Stocks report mild gains in anticipation of QE3

 

U.S. stocks are reporting modest gains today as investors are guarded in anticipation of potential quantitative easing (QE3). Thursday will conclude a two day session of the Federal Open Market Committee (FOMC) after which many analysts foresee Federal Reserve Chairman Ben Bernanke potentially announcing further government stimulus. Economists are expecting the announcement following 43 consecutive months of unemployment above 8% and an economy that grew less than 2% in the second quarter of 2012. A poll of economists who put the chances of QE3 above 50% resulted in 39 out of 51 predicting action on the part of the Fed during this week. “Monetary stimulus will ‘shore up’ a fundamentally weak economy, as opposed to helping the U.S. economy attain a significantly faster underlying rate of growth,” said John Lonski, economist at Moody’s Investors Service.

Gold futures are also realizing humble gains as a German court ruling has allowed Berlin to ratify a final euro zone rescue fund along with news from the FOMC. “With the market’s main focus on this week’s [Fed] meeting…prices were buoyed by a stronger euro,” said strategists at HSBC. The next 24 hours could prove to be eventful for precious metals markets.

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

  • Gold, $1,732.30, Down $1.60.
  • Silver, $33.12, Down $0.46.
  • Platinum, $1,649.20, Up $41.20.
  • Palladium, $679.10, Up $4.30.

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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Analyst: Time for QE3

Modern-day meeting of the Federal Open Market ...

Modern-day meeting of the Federal Open Market Committee at the Eccles Building, Washington, D.C. (Photo credit: Wikipedia)

Precious Metals are trading higher this morning in anticipation of the Federal Reserve meeting tomorrow.  After last week’s dismal jobs report, analysts believe the time is now for the Fed to act.  Mike Dueker of Russell Investments wrote, “If many (Federal Open Market Committee) members meant what they said about needing to see ‘substantial and sustainable strengthening in the pace of the economic recover’ in order not to implement a third around of quantitative easing, then it is time to act.

Germany’s Federal Constitutional Court blocked requests for an injunction which would rule German support of the eurozone rescue fund unconstitutional.  German Chancellor Angela Merkel said that the ruling sends “yet another strong signal to Europe and beyond: Germany is accepting its responsibility as the largest economy and reliable partner in Europe.”

The Platinum price is gaining at a much greater pace than other metals today due to the unrest in South Africa.  The top Platinum producer in the world, Anglo American Platinum, is now being affected by striking miners, who blockaded roads leading to shafts.  “Fear of intimidation and threats by unidentified individuals in and around” certain locations caused some non-striking miners to be unable to report for work, according to a statement.

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

  • Gold – $1,738.90 – Up $5.00.
  • Silver – $33.71 – Up $0.15.
  • Platinum – $1,646.10 – Up $38.10.
  • Palladium – $679.50 – Up $4.60.

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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Gold gaining momentum, Germany worried about U.S. debt

 

Spot gold is trading around six month highs today as the euro is gaining strength against the dollar. Gold has a positive relationship to the euro right now and over the past two months has grown to be at its most positive, a +0.75. There is growing expectations about what will come out of Thursdays Federal Reserve meeting; speculation is that a quantitative easing announcement could send the price of gold over $1,800.

German Finance Minister Wolfgang Schaeuble has brought into question the United States’ high level of debt. He is quoted saying in a speech to the lower house of parliament that “U.S. debt (is) a burden for the global economy.” He underscores the fact that the rest of the world is keeping their eye on the U.S. elections and is concerned about our ability to deal with it once the elections are over. This comes just after the U.S. reached an inauspicious $16 trillion debt.

Adding insult to injury, the U.S. trade gap widened in July. This was the first time in four months that demand for U.S. produced goods decreased. The gap grew 0.2 percent to $42 billion. The positive side to this is that is smaller than projected. The trade gap is due in part to stagnant economies in Europe.

At 9AM EDT the APMEX precious metals prices were:

  • Gold price – $1,736.10 – Up $5.30
  • Silver price – $33.82 – Up $0.19 cents
  • Platinum price – $1,608.00 – Up $3.20
  • Palladium price – $675.80 – Up $3.00

 

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South African Strikes Continue; Citigroup Estimates Probability of QE3 at 99%

Gold and silver are trading relatively flat today while platinum and palladium are up following news of further unrest surrounding South African miners and leading platinum producer Lonmin plc. Reports were released today that 10,000 striking platinum miners – many of whom were armed with sticks and machetes – marched on several Lonmin mine shafts threatening violence against strike breakers who are continuing to work. The recent strikes have inspired laborers in South African gold mines to rebel against their own employers. The result has been a stoppage of production at two Gold Fields (the world’s fourth largest gold producer) mines in the last several days. “We haven’t been given any demands but the pattern is the same as KDC East. It is intimidation. The strikers went around from hostel to hostel yesterday to prevent the others going to work,” Gold Fields spokesman Sven Lunsche said.

Despite the conflict, the Gold price has yet to be seriously impacted by concern over a significant stoppage in production. The main focus for investors is the looming concern over the Federal Reserve’s announcement of a third round of bond-buying known as quantitative easing (QE3). An analysis of current market factors and recent news surrounding the state of the U.S. economy have prompted Citigroup Inc. to estimate the chances of QE3 at 99% as many experts await more definitive language from the Fed regarding the steps it will take to aid the struggling economy. “Nervousness and continued agony over in Europe, the fiscal cliff, election uncertainty means there are a lot of headwinds,” said Mark MacQueen, partner and money manager at Austin, Texas-based Sage Advisory Services Ltd., which oversees $10 billion. “Everything is lining up to be more difficult. The Fed will give us language that reassures the market they intend on doing more.”

At 1PM EDT the APMEX precious metals prices were:

  • Gold price – $1,731.10 – down $8.40
  • Silver price – $33.57 – down 12 cents
  • Platinum price – $1,605.00 – up $7.70
  • Palladium price – $672.20 – up $17.40
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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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