Roubini on 2012’s “Global Perfect Storm”

Precious Metals are trading mostly flat this morning, taking a cue from the euro.  The common currency has rebounded slightly since hitting a two-year low on Friday.  Adam Myers of Credit Agricole wrote, “The currency market mood is likely to turn more pessimistic this week as investors return their focus to fiscal-policy challenges.  In the wake of [Federal Reserve, Bank of England, and European Central Bank] announcements, there now appears little on the monetary-policy front to lift investor sentiments.”  Lately, Gold and Silver have largely followed the currency markets, moving inversely to the American dollar.

Two months ago, economist Nouriel Roubini said that four key items, if happening simultaneously, could create a “perfect storm” for the economy.  The four items – a slowdown in emerging markets, military conflict in Iran, the European debt crisis, and growth slowing in the U.S.A. – seem to be coming together now.  Roubini said, “Levitational force of policy easing can only temporarily lift asset prices as gravitational forces of weaker fundamentals dominate over time.”  Historically, Gold has reacted positively in times of economic uncertainty.

American stock futures are falling this morning due to news out of Japan and China.  In Japan, machinery orders experienced their largest fall in over ten years.  Mike Lenhoff of Brewin Dolphin Securities Ltd. said, “We’ve had a bit of a shocker out of Japan.  [The three-day losing streak for stocks] indicates a loss of momentum in the underlying global economy.”  Chinese Premier Wen Jiabao said that downward pressure on the economy in the country is still “relatively large.”  As mentioned by Roubini, China is a key factor in the global economic recovery.

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

  • Gold – $1,586.90 – Up $6.50.
  • Silver – $27.31 – Up $0.32.
  • Platinum – $1,443.00 – Down $6.50.
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