European summit not looking good; dollar rising

Precious metals prices are weathering the blows of investors concerns over the eurozone debt crisis. The concerns ahead of the European Union summit, has influenced investors and even world markets. The rupee continues to struggle, which has curbed the primary gold-investing nation of India’s normal buying. Analyst Robin Bahr said, “There’s no semblance of a safe-haven at the moment but as the price goes lower that bid does come back as you maybe get some renewed investor interest – sovereign wealth funds and central banks looking to nibble away and even some physical buying.”

The concerns now are growing, as concerns over Germany’s own economic issues mount. As executive and consumer sentiment fell from 90.5 in May to 89.9, the lowest for Germany since late 2009 and unemployment is on the rise. The issue is that now core member nations, not just secondary nations, are affected by the growing debt crisis. Economist Christoph Weil said, “Germany won’t be able to disconnect from the euro-region developments… The second quarter will show an economic contraction and there are no signs of improvement for the following three months. Whether the situation stabilizes afterward hinges decisively on the euro crisis and latest developments are no real reason for optimism.”

The pressure continues to build for German Chancellor Angela Merkel within the European Union as she continues to be attacked on all sides from nations that find her intransigence off-putting. However, it is not just her partner nations, but she is even pressured globally. The issue is that as unpopular as her beliefs are in the EU, they are quite popular with the German people. Billionaire George Soros feels her position is a bit myopic. He said, “Merkel has realized that the euro is not working, but she cannot change the narrative she has created because that narrative has caught the imagination of the German public, and the German public has accepted it.”

At 9:00 a.m. (EDT) – the APMEX Precious Metals spot prices were:

  • Gold – $1,570.10 – Down $9.90.
  • Silver – $26.96 – Down $0.11.
  • Platinum – $1,402.30 – Down $9.50.
  • Palladium – $577.00 – Down $3.80.
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Credit Dries Up for Spanish Banks

Spain may be required to accept a bailout soon as the country’s Treasury Minister told Spanish radio listeners today that it’s “technically impossible” for Spain to bail itself out. Spanish banks are suffering from an overload of debt from the country’s bursting housing bubble that was fueled by cheap interest rates after Spain joined the eurozone. Bond yields on Spanish sovereign debt have tipped near the 7% mark that signals markets are anticipating a default, and have been trading at 5.48% premium to safe-haven German bonds, indicating reluctance to loan the government more and more money. Spain will attempt to issue $2 billion more euros in debt on Thursday, which will be a test of market sentiment.

Famed hedge fund manager George Soros estimates Europe has three months to address the crisis. “The heavily indebted countries need relief on their financing costs. There are various ways to provide it but they all need the active support of the Bundesbank and the German government,” Soros said. “Nothing can be done without German support.” While he does not expect a full-blown collapse of the euro, Soros expects Germany’s economy to weaken and the resolve of German citizens to soften to the point that they will be increasingly resistant to assist with further bailouts. Soros, a noted gold bug, rose to fame in the early 1990’s by betting against the British pound, earning him the title, “The Man Who Broke the Bank of England.”

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

  • Gold, $1,617.60, Up $4.20.
  • Silver, $28.57, Up $0.48.
  • Platinum, $1,437.20, Up $7.90.
  • Palladium, $624.30, Up $10.30.
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Wednesday links: Gold at 10-month low, holds on to $1,500 an ounce

Gold at 10-month low, holds on to $1,500 an ounce (MarketWatch)

Gold & Silver Decline: George Soros Nearly Quadrupled Gold Stake in Q1 (Fox Business)

Slump Persists: Greek Banking Jitters Scuttle Early Rally (Fox Business)

Fund managers reveal “best ideas” at Ira Sohn event (Reuters)

Fed Raises Stimulus Hopes, Treasurys Soar (WSJ)

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Political turmoil in Greece suggests possible Euro exit

Gold has officially erased any gains it has earned in 2012 based on the current financial situation in Europe.  The eurozone debt crisis has been affecting the global market over the past week with Europe’s political uproar and an unknown economic outlook.  “Worries about Europe are pushing people to the dollar,” Frank McGhee, at Integrated Brokerage Services LLC.

The Greek election has frightened many that the nation may exit the eurozone, which in turn would create a catastrophe for the financial market.  “I think for as long as the crisis in Europe drags on, it’s going to keep sentiment broadly in check. At the moment, gold has been painted with the risk brush. It’s going to be very much a tracker of the equity markets,” said Nick Trevethan, a senior commodity strategist at ANZ in Singapore.  Economists at Citi have predicted the chances of Greece leaving the euro to be between 50 and 75 percent.   Billionaire investor, George Soros said,” The euro is seriously at risk. The consequences of a non-controlled implosion risks to be disastrous.”

Oil prices have continued to drop to its lowest level in almost five months due to Europe’s fiscal crisis along with Saudi Arabia’s oil minister who made it clear that prices could decline even more.  “Greece is unable to form a coalition government and Europe is the biggest problem right now,” said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. “When the Saudis speak, the market tends to listen. They’ve been trying to talk down the market for a while.”

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

  • Gold – $1557.80 – Down $27.70.
  • Silver – $28.19 – Down $0.78.
  • Platinum – $1439.10 – Down $33.30.
  • Palladium – $591.00 – Down $13.30.
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