Stocks Still Gaining After QE3; Gold Outlook Positive

Global markets continue to rally today following Thursday’s announcement of the United States’ aggressive bond-buying plan. News of the program lifted the S&P 500 to its highest single day peak since January 2, 2008. The market reaction is not unexpected. Investors will await the long-term effects of the latest round of quantitative easing (QE3) as the Federal Reserve announced it will inject $40 billion dollars a month into the U.S. economy until the jobs market realizes prolonged growth.

Bullish investors are still impeded by one final obstacle as Spanish Prime Minister Mariano Rajoy continues to delay acceptance of the European Central Bank’s stimulus package which was announced last week. Economists continue to assert that a bailout is inevitable and necessary for the country which currently renders one out of four workers jobless. Rajoy “needs to bite the bullet on aid while the going is relatively good,” Derks said, in a note. “The current market calm is merely a facade created by a fortuitous alignment of various forces. Better to get pen to paper now, rather than be forced kicking and screaming in a few months time.”

As expected, the announcement of QE3 caused a significant spike in the gold price on Thursday. Though it has traded relatively flat today, analysts predict continued upward movement for the metal as the Fed gears up to indefinitely pump funds into the struggling U.S. economy. “You’ve got gold, a fixed quantity, and central banks printing more money. Ergo, gold becomes more expensive,” Richard Cookson, global chief investment officer at Citi Private Bank, told CNBC Friday. “The cost of holding gold is zip, because interest rates are effectively zero. So you print more currency, and the gold price goes up because you price in that extra currency.”

At 1:00 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,773.90, Up $2.80.
  • Silver, $34.71, Down $0.08.
  • Platinum, $1,714.60, Up $34.10.
  • Palladium, $701.20, Up $12.20.

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 8 p.m. (EDT)! Or call us Fridays until 6 p.m. (EDT)! If you have any questions about investing in Precious Metals or simply would prefer to place your order by telephone, we are here to help.

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QE3 talk pushes Gold higher

 

Gold rose to a five-month high today on quantitative easing news out of the U.S. and Europe.  James Steel of HSBC said that “it’s the avalanche of money argument” in regards to Precious Metals’ gains recently.  Andrey Kryuchenkov of VTB Capital added, “All that promise (of quantitative easing) needs to turn into concrete action.  And for Gold in the long run, it needs any sort of liquidity boost, or balance sheet expansion, and for bond yields to stay low.”

Drakon Capital’s Guy Adami believes that the quantitative easing news will send Gold to a new record price.  “I don’t think it has anything to do with fear (about fiat currencies).  It has everything to do with what’s coming down the pipe,” he told CNBC.  “Again, I’ll say, although it’s painful on the down days, and there have been a number of them, I think gold is what’s going to win,” he added. “One day we’re all going to wake up, and the price of gold is going to be a lot higher than it is now. When I say a lot higher, I mean north of $2,000.”  Whether Gold eclipses this figure is yet to be seen, but Adami is a firm believer.

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

  • Gold, $1,696.70, Up $10.60.
  • Silver, $32.38, Up $0.94.
  • Platinum, $1,570.40, Up $32.10.
  • Palladium, $642.00, Up $12.60.

APMEX’s Account Managers now have extended hours Mondays through Fridays and are here to serve you until 8 p.m. (EDT)! If you have any questions about investing in Precious Metals or simply would prefer to place your order by telephone, we are here to help.

 

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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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Gold jumps over 3 percent on EU deal

Gold jumps over 3 percent on EU deal, logs monthly gain (CNBC)

Consumer Spending in U.S. Stalls as Hiring Weakens: Economy (Bloomberg)

S&P Posts Best Day This Year (WSJ)

What Really Happened at the European Summit? (BusinessWeek)

Gold Prices Jump Most in Four Weeks on Europe Relief Plan (BusinessWeek)

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Gold coin sales from national Mints fall in Q1

Gold falls on deflation fears, euro debt worries (Reuters)

Gold coin sales from national Mints fall in Q1 (Reuters)

India’s Gold Demand May Revive on Normal Monsoon (WSJ)

Home Prices Showing Signs of a Turnaround: Case Shiller (CNBC)

Global stocks up, euro flat as technicals offset Spain worry (Reuters)

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