Weekly Gold and Silver Market Recap for Oct 5, 2012

Gold showed mixed results this week:

This week has been active to say the least in the gold market pricing. While the market is still riding the high of monetary easing around the globe, there have been a few bumps in the road during the week. The prices are still being supported by easing monetary policy and lingering eurozone troubles. Chicago Fed President Charles Evans “was extremely dovish” about the third round of quantitative easing in the U.S., according to RJO Futures’ Phillip Streible. “He was full-throttle on QE.” The Gold price neared an 11 month high this week, supported by an overall lackluster feeling from investors regarding the global economy. Gains increased after the release of the ADP jobs report, which, including reductions in previous months’ estimates showed a net increase of 133,000 jobs, well below expectations of 153,000. Federal Reserve officials have recently announced that until jobs numbers improve, QE3 will continue. Tom Kendall of Credit Suisse said, “We’ve seen intra-day moves triggered by the ADP numbers before, so it wouldn’t be a surprise if there was a bit of intra-day volatility around that number. To get this market over $1,800 and trending higher again, what we need to see is greater participation in places like India on the buy-side.” Despite Friday’s dip in market price due to the U.S. jobs report, strategists at Deutsche Bank expect fiscal fears, spurred on by recent quantitative easing and expectations of a U.S. credit downgrade, which will increase in the fourth quarter. “This will prove to be most beneficial to the Precious Metals complex and specifically gold,” the strategists wrote in a research report.

Global economic issues continue to make headlines:

Economic struggles have been taking a toll on markets around the world. It shows that the global marketplace is very much intertwined between countries. The European issues have been a main topic of conversation and this week Spain was back in the spotlight. There is some thought the Spanish government will soon request a bailout, which some consider a necessary step to alleviate the eurozone’s debt crisis. Paul Mendelsohn, chief investment strategist at Windham Financial services in Charlotte, Vermont said, “I think the market feels that we are closer to some type of action and resolution in terms of the Spanish problem, (and) that’s certainly helping markets this morning.” While some have predicted an end to the Euro, they are not willing to buy into that notion. An boost came with news that the European Central Bank would hold steady on interest rates again, at 0.75 percent, with a zero percent interest rate on its deposit facility. ECB President Mario Draghi said at his monthly press conference that the eurozone’s recent bond buying plan has eased regional tensions. He also repeated earlier statements that the euro is “irreversible.” The reassurance that fiscal assistance will persist has once again bolstered the Gold price, which is close to breaching the $1,800 mark. “Indications from Mario Draghi […] that the European version of quantitative easing will go on as planned no matter what happens in the U.S.” provided support for Gold prices, said Brien Lundin, editor of Gold Newsletter.

The United States Federal Reserve keeps easing opened and other U.S. news:

Federal Reserve Chairman Ben Bernanke spoke at the Economic Club of Indiana this week, stating the Fed’s objectives of price stability and maximum sustainable employment have not changed. Bernanke said, “These goals mean, basically, that we would like to see as many Americans as possible who want jobs to have jobs, and that we aim to keep the rate of increase in consumer prices low and stable.” During the United States’ recession of 2007-09, the Fed lowered borrowing costs to almost nothing and purchased $2.3 trillion in mortgage and Treasury securities to create and sustain growth. Not everyone has been on board with the Fed’s decisions to lower interest rates or to create further easing but Bernanke believes the measures will boost the economy. The national debt in the United States has been the topic of discussion for years, and now that it is an election year those talks are magnified. The situation is clear when you look at the numbers. The national debt is more than $16 trillion and the gross domestic product (GDP) is approximately 11 percent less than that. That gap between the debt and the GDP is very alarming to most economists. Pimco’s Bill Gross said Tuesday, “Unless we begin to close this gap, then the inevitable result will be that our debt/GDP ratio will continue to rise, the Fed would print money to pay for the deficiency, inflation would follow and the dollar would inevitably decline. Bonds would be burned to a crisp and stocks would certainly be singed; only gold and real assets would thrive.” The other major news of the week was the unemployment report. The addition of jobs in September was disappointing, but the unemployment rate fell by 0.3 percent to 7.8 percent, which is the lowest level since January 2009. Since the newest round of quantitative easing by the Fed is expected to continue until jobs numbers improve, reports such as this one will carry more weight than they may have previously.

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Gold & Silver Prices are Holding at 7 Month Highs

Gold & silver prices are holding on to recent gains in early morning trading. Last week, gold and silver was up for the 4th week in a row. Gold prices have risen 13.2%, so far in 2012. According to Peter Fertig, a consultant for Quantitative Commodity Research, “if we do not see $1800 this week, that would not be a problem as, nevertheless, the signs are that precious metals are moving higher ECB Rally Sputters as Leaders Fail to Act on Spain, Greece — Business News – CNBC.”

Stocks in the European market are falling today, as once again their leaders fail to act on Greece or Spain. Markets had received a boost on the European Central Bank’s bond buying announcement, as well as the Federal Reserve QE3 announcement last week. Investors are frustrated because it would appear that instead of taking advantage of this “breathing space”, European finance ministers are in even less of a hurry to tackle critical issues. These policy makers decided to wait on three urgent issues: a bailout for Spain, a decision on Greece’s request for a two-year extension on bailout terms, and a common supervisor for European banks.

At 9AM EDT the APMEX precious metal prices were:

  • Gold price – $1,771.70 – up 10 cents
  • Silver price – $34.63 – down 4 cents
  • Platinum price – $1,698.80 – down $15.90
  • Palladium price – $692.70 – down $6.60

Gold gaining momentum, Germany worried about U.S. debt

 

Spot gold is trading around six month highs today as the euro is gaining strength against the dollar. Gold has a positive relationship to the euro right now and over the past two months has grown to be at its most positive, a +0.75. There is growing expectations about what will come out of Thursdays Federal Reserve meeting; speculation is that a quantitative easing announcement could send the price of gold over $1,800.

German Finance Minister Wolfgang Schaeuble has brought into question the United States’ high level of debt. He is quoted saying in a speech to the lower house of parliament that “U.S. debt (is) a burden for the global economy.” He underscores the fact that the rest of the world is keeping their eye on the U.S. elections and is concerned about our ability to deal with it once the elections are over. This comes just after the U.S. reached an inauspicious $16 trillion debt.

Adding insult to injury, the U.S. trade gap widened in July. This was the first time in four months that demand for U.S. produced goods decreased. The gap grew 0.2 percent to $42 billion. The positive side to this is that is smaller than projected. The trade gap is due in part to stagnant economies in Europe.

At 9AM EDT the APMEX precious metals prices were:

  • Gold price – $1,736.10 – Up $5.30
  • Silver price – $33.82 – Up $0.19 cents
  • Platinum price – $1,608.00 – Up $3.20
  • Palladium price – $675.80 – Up $3.00

 

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End of week Gold and Silver report

 

Gold waited all week for direction:

As the week started gold and other markets had all eyes on a small town in Wyoming called Jackson Hole. That is where an annual meeting is held by the U.S. Federal Reserve and in the past has given way to significant monetary action such as two rounds of easing. There was a lot of speculation and waiting for news. For some, it was not going to be an extraordinary event.  Many financial specialists believe the Jackson Hole meeting will not be the critical event that could trigger further government financial stimulus this time around. “The critical period is really from Friday to the 12th (of September) — the constitutional court decision,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vt. Many others shared a different view of the meetings of the Fed. While the question remains whether there will be another round of monetary easing, if the answer is “no,” it could affect Gold’s price. “We see near term risks of a reversal if Jackson Hole does not deliver what the market is hoping for,” said Nick Trevethan, senior metals strategist at ANZ in Singapore. Friday came and so did the report with Federal Reserve Chairman Ben Bernanke giving indications that the Fed will soon embark on another round of bond buying, otherwise known as quantitative easing (QE). “It is important to achieve further progress, particularly in the labor market,” Bernanke said. “Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.” Bernanke cited previous rounds of easing as effective in stimulating economic development and job creation without hastening inflation.

Europe still trying to work through issues:

Europe clearly took a backseat this week to the Fed’s potential monetary easing announcement, but the European Central Bank (ECB) is readying for an ECB Governing Council meeting next week. James Reid of Deutsche Bank said, “For now, Europe is in a holding pattern ahead of clarity surrounding the next move in the great ECB bond buying maneuverings, and the U.S. is in limbo ahead of Bernanke’s Jackson Hole appearance tomorrow. For the latter, speculation mounts that Bernanke won’t say anything overly new in his speech.” The eurozone is in a battle of its own, regardless of what the Fed decides. Spain is being sucked into the center of the eurozone debt crisis. Spanish consumers have pulled as much as 5 percent of their private sector deposits. The other side of this coin is that Greek banks are seeing a boost in their deposits since June elections. Private sector deposits are up about 2 percent. The World Gold Council is suggesting a creative way of looking at Gold in the eurozone. Many pundits have suggested that troubled eurozone countries sell Gold to take care of their debts. This ill advised idea sounds like a simple resolution, but of course it is more complicated than that. The World Gold Council has suggested bonds and loans backed by Gold. Some groups (LCH.Clearnet, Intercontinental Exchange, and the Chicago Mercantile Exchange) have begun accepting Gold as collateral for margin requirements recently. Gillian Tett of Financial Times wrote that this “suggest(s) that a slow evolution of attitudes is under way — not so much in terms of the desirability of Gold per se, but the increasing undesirability and riskiness of other supposedly ‘safe’ assets, such as government bonds.”

United States economy still giving mixed reports:

In the U.S.A., a trend of economic growth could be a reason the announcement of another round of easing by the Federal Reserve was not made today. One discussion is surrounding the small amount of growth and whether it is enough to sustain a positive direction moving forward. The United States’ gross domestic product (GDP) went up in the second quarter by 1.7 percent, which was 0.2 percent more than a previous estimate. The GDP is seen as a key indicator of the economy. While there was improvement, many believe it was at a level low enough to warrant more action by the Fed. The release of the weekly jobless claims report has had little effect on Gold and Silver. The four week moving average of new claims rose by 1,500, while the week to week change was flat. Personal consumer spending increased in July to a five month high, according to data from the Commerce Department. Falling gasoline prices coupled with moderate increases in income to provide consumers a bit more to spend this midsummer. Despite July’s increase, consumers have been cautious on spending for most of the year, with a decrease in June and a flat report in May. “In the first quarter of the year, Americans saved less in order to spend more,” said Chris Christopher, senior economist at IHS Global Insight. “In the second quarter, job prospects were not very promising, so Americans put more money aside and spent less.”

 

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Ten (10) Things to Know Before you Buy from APMEX

 

English: APMEX headquarters in Oklahoma City

English: APMEX headquarters in Oklahoma City (Photo credit: Wikipedia)

 

It’s that time. You’ve been watching the prices rise and fall—up and down like a see saw.  Finally you’re ready to invest in Silver, Gold, or both if you’re trying to build a diverse portfolio. Before confirming your purchase, here are a few things you might want to know before ordering with APMEX—the largest online provider of precious metals!

 

  1. The shipping address and your credit card’s billing address must match! We want to ensure that your order is shipped directly to you and you only.
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  5. Who doesn’t love a discount? We’ll give you an immediate 3% discount just for paying with a check, money order, cashier’s check, bank wire or trade.
  6. We’re an open book. Read our general FAQ section and the terms and conditions before placing your order.
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  8. APMEX offers thousands of silver, gold, platinum, and palladium products online. Unfortunately we can’t provide you with printed materials. Everything we offer will be at APMEX.com.
  9. Our account managers can help you place an order over the phone if you’re paying with anything other than a credit card. Reach them at 800.375.9006 option 1.
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