Fed chairman set to speak; should eurozone look at Gold differently?

 

U.S. stock futures and Precious Metals are enjoying a boost this morning in anticipation of Federal Reserve Chairman Ben Bernanke’s speech at Jackson Hole, Wyo., set to begin at 10 a.m. (EDT). Many investors are expecting Bernanke to strongly hint about a new round of quantitative easing, if not deliver an outright announcement. Peter Cardillo of Rockwell Global Capital said, “Obviously the market has discounted the fact Mr. Bernanke is not going to announce (a third round of quantitative easing), but he will acknowledge the fact there is a growing possibility that it could happen, so I think that’s what the market is looking at.”

The World Gold Council is suggesting a creative way of looking at Gold in the eurozone. Many pundits have suggested that troubled eurozone countries sell Gold to take care of their debts. This ill advised idea sounds like a simple resolution, but of course it is more complicated than that. The World Gold Council has suggested bonds and loans backed by Gold. Some groups (LCH.Clearnet, Intercontinental Exchange, and the Chicago Mercantile Exchange) have begun accepting Gold as collateral for margin requirements recently. Gillian Tett of Financial Times wrote that this “suggest(s) that a slow evolution of attitudes is under way — not so much in terms of the desirability of Gold per se, but the increasing undesirability and riskiness of other supposedly ‘safe’ assets, such as government bonds.”

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

  • Gold, 1,662.90, Up $7.30.
  • Silver, $30.79, Up $0.34.
  • Platinum, $1,519.20, Up $14.50.
  • Palladium, $625.80, Up $625.80.

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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Weekly Gold & Silver Market Recap for March 23, 2012

In the past few weeks, Gold has been experiencing a positive correlation to Treasury prices, which means Gold likely will follow the trend of U.S. bond prices. According to the Financial Times, an industry source reported in recent weeks that central banks have been buying Gold, with an estimated four metric tons of the metal being bought. The consumer demand seems to have helped boost Gold sales as well. According to Rohit Savant, an analyst with CPM Group in New York, “A lot of it has to do with bargain hunting.” Rohit said lower prices are enticing investors back to Gold.

With India‘s announcement late last week that taxes for Gold purchases will increase, many of that country’s jewelers have been on strike, which lead to a slump on gold demand this week. The jewelers’ fear that the shift to double customs duty on Gold will increase prices and weaken demand. This week, credit rating agency Moody’s announced that starting in April, India’s credit rating will be credit negative for its sovereign debt, based on its, “…dependence on corporate tax revenue and vulnerability to commodity prices and exchange rates.”  Many investors are awaiting European data to see how the eurozone is faring after the Greek bailout deal. Yuichi Ikemizu, head of commodity trading, said, “A lot of people are on the sidelines at the moment. … We saw some bearish signs, but the market seems to be holding well. The upside at $1,800 is still looking quite heavy, and investors are waiting for a cue.” Continue reading