The “Bond King”- PIMCO’s Bill Gross says Buy Gold!

Bill Gross says to buy gold not bonds. In an interview on Bloomberg News today, Mr. Gross said that to continue believing that stocks or bonds can return 10% is a dying belief. Mr. Gross commented that, “Gold cannot be reproduced. It could certainly be taken out of the ground at an increasing rate but there is a limited amount of gold. And there has been an unlimited amount of paper money over the past 20 to 30 years now – in this period of central bank expansion where it’s QE1 or QE2, or whether it’s the LTROs of the ECB or this potential new program…then central banks are at their leisure to print money.” He further goes on to say that with central banks writing checks for trillions of dollars, it is a good idea to own something that cannot be reproduced such as gold.

Profit taking is the most probably reason that precious metals markets are down slightly this morning. The big event this week is the Wednesday-Thursday Federal Reserve meeting and the high expectation of many, that Fed Chairman Bernanke will announce QE3 on September 13. The sluggish jobs report on Friday might be the event the finally triggers this announcement. The ECB and China announced stimulus plans last week.  many expect the U.S. to be next.

At 9AM EDT the APMEX precious metals prices were:

  • Gold price – $1,731.30 – down $8.30
  • Silver price – $33.50 – down 19 cents
  • Platinum price – $1,594.50 – down $2.80
  • Palladium price – $659.00 – up $4.30
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Jobs report pushes precious metals prices upward; Russia stockpiles Gold

English: Gold reserves per capita.

English: Gold reserves per capita. (Photo credit: Wikipedia)

Disappointing data from the monthly United States jobs report is the latest news to cause concern over the American economy and prompt a spike in Precious Metals prices. The continued lack of stronger economic statistics is propelling the anticipation of further monetary easing by the Federal Reserve. Economist Mark Zandi described the sentiment of the individual worker, stating, “They (workers) are still feeling pretty awful. They recognize that we’ve made progress, that we’ve gone from losing a boatload of jobs to seeing some growth, but that’s very little solace in the context of an (8.1 percent) unemployment rate.”

Central banks from nations around the globe have been amassing sizable Gold reserves in recent years as a reaction to the global financial crisis. The World Gold Council recently announced that Russia has doubled its stockpile in the past five years by purchasing a half-billion dollars’ worth of Gold every month. If the Fed announces further quantitative easing and world economic leaders such as Russia continue accumulating large quantities of Gold, the price of the yellow metal is likely to continue its upward climb.

At 1 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,738.30, Up $33.70.
  • Silver, $33.68, Up $1.01.
  • Platinum, $1,593.30, Up $5.90.
  • Palladium, $654.40, Up $6.70.
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All eyes on the Fed

 

The primary topic of discussion today will be the release of the minutes from last week’s Federal Reserve meeting. Ahead of that announcement, speculation will abound. Some investors will want more quantitative easing, while others will want more of what we have been getting: inaction. Speaking on CNBC, Art Cashin, director of floor operations at USB, said, “You’re going to need a translator for these minutes.”

The Gold price hit a three month high in overnight trading, going as high as $1,645. Since 2009, central banks have been net buyers of Gold, regardless of the spot price. According to the World Gold Council, central banks bought 158 tons in the June quarter. The ever present eurozone crisis and never improving American financial situation has presented central banks across the globe with a situation in which the yellow metal is the perfect safe haven for their currency reserves.

At 9:09 a.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,640.40, Down $1.00.
  • Silver, $29.48, Down $0.06.
  • Platinum, $1,522.00, Up $13.20.
  • Palladium, $631.50, Up $5.80.

 

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Tuesday links: Gold Climbs As QE Hopes Stoke Haven Demand

Gold taken from Calif. courthouse valued at $1.2M (Sacramento Bee)

Gold Climbs As QE Hopes Stoke Haven Demand (WSJ)

Demand for gold stays strong; closes above $1,600 (AP)

Do Asian central banks hold enough gold? (Reuters)

Euro rises, but gains seen fleeting (CNBC)

A look at economic developments around the globe (Newsday)

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China rate decision boosts stocks

News out of China is driving the markets this morning, as the central bank in the country cut interest rates by 25 basis points.  Jordan Lambert of Spreadex Ltd. said “The unscheduled rate announcement by the Chinese central bank has been long awaited and has satisfied the growing expectations of a rate cut by a major economy … It is also worth being mindful that sometimes such interest rate moves are coordinated with other central banks therefore there could be further surprises to the upside.”

Also in focus today will be Federal Reserve Chairman Ben Bernanke’s testimony to the Joint Economic Committee.  Bernanke always seems to move the markets when he speaks, and today may be no different.  Another top Fed official, Janet Yellen, is not closing the door on a third round of quantitative easing.  “I am convinced that scope remains for the (Federal Open Market Committee) to provide further policy accommodation,” Yellen said.  She said that jobs numbers lately have been “pretty disappointing,” and that, among other topics, could be reason for further intervention.

This week’s jobless claims report showed a drop of 12,000 new claims, which is better than expected.  However, numbers from two weeks ago were revised upwards by 6,000, and continuing claims rose by 34,000.  Precious Metals prices and stock prices seemed to take this in stride, continuing to be more influenced by the Chinese rate cut.

At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold – $1,623.20 – Down $10.50.
  • Silver – $29.54 – Down $0.04.
  • Platinum – $1,467.50 – Down $1,467.50.
  • Palladium – $628.50 – Down $4.30.
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Friday’s Jobs Report Could Spur the Fed to More Quantitative Easing

The Federal Reserve Committee has never taken QE3 off the table. The possibility of additional quantitative easing has remained an option should the circumstances warrant it. Many analysts see the dismal jobs report on Friday as just the sort of circumstances that will trigger the next round of easing. Not only was the 69,000 new jobs added very disappointing, but it was all the more lackluster considering the numbers from prior two months were lowered. Dennis Gartman speaking on CNBC this morning said there is a 100% chance of further Fed easing. Frank Lesh, broker and futures analyst with FuturePath Trading said, “Now that it appears the U.S. may have to act with Europe. That just means throwing more money at it. That’s just what gold wanted to hear.”

The call for central banks to take action is not just here in the U.S., but is being heard worldwide. Bond yields have declined and the global stock markets continue to go down. John Noonan, Senior Foreign Exchange Analyst with Thomas Reuters said, “Synchronized monetary easing could happen as early as even this week, as central banks of Australia, England and Europe meet.” According to Michael Gayed, Chief Investment Strategist at Pension Partners, this could be a do or die moment for central banks. U.S. bond yields out at their lowest levels since post-Lehman days, which is a sign the market is expecting QE3 from the Federal Reserve.

Gold is holding on to Friday’s gains in early morning trading. Friday was the biggest one day advance since last August on investor risk aversion and the greater expectations for worldwide monetary easing.

At 9AM EST the APMEX precious metal prices were:

  • Gold price -$1,620.70 down 90 cents
  • Silver price – $28.41 – down 19 cents
  • Platinum price – $1,438.80 up $3.60
  • Palladium price – $612.20 down $1.80
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