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.
  2. Your check will be held for 5-10 business days before your order ships. Don’t worry; we’ll also hold the price for you as well!
  3. Credit card orders will process within 1-3 business days and can’t be expedited. Please adjust your gift purchases accordingly.
  4. No last minute changes! Get all the items you want now, because once placed, your order cannot be modified or combined with any additional orders.
  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.
  7. We’re here to serve you! You’re the only person that can gain access to your account and be provided with any information regarding it.
  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.
  10. If paying by check or bank wire, you will not be submitting the information electronically. We will provide you with our mailing address or bank wire instructions.

 

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Weekly Gold and Silver Market Recap for Aug 24, 2012 By Nicholas Wilsey

Contact Nicholas at Nicholas.Wilsey@APMEX.com

Gold prices move upwards on market news:

Gold has had quite a week of positive gains this week. Starting the week around the $1613 per ounce and at mid-day Friday the yellow metal was around the $1672 per ounce. On Tuesday the Gold price was at a two month high, tracking the euro upward. VTB Capital analyst Andrey Kryuchenkov said, “A break above $1,630 is very significant, as we breach the June-July and early August range. Buy orders were triggered, with the dollar index also slipping below support … at early July lows. This is on speculation that the ECB (European Central Bank) will act.” Kryuchenkov went on to say that as normal, Gold is trading against the dollar in this case. As the week went on, so did the upswing in the gold market. The gold price has moved more this week than in the past four months. The movement reflects growing eagerness for the Federal Reserve to provide further stimulus measures to boost the economy. Adam Klopfenstein at Archer Financial Services Inc. said, “Gold is exploding as inflation concerns are back. A combination of rising commodity prices and the chances of more easing coming in the U.S. is stoking inflation worries.” Michael Gayed of Pension Partners LLC said, “Gold is surging on renewed expectations of inflation rising after easing.” During two rounds of quantitative easing, from December 2008 to June 2011, the Gold price jumped 70 percent. All eyes continue to be on the Fed’s Jackson Hole, Wyo., economic symposium for more signs of QE3. That meeting is to be held late next week.

Europe had a rare positive week:

In Europe, there was an unusual sight in the financial reports: Positivity. The euro jumped to a seven-week high on the hope that the European Central Bank will be able to help the struggling region with a stimulus package. “The market has moved to the belief that (the ECB) is going to do whatever it takes,” said William Larkin, fixed-income portfolio manager at Cabot Money Management in Salem, Massachusetts. There are meetings scheduled in the next few days between leaders in the area to discuss possible options. Spain has begun negotiations with eurozone partners over the requirements necessary to lower its borrowing costs, but that country has stopped short of requesting an official bailout. The strategy currently in favor includes a combined attack by the European rescue fund (EFSF) and the European Central Bank (ECB) as they purchase Spanish debt in the primary and secondary markets. Spain’s borrowing costs are at record levels since the launch of the euro 13 years ago. “Negotiations have started and are well under way. Right now, the preferred option, the one that is being actively discussed, is for the EFSF to buy bonds on the primary market and for the ECB to buy bonds on the secondary,” one of the sources told Reuters on condition of anonymity. Two of the main players in the European talks met this week. German Chancellor Angela Merkel has engaged in talks with Greek Prime Minister Antonis Samaras with both asserting their allegiance to the euro.

 

The United States Federal Reserve ponders more monetary easing:

The precious metals markets saw an upswing this week and one of the main components of that was the idea of another round of monetary easing from the U.S. Federal Reserve. In prior cases of easing the effect to metals were positive. Easing is used to stimulate the economy and is based on how the good or bad the economic conditions are. One of the main issues the Fed has had to deal with is the mixed signals reports have shown as of late. There was a report that showed leading economic indicators in the country were up 0.4% in July. This report is considered a good indication of the outlook of the economy. “The expansion continues, no double-dip recession, just continued moderate, sub-par growth,” said John Silvia, chief economist at Wells Fargo. Then the release of the weekly jobless claims report was released. After an upward revision from last week’s numbers, the report showed increases across the board in new claims, existing claims, and the four week moving average. The jobless numbers gave way to more talk of easing.  Even people inside the Federal reserve were sending mixed messages. The St. Louis Federal Reserve president said that more easing may be unnecessary. Today, one of the longtime supporters of further quantitative easing by the Fed, Chicago Fed President Charles Evans, stated his view on the matter. “The outlook for growth is 2 percent, if we are lucky 2.5 percent, over the next 18 months to two years. Back in the spring, we thought it was going to be 2 1/2, 3 percent. … We stepped down our outlook; unemployment is 8.3 percent; there’s a lot of reason to do more,” he said. Next week Federal Reserve Chairman Ben Bernanke will speak at the annual meeting in Jackson Hole, WY. “Given all the mixed messages, the Jackson Hole symposium next Friday is building up to be a key event as we look forward to the latest download from the chairman himself,” said James Reid of Deutsche Bank.