End of week Gold and Silver recap: Gold breaks $1,700

Model of the ECB's new headquarters, which is ...

Model of the ECB’s new headquarters, which is due to be completed in 2014. (Photo credit: Wikipedia)

Written by John.Foster@APMEX.com

Gold Breaks $1700:

Gold continued it march past $1700 an ounce as growing signs the European Central Bank will take action added to disappointing U.S. economic data this week.  Fridays United States nonfarm jobs report showed 96,000 jobs were created in August. The number was disappointing because it fell short of the 125,000 that had been expected. The August manufacturing report showed the largest drop in more than three years. The nation’s factory activity was rated at 49.6, which indicates an unforeseen contraction in the sector. United States construction also fell off by 0.9 percent; as with the manufacturing report, experts had predicted an increase, as well.  This news was bullish for Gold and boosted the possibility of financial stimulus from the Federal Reserve. The expectation is that the Federal Reserve will announce the next round of quantitative easing, better known as QE3, this year. Jeremy Friesen at Societe Generale in Hong Kong said he believes the Fed will act possibly this month. He said, “We think the payrolls number will be very poor, which should be positive for Gold, as it would confirm that the Fed will do something at the next FOMC (Federal Open Market Committee) meeting.”

Europe Announces Bond Program:

The European markets started the week strongly on hopes that the ECB would announce a plan to curb widespread debt in the region. Many economists in the area believed there would be a large bond buying plan to offset short term debt. One media report went as far to say the ECB will spend “unlimited” amounts to do so, and that caused quite a stir. “I think the market saw the word ‘unlimited’ and jumped before realizing that the ECB would not expand its balance sheet as it would sterilize all its purchases, and thus this was not the kind of aggressive monetary expansion that FX traders were looking for,” said Boris Schlossberg, managing director of FX Strategy at BK Asset Management in New York.  On Thursday the European Central Bank announced its intention to rebuild the eurozone with new stimulus measures by purchasing sovereign bonds. Alex Merk at Merk Investments commented on how the market may be more interested in the euro. “Now, I’m not going to pretend that everything is going to be great in the eurozone, but it (the ECB’s measures) does take off the so called ‘tail risks,’ it makes the euro less risky.” On a positive note, Merk added, “We think the euro is going to do well in the years to come. … It is becoming a different currency with different dynamics in place.”

China’s Economy Slowing:

The United States and Europe may not be the only economies on the verge of receiving a stimulus. Although the Chinese government has yet to implement any stimulus measures in the face of a slowing Chinese economy, there is additional evidence that the Chinese economy is slowing. On Saturday (09/01), the official manufacturing sector survey reported a 49.2 reading in August. This falls below the level of 50 that separates expansion from contraction. In another survey more focused on small to midsize businesses, published by HSBC, the number was 47.6.  Gordon Chang, author of “The Coming Collapse of China,” spoke with CNBC regarding China’s economy and how some data reflect zero growth for that nation. Chang said that manufacturing surveys, price indices and electricity production are all key indicators of economic growth, and those factors suggest no growth in China’s economy. Chang said, “By far the most reliable indicator of Chinese economic activity is the production of electricity. When you look at the period of April through July electricity production increased by less than an average of 1.2 percent.”  He said electricity production typically outpaces economic growth

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Jobless claims disappoint, leaving door open for QE3

 

English: James Bullard, president of the Feder...

English: James Bullard, president of the Federal Reserve Bank of St. Louis (Photo credit: Wikipedia)

 

Precious Metals prices added to early gains after the release of the weekly jobless claims report. 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. Jumps in the prices of Gold and Silver are most likely due to the fact that yesterday’s Federal Open Market Committee (FOMC) meeting minutes revealed that a third round of quantitative easing (QE3) was likely unless there was significant improvement in economic reports, and this report certainly does not indicate improvement.

 

In stark contrast to the minutes of the FOMC meeting released yesterday, St. Louis Federal Reserve President James Bullard said, “If we were to resume, and I think we will, 2 percent growth, maybe a bit stronger than that in the second half of the year, unemployment ticks down through the rest of the year, that’s not a great outcome but that’s a good enough outcome to keep us on hold,” regarding QE3. Bullard also said the market may be setting itself up for disappointment. He said, “Probably the best thing to talk about here is what would that action really be? I think the markets have the idea of some gigantic action. I’m not sure if the data really warrants that.”

 

The euro continues to rise against the dollar, which is supporting the Gold price’s recent moves. Chen Min of Jinrui Futures in China said, “The Fed’s tone is totally different in the minutes from previous comments, and that helped Gold break from the previous range and move into a higher price range ahead of the peak consumption season.”

 

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

 

  • Gold, $1,664.20, Up $24.90.
  • Silver, $30.50, Up $0.83.
  • Platinum, $1,543.80, Up $16.30.
  • Palladium, $637.90, Up $7.70.

 

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Fear drives precious metals prices

 

Bullion prices moved their way up with investors being hopeful for further stimulus measures from policy makers, which increased gold’s price today.   Chintan Karnani, chief analyst at Insignia Consultants in New Delhi commented on what affected gold for the day by saying, “Prices continued to trade in a tight range amid a lack of major news from the U.S. or Europe.” Investors began purchasing more platinum with growing concern coming out of South Africa that there may be a shortage in the production of the metal after a reported 44 people were killed during a strike at Lonmin’s.  “Platinum could test its 200-day moving average above $1,500 on the possibility that the Marikana mine can be shut down for an extended period of time or that strike ends up spreading to other mines,” said Phillip Streible, at futures brokerage R.J. O’Brien.

Steve Cortes, founder Veracruz, a research and consulting firm is confident on his prediction that China’s slower than normal financial trading is a sign that its economy is declining far more than investors realize.  Cortes said, “China is trading at its lowest levels since the 2007 crisis and that’s a big problem for the markets.”  Cortes also confirmed that he is optimistic with the American economy moving into a strong territory.  Cortes said, “We’re getting a lot of good reports – not just housing – but unemployment claims are falling, retail chain store salesare improving and we just got better confidence data.”

At 5:05 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,621.90, Up $4.00.
  • Silver, $28.87, Up $0.76.
  • Platinum, $1,492.70, Up $18.60.
  • Palladium, $608.60, Up $2.00.

 

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Gold price on the rise; China adds to stockpile

 

As the week begins, so does the rise in Gold prices. With reports coming out at the end of last week showing another rise in the United States jobless rate, the talk of more monetary easing from the Federal Reserve continues. “There is still room for easing if it is required, and there is still a perception that it may be required,” said David Jollie, an analyst with Mitsui Precious Metals. Another factor in the Precious Metals market is the high demand from China. Even though shipments of Gold went down in the last month, China is still on pace to overtake India as the world’s largest Gold market. “Although this was down on the previous month’s figure, it was well above the year on year level,” Commerzbank said in a note. “In the first half year, China thus imported 382.79 tons of Gold from Hong Kong, following a figure of 64.95 tons in the same period last year.”

In Europe, it may be a new week, but the news remains the same. There are many opinions on the best way to deal with the economic crisis in the region, but there are no signs of unity. While the European Central Bank has promised action, that will be next to impossible if the ECB does not have the support of the countries involved. While some of the nations are prepared to act, others seem to be lagging behind. “The Spanish seemed to think they could get a free ride from the ECB without conditions. That was never going to happen,” said a senior eurozone policymaker, speaking on condition of anonymity.

Reports in the United States are showing that productivity in the workforce is down. One expert said he believes that is the best case scenario at this time. “The only reason 1.7 percent GDP growth can go with 1 percent jobs growth is because productivity growth is less than 1 percent,” said Robert Gordon, a Northwestern University economics professor. These numbers, while not ideal, have created a drop in unemployment benefits claims over the last year.

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

  • Gold, $1,613.70, Up $6.40.
  • Silver, $28.00, Up $0.09.
  • Platinum, $1,404.00, Down $10.40.
  • Palladium, $581.10, Up $1.90.

 

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2012 Gold & Silver Proof Chinese Pandas. In 5 Oz And Kilo Sizes.

They’re Big. They’re Beautiful. And They Just Arrived. 2012 Gold & Silver Proof Chinese Pandas  In 5 Oz And Kilo Sizes.

2012 Chinese Pandas The Chinese Panda, one of the most beautiful and sought after bullion coins in the world, proves hard to keep in stock. But APMEX has the 2012 Proof Chinese Pandas in 5 oz and kilo sizes in Gold and Silver. Don’t wait, because as big as this news is, quantities are very limited.

The unique design of the Chinese Panda coin appeals to investors and collectors alike. The obverse, or front, is an intricate rendering of China’s Hall of Prayer for Good Harvests at the Temple of Heaven in Beijing, while the design on the reverse, or back, changes almost every year, but always features the lovable panda in its natural habitat. The beauty and intricate detail of these coins come stunningly to life in Proof finish 5 oz and 1 kilo sizes. These coins are all:

  • Packed with more Gold and Silver: Made of .999 fine Gold or Silver, the 5 oz and 1 kilo sizes make it easier to own and store larger quantities of Precious Metal.
  • Proof finish: You can better appreciate the exquisite details in this year’s “panda and cub” design. The Proof finish adds a frosted look to the raised devices and a shimmering luster to the background.

Shipped in a display box with certificate of authenticity: The box makes for a handsome display, even as it protects coins from damage during shipping and storage. A Chinese government issued certificate ensures authenticity of each coin.

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Roubini on 2012’s “Global Perfect Storm”

Precious Metals are trading mostly flat this morning, taking a cue from the euro.  The common currency has rebounded slightly since hitting a two-year low on Friday.  Adam Myers of Credit Agricole wrote, “The currency market mood is likely to turn more pessimistic this week as investors return their focus to fiscal-policy challenges.  In the wake of [Federal Reserve, Bank of England, and European Central Bank] announcements, there now appears little on the monetary-policy front to lift investor sentiments.”  Lately, Gold and Silver have largely followed the currency markets, moving inversely to the American dollar.

Two months ago, economist Nouriel Roubini said that four key items, if happening simultaneously, could create a “perfect storm” for the economy.  The four items – a slowdown in emerging markets, military conflict in Iran, the European debt crisis, and growth slowing in the U.S.A. – seem to be coming together now.  Roubini said, “Levitational force of policy easing can only temporarily lift asset prices as gravitational forces of weaker fundamentals dominate over time.”  Historically, Gold has reacted positively in times of economic uncertainty.

American stock futures are falling this morning due to news out of Japan and China.  In Japan, machinery orders experienced their largest fall in over ten years.  Mike Lenhoff of Brewin Dolphin Securities Ltd. said, “We’ve had a bit of a shocker out of Japan.  [The three-day losing streak for stocks] indicates a loss of momentum in the underlying global economy.”  Chinese Premier Wen Jiabao said that downward pressure on the economy in the country is still “relatively large.”  As mentioned by Roubini, China is a key factor in the global economic recovery.

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

  • Gold – $1,586.90 – Up $6.50.
  • Silver – $27.31 – Up $0.32.
  • Platinum – $1,443.00 – Down $6.50.
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Gold Seeks Direction Amid Global Economic Woes

As the week comes to a close, two things stand out in the marketplace. First are the unexpected positive job reports in the United States. These reports have given life to the dollar and taken the steam out of Gold’s two week rally. Second, negative economic news continues to flow out of Europe and China. Both have cut key interest rates, and that could be a good sign for Gold’s global outlook. “While the ECB cut was near term bearish for Gold, as it weakened the euro, it may be more bullish longer term. Added global liquidity, with policy easing measures from the eurozone, China and the Bank of England, may stimulate demand for hard assets, including Gold,” HSBC financial services wrote in a note.

The United States has been improving steadily in many key economic factors. Employment reports have shown fewer Americans without work. The housing market has turned a corner and is making up lost ground. The issue is with the pace of the improvement. Even with the unemployment numbers dropping, it is such an insignificant amount that the overall percentage remained unchanged. “Growth has been low, and there remains uncertainty about the economy and policy here and abroad. All of those things are weighing on activity, but overall I’d put it on low growth in the U.S.,” said economist Andrew Tilton of Goldman Sachs.

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

  • Gold, $1633.89, Down $21.48.
  • Silver, $28.02, Down $0.48.
  • Platinum, $1490.96, Down $25.89.
  • Palladium, $595.25, Down $7.71.
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