectations were met on export growth, import growth declined sharply. China is often seen as a major component of a global economic recovery. Barclays Capital Analysts said, “…the Chinese economy remains on track for a soft landing, with external weakness continuing to pose the biggest downside risk.” The U.S. and its allies are looking to impose stronger sanctions on Iran due to that nation’s nuclear ambitions, and China, as Iran’s top trade partner, seems to be caught in the middle. Hua Liming, former ambassador to Iran, said, “Iran will expect China to support its interests at the U.N. and other international circumstances, while the U.S. will exert tremendous pressure on China and use the Iran issue to judge if China is a ‘responsible’ major power.” Meanwhile, Chinese Gold imports from Hong Kong have climbed to a record high due to investment demand. China bought nearly 103,000 kilos from Hong Kong in November alone.

WEEKLY SPOT PRICES

Gold: Spot Gold prices opened this week at $1,609.20. The high was on Thursday, Jan. 12th at $1,622.90, while the low for the week occurred on Monday, Jan. 9th, $1,605.70. Gold ended the week up $32.10 at $1,641.30. 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 $28.25. Silver reached a high of $30.68 on Thursday, Jan. 12th, while this week’s low for Silver occurred on Monday, Jan. 9th at $28.55. Silver ended the week up $0.86 at $29.81 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 $1,428.40 and ended the week up $64.20 at $1,492.60. 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 $616.80 and ended the week up $22.20 at $639.00. Palladium investors preferred 1 oz. Pamp Suisse Palladium Bars and Palladium Canadian Maple Leafs this week at APMEX.com.

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Australian Gold Lunar Coins

Designed by the Perth Mint in Australia, the Australian Gold Lunar coins are among some of the most beautiful coins in the world. Centered around the Chinese lunar calendar, the Australian Gold Lunar coins appeal to collectors and investors all over the world. Created because of popular demand from international investors and the success of the Australian Gold Lunar Series I coins, the Australian Gold Lunar Series II began in 2008 with the Year of the Mouse coins and will end with the Year of the Pig coins in 2019.

Struck from .9999 fine gold, Australian Gold Lunar coins are a great way to acquire and invest in precious metals. Legal Australian tender, most Gold Lunar coins are struck with a larger diameter. Inspired by China’s ancient lunar calendar, the Australian Gold Lunar Series coins feature the 12 animals central to the calendar’s stories. According to the lunar calendar, each of these 12 animals has a profound influence over those born under its year of “rule.”

Order GOLD online today at APMEX.com!

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12 Days of Christmas: Day 7 – Australian Silver Dragons

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Ring in the New Year with the 2012 1 oz. Silver Australian Year of the Dragon coin priced at just $84.99 each for any quantity! These .999-fine Silver coins were minted in limited quantities by the Perth Mint in Australia. APMEX has the 2012 Australian Silver Dragons in stock and ready to ship in original mint-issued plastic capsules. Buy Silver from the Perth Mint today, while supplies last!

Quantities of this Highly Anticipated Coin Are Limited — Get Yours Today!

The Perth Mint has received more than 2 million requests for the 1 oz. 2012 Silver Australian Year of the Dragon coin, but minted only 300,000. What makes these coins so special?

  • The Year of the Dragon comes around only once every 12 years.
  • The dragon is the only mythical creature in the Chinese lunar calendar, and it’s one of the most popular.
  • The dragon is known for its strength, beauty, and noble nature. It is flawlessly portrayed on the back of the 2012 coin in a playful, yet powerful stance.

With such strong demand, supplies of these coveted Silver Australian Dragons won’t last long. Order today!

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In Stock and Ready to Ship from APMEX

Add the 2012 1 oz. Silver Australian Year of the Dragon coins to your portfolio and take advantage of our low price of just $84.99 per coin.

Demand for the 2012 Gold Australian Dragons is great!

The Perth Mint produced only 30,000 of the 2012 1 oz. Gold Year of the Dragon coins, yet buyers have requested more than five times that number from the mint. Don’t miss this opportunity to own yours at $40 off regular price per coin, while supplies last.

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Shop More Lunar Calendar Silver from the Perth Mint

APMEX   stocks the full collection of Silver Australia Lunar Series II coins in   various sizes and conditions, including colorized and gilded coins. A unique design is featured for each year.

Order Australian Dragons online today at APMEX.com!

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Final Days of our Escape to Australia Contest

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Purchase $250 or more of select 2012-dated Perth Mint coins before Oct. 15, and you’ll be automatically entered for a chance to win round-trip airfare for two to Perth, Australia — plus hotel accommodations, $1,000 in spending cash and a VIP tour of The Perth Mint!*

One of the world’s premier mints, the Perth Mint is producing limited quantities of the Lunar Year of the Dragon coins in both Silver and Gold. Known for its strength, beauty and noble nature, the dragon is the only mythical creature in the Chinese lunar calendar and one of the most popular. It won’t be featured again for another 12 years! These 2012 Perth Mint coins give you the advantages of bullion coins, plus the added value of semi-numismatic “collector” items.

APMEX has these treasured coins in stock and ready to ship:

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Whether you’re an investor or collector, our 2012 selection of Year of the Dragon Perth Mint coins are a valuable addition to your portfolio. Don’t miss your chance to own these prized coin.

The sweepstakes ends Sat., Oct. 15 so qualify while supplies last!

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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