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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Prediction on QE3 Roll out; S&P Foresees Greece Exiting Eurozone

Today, gold followed the trends of the euro and oil as all three assets clearly began to strengthen.  The safe haven appeal continues to coincide with gold as Jeffrey Sica, at SICA Wealth Management LLC suggested the yellow metal is an essential tool to deal with the global economic worries.  Sica said, “Right now the tools to deal with the European crisis and the U.S. economy are limited and questionable.  So that puts the financial market in a very vulnerable position and enhances the desire to accumulate safe-haven-type investments” such as gold.

Dennis Gartman, the editor and publisher of The Gartman Letter, spoke to CNBC today about the likeliness of the Federal Reserve announcing the next round of quantitative easing (also known as QE3) as early as this month.  Gartman bases his predictions on the latest jobs report that was released Friday with disappointing numbers.  Gartman said, “The Fed has made it abundantly clear that it has kept QE3 up on the table; (it) would be executed if economic circumstances deteriorated.  And you have to admit that Friday’s number — no matter how you try to slice it — was deterioration.”  Gartman also mentioned QE3 will happen far ahead of the U.S.A. presidential election in November so that it is not linked in any political manner to the current administration.

Standard & Poor’s (S&P), one of the big three credit rating agencies, has announced it foresees a one in three chance that Greece will exit the eurozone in the coming months. “ A rejection by Greek voters to enact financial reforms demanded by the European Commission, International Monetary Fund, and European Central Bank would likely result in a cutoff of international aid and subsequent defaults,” S&P said.

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

  • Gold – $1,619.90 – Down $1.70.
  • Silver – $28.30 – Down $0.30.
  • Platinum – $1,430.70 – Down $4.50.
  • Palladium – $612.90 – Down $1.10.
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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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