End of week Gold and Silver report

 

Gold waited all week for direction:

As the week started gold and other markets had all eyes on a small town in Wyoming called Jackson Hole. That is where an annual meeting is held by the U.S. Federal Reserve and in the past has given way to significant monetary action such as two rounds of easing. There was a lot of speculation and waiting for news. For some, it was not going to be an extraordinary event.  Many financial specialists believe the Jackson Hole meeting will not be the critical event that could trigger further government financial stimulus this time around. “The critical period is really from Friday to the 12th (of September) — the constitutional court decision,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vt. Many others shared a different view of the meetings of the Fed. While the question remains whether there will be another round of monetary easing, if the answer is “no,” it could affect Gold’s price. “We see near term risks of a reversal if Jackson Hole does not deliver what the market is hoping for,” said Nick Trevethan, senior metals strategist at ANZ in Singapore. Friday came and so did the report with Federal Reserve Chairman Ben Bernanke giving indications that the Fed will soon embark on another round of bond buying, otherwise known as quantitative easing (QE). “It is important to achieve further progress, particularly in the labor market,” Bernanke said. “Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.” Bernanke cited previous rounds of easing as effective in stimulating economic development and job creation without hastening inflation.

Europe still trying to work through issues:

Europe clearly took a backseat this week to the Fed’s potential monetary easing announcement, but the European Central Bank (ECB) is readying for an ECB Governing Council meeting next week. James Reid of Deutsche Bank said, “For now, Europe is in a holding pattern ahead of clarity surrounding the next move in the great ECB bond buying maneuverings, and the U.S. is in limbo ahead of Bernanke’s Jackson Hole appearance tomorrow. For the latter, speculation mounts that Bernanke won’t say anything overly new in his speech.” The eurozone is in a battle of its own, regardless of what the Fed decides. Spain is being sucked into the center of the eurozone debt crisis. Spanish consumers have pulled as much as 5 percent of their private sector deposits. The other side of this coin is that Greek banks are seeing a boost in their deposits since June elections. Private sector deposits are up about 2 percent. 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.”

United States economy still giving mixed reports:

In the U.S.A., a trend of economic growth could be a reason the announcement of another round of easing by the Federal Reserve was not made today. One discussion is surrounding the small amount of growth and whether it is enough to sustain a positive direction moving forward. The United States’ gross domestic product (GDP) went up in the second quarter by 1.7 percent, which was 0.2 percent more than a previous estimate. The GDP is seen as a key indicator of the economy. While there was improvement, many believe it was at a level low enough to warrant more action by the Fed. The release of the weekly jobless claims report has had little effect on Gold and Silver. The four week moving average of new claims rose by 1,500, while the week to week change was flat. Personal consumer spending increased in July to a five month high, according to data from the Commerce Department. Falling gasoline prices coupled with moderate increases in income to provide consumers a bit more to spend this midsummer. Despite July’s increase, consumers have been cautious on spending for most of the year, with a decrease in June and a flat report in May. “In the first quarter of the year, Americans saved less in order to spend more,” said Chris Christopher, senior economist at IHS Global Insight. “In the second quarter, job prospects were not very promising, so Americans put more money aside and spent less.”

 

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Fed chairman gives clear signal for QE3

English: President Barack Obama confers with F...

English: President Barack Obama confers with Federal Reserve Chairman Ben Bernanke following their meeting at the White House. (Photo credit: Wikipedia)

The much anticipated Jackson Hole, Wyo., speech took place this morning, with Federal Reserve Chairman Ben Bernanke giving indications that the Fed will soon embark on another round of bond buying, otherwise known as quantitative easing (QE). “It is important to achieve further progress, particularly in the labor market,” Bernanke said. “Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.” Bernanke cited previous rounds of easing as effective in stimulating economic development and job creation without hastening inflation.

The Gold price has had a turbulent morning. The metal fell immediately after Bernanke’s speech but quickly rebounded, leaving Gold at its highest level since April. “The main catalyst for the reversal in Gold has been that Bernanke used the words “grave concern” and the interpretation is that there’s going to be more QE if he’s using such dire projection for the economy,” said Jeffrey Sica, chief investment officer of SICA Wealth Management. Today’s rise in Gold price could be the first substantial gain in a rally that some analysts predict to breach $1,900 by year’s end.

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

  • Gold, 1,681.20, Up $25.60.
  • Silver, $31.23, Up $0.88.
  • Platinum, $1,535.30, Up $30.60.
  • Palladium, $627.90, Up $11.40.

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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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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Anticipation for Friday grows, affects the markets

 

The dominant news of the week will be speculation as to what will or won’t be announced during the annual Jackson Hole symposium.  Anticipation leading up to those announcements left stocks flat.  David Morrison, senior market strategist at GFT Markets in London, said “There are hopes that the Fed chairman will signal that another round of quantitative easing (QE) is imminent, although it seems more likely that he will keep investors guessing, while assuring them that the Federal Reserve stands ready to intervene further, if required.”

 

The eurozone is in a battle of its own, regardless of what Bernanke says at Jackson Hole.  Spain is being sucked into the center of the eurozone debt crisis.  Spanish consumers have pulled as much as 5 percent of their private sector deposits.  The other side of this coin is that Greek banks are seeing a boost in their deposits since their June elections.  Private sector deposits are up about 2 percent.

 

Official portrait of Federal Reserve Chairman ...

Official portrait of Federal Reserve Chairman Ben Bernanke. (Photo credit: Wikipedia)

 

Gold is riding a three month increase in price, up 3.1 percent.  This is the highest percentage increase since January.  The rising prices are fueled, in part, by expectations for what will come from the Jackson Hole meeting.  Gold’s meteoric rise in price, doubling since 2008, has been fueled by the Fed’s QE tactics.  For those that are risk adverse, gold holds a strong appeal; as currencies inflate, gold will always be a store of wealth as its value is historically independent of any one currency.

 

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

 

  • Gold, $1,665.40, Down $8.70.
  • Silver, $30.90, Down $0.24.
  • Platinum, $1,524.50, Down $29.70.
  • Palladium, $640.40, Down $15.80.

 

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Jobless claims disappoint, leaving door open for QE3

 

English: James Bullard, president of the Feder...

English: James Bullard, president of the Federal Reserve Bank of St. Louis (Photo credit: Wikipedia)

 

Precious Metals prices added to early gains after the release of the weekly jobless claims report. After an upward revision from last week’s numbers, the report showed increases across the board in new claims, existing claims, and the four week moving average. Jumps in the prices of Gold and Silver are most likely due to the fact that yesterday’s Federal Open Market Committee (FOMC) meeting minutes revealed that a third round of quantitative easing (QE3) was likely unless there was significant improvement in economic reports, and this report certainly does not indicate improvement.

 

In stark contrast to the minutes of the FOMC meeting released yesterday, St. Louis Federal Reserve President James Bullard said, “If we were to resume, and I think we will, 2 percent growth, maybe a bit stronger than that in the second half of the year, unemployment ticks down through the rest of the year, that’s not a great outcome but that’s a good enough outcome to keep us on hold,” regarding QE3. Bullard also said the market may be setting itself up for disappointment. He said, “Probably the best thing to talk about here is what would that action really be? I think the markets have the idea of some gigantic action. I’m not sure if the data really warrants that.”

 

The euro continues to rise against the dollar, which is supporting the Gold price’s recent moves. Chen Min of Jinrui Futures in China said, “The Fed’s tone is totally different in the minutes from previous comments, and that helped Gold break from the previous range and move into a higher price range ahead of the peak consumption season.”

 

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

 

  • Gold, $1,664.20, Up $24.90.
  • Silver, $30.50, Up $0.83.
  • Platinum, $1,543.80, Up $16.30.
  • Palladium, $637.90, Up $7.70.

 

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