America waits for further stimulus; how are investors measuring the euro

 

Gold fell slightly today with investors taking their earnings after last week’s gains, which was encouraged on the assumption that central banks will provide additional stimulus actions.  “Everybody seems to be waiting for this huge money printing that they think is going to happen which hasn’t happened yet. So, nobody really wants to bet against it, but at the same time they don’t want to go long,” said Doug Roberts, chief investment strategist at Channel Capital Research.

As the European debt crisis continues, it is evident that Europe’s foundation is ultimately taking care of the peripheral countries that have more or less had to be bailed out by the troika of the European Central Bank, International Monetary Fund and European Commission.  The concerns are beginning to rise as the growth numbers for France and Germany are slipping.  Also, for the months of May and June, Germany’s factory orders fell by a disturbing 1.7 percent compared to the forecasted 0.8 percent.  Gerard Lyons, chief economist at Standard Chartered, told CNBC.com. “In the good times, the euro encourages money to go from the core to the periphery, creating booms and busts. In the bad times, it encourages money to go the other way and increases the liabilities of the core.  The euro is a fundamentally flawed concept, and that’s why the core is facing greater challenges. The core can’t cut themselves off completely from the periphery and that’s what markets are responding to.”

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

  • Gold, $1,610.60, Down $10.70.
  • Silver, $27.87, Down $0.31.
  • Platinum, $1,388.50, Down $12.40.
  • Palladium, $574.50, Down $9.20.

 

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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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