Analyst Predicts Ongoing Easing Through 2013

Gold and Platinum prices are mostly flat this morning, while Silver and Palladium are down slightly. Analysts continue to say that the high physical demand in Asia is one of the driving forces behind Gold’s price, though it seems the major topic is quantitative easing (QE) around the world. Recent comments from central bank officials have supported ongoing QE in many regions, as seen yesterday when a European Central Bank official confirmed the eurozone’s monetary policy stance “for as long as necessary.”

Roubini Global Economics’ Managing Director of Research Christian Menegatti chimed in, saying, “We are talking about 2014, in terms of winding down quantitative easing. We’ll have to wait much longer for rate hikes… well into 2015 and maybe towards the end of (that year).” The driving force behind Gold being stuck just below $1,600 has been fear that QE could be coming to an end soon, but these views seem to refute that. In a recent CNBC poll, over 70 percent of voters said they were still buying Gold instead of selling it.

At 9:10 a.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,593.60, Down $0.10.
  • Silver, $29.15, Down $0.09.
  • Platinum, $1,598.50, Up $1.50.
  • Palladium, $772.80, Down $1.80.

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 7 p.m. (CDT)! Or call us Fridays until 5 p.m. (CDT)! 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.

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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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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ECB to buy sovereign bonds

Mario Draghi presents his credentials as candi...

Mario Draghi presents his credentials as candidate ECB president (Photo credit: European Parliament)

“The euro is irreversible” said Mario Draghi as he announced the bond buying program at the ECB press conference in Frankfurt. The program is called “MOT” or Monetary Outright Transactions. It will focus on the secondary sovereign bond market where Draghi said it was necessary to deal with “severe” distortions in the bond markets.

Ahead of the meeting, precious metals were up across the board but most notably gold is once again over the $1700 mark. The euro has gained against the dollar due to Mario Draghi’s remarks that he would do “whatever it takes” within the European Central Banks mandate to save the euro. It will take time to see if the MOT program is considered “whatever it takes” and keeps the euro’s rally going. Gold has a strong inverse correlation to the U.S. dollar and as we have seen the Euro rally we have also watched gold rally with it, in fact, gold is at a five month high.

Closer to home today’s jobless report showed jobless claims decreasing to the lowest levels in a month. Estimates are that claims decreased by 12,000. Although this isn’t a monumental leap it is a step in the right direction and right now any positive movement is welcomed.

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

  • Gold, $1,702.00, Up $9.40.
  • Silver, $32.64, Up $0.32.
  • Platinum, $1,581.00, Up $4.40.
  • Palladium, $645.00, Down $2.00.
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Gold keeps rising, Europe in the spotlight

 

English: European Central Bank ECB Eurotower i...

English: European Central Bank ECB Eurotower in Frankfurt a.M. Germany Deutsch: Europäische Zentralbank EZB Eurotower in Frankfurt a.M. (Photo credit: Wikipedia)

 

Gold and other precious metals had big gains last week due to the U.S.A. Federal Reserve meeting and the probability of another round of monetary easing. This week has started off with the same rise in prices and monetary easing continues to be the reason. However, the location is now changed to Europe and meetings of the European Central Bank (ECB). “The ECB is evidently planning to launch a new government bond intervention program, which would inject further liquidity into the market. This should also benefit commodities due to the lack of attractive alternative investments,” analysts at Commerzbank said in a note. Some speculate these actions by the ECB could be implemented as soon as this week.

 

A few weeks ago, the ECB President Mario Draghi said they will do “whatever it takes” to keep the euro as the major currency of the region. This week will be a good indication of what exactly Mr. Draghi and his associates have in mind to do.  “Draghi certainly has to present something,” said Guillaume Menuet, economist at Citi. “A document of some sort, something of substance is what markets want to see in order to justify valuations.” One of the main issues is not a plan of action, but rather a plan that all the countries involved can agree to.

 

In the United States, there were more negative economic reports released today. The August manufacturing report was shown to have the largest drop in over three years. Economists estimated the national factory activity to have a median of 50.0 and it came in at 49.6. It shows an unforeseen contraction in the sector. U.S. construction also fell off by 0.9 percent, as with the manufacturing report, expert predicted an increase as well. Both of these reports give more talk of monetary easing by the Federal Reserve.

 

At 1:00 pm (EDT), the APMEX precious metals spot prices were:
·    Gold, $1694.40, Up $8.30.
·    Silver, $32.27, Up $0.83.
·    Platinum, $1566.50, Up $28.20.
·    Palladium, $641.00, Up $11.60.

 

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 7 p.m. (CDT)! Or call us Fridays until 5 p.m. (CDT)! 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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Gold prices are on the move

FRANKFURT AM MAIN, GERMANY - SEPTEMBER 27:  Th...

(Image credit: Getty Images via @daylife)

Precious Metals continue to move upward as investors continue to view the recently released Federal Reserve policy meeting minutes in a positive light.  Hopes continue to grow that the Fed will take some action soon to boost the economy. “The default action has changed from do nothing to do something,” Mitsui Precious Metals analyst David Jollie said. “This means that we can expect to see some action soon, but the latest minutes imply the Jackson Hole and the September 12-13 meetings are not likely to see QE3 launched.”   The Platinum price is still feeling the effect of labor interruptions as clashes between the police and striking miners in South Africa have reached a death toll of 44 people.

Spain has begun negotiations with eurozone partners over the requirements necessary to lower its borrowing costs, but 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) purchasing 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.

Concerns over Europe and its debt situation are dragging on US stocks, with the S&P 500 heading to a weekly decline. “People aren’t willing to invest,” said Stephen Hammers, the chief investment officer at Compass EMP Funds. “If Europe gets worse, U.S. investors will see that as a warning sign.”  Adding to the concern are comments from German Finance Minister Wolfgang Schaeuble stating that giving Greece more time would not solve its problems and cost investors.

At 1:00 p.m. (EDT), the APMEX

Precious Metals spot prices were:

  • Gold, $1,674.00, Up $35.00.
  • Silver, $30.72, Up $1.08.
  • Platinum, $1,557.70, Up $30.20.
  • Palladium, $657.50, Up $27.30.
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Is the euro currency already dead?

 

Precious metals recovered from early losses this morning after the release of the Consumer Price Index showed the smallest year-over-year increase in nearly two years.  The better-than-expected report could support the Federal Reserve’s looming decision on another round of monetary stimulus.  Also, a key business gauge contracted unexpectedly for the first time in nearly a year.  The “Empire State” index showed a drop to minus 5.85 from 7.39 last month.

Quantitative easing (QE) from either the European Central Bank (ECB) or the Fed seems to be the key factor in a rally for the price of Gold.  Should either central bank announce a round of QE, prices are likely to increase due to the results of such action all being supportive of the Gold price.  Investors shouldn’t be surprised to see action from Europe before the U.S., however.  London’s Marex Spectron said in a note, “The eurozone appears to continue to struggle, while the U.S. keeps surprising the market with positive figures.  This only enhances the chance the the ECB is more likely to act before the Fed.”

Matthew Lynn of Marketwatch writes that the euro as a currency is much like a zombie.  He writes, “Some countries can’t use the euro for imports because of fears that drachmas or lire may suddenly replace euros.”  Lynn explains that oil traders, for instance, may be wary of selling oil to a country like Greece, because when payment is due six months down the the road, they may not be paying in euros, but in something worth far less.  “When a currency stops working the damage done to the economy is immediate.  Trade stops flowing.  Investment gets postponed.  Capital flees.  Very quickly, unemployment starts to rise, and output declines.  That is exactly what is happening in the eurozone right now,” he writes.

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

  • Gold, $1,601.10, Up $0.20.
  • Silver, $27.92, Up $0.05.
  • Platinum, $1,398.70, Down $1.50.
  • Palladium, $577.90, Down $2.00.

 

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