10.21.11 Weekly Recap

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The uncertainty in Europe has caused Gold to be pulled in opposite directions all week. Europe remained at the forefront of traders’ minds this week as markets moved up on optimism that a bailout plan was imminent.  However, German Chancellor Angela Merkel made a pointed comment, saying, “Dreams that with this package everything will be solved and everything will be over on Monday won’t be able to be fulfilled.” Many investors thought a more defined plan would be created during the conference of European Union (EU) finance leaders but Germany, the main proponent of any bailout, is not building confidence in the global
marketplace. They will be working on a plan but that plan is not the ‘miracle cure’. The plan includes a number of objectives, including a write-down of debt greater than the originally suggested 21% reduction, and recapitalization of euro zone banks. “Determining how the write-downs will be applied and the source of funds to recapitalize the banks will require arduous negotiations between now and the deadlines the EU has set for itself,” said Dan Morris, Global Strategist at J.P. Morgan Asset Management. “We remain optimistic an agreement will be found but returns have been so strong over the last few weeks there is a risk of disappointment if it takes longer to work out the details than investors expect.”

The Chinese economy grew at 9.1% in the third quarter from a year earlier, which is the slowest pace since 2009. This was down from the 9.5% of previous quarters and the expectations of 9.3%. The slowdown is a global concern on two fronts. If the Chinese economy slows, it is an indicator that the global economy is slowing since China is a major exporter of goods. If business is  lowing, it is due to the poor economic condition of China’s customers, i.e., the other nations of the world. If the Chinese
economy should continue to falter along with continued troubles in the euro zone, many investors fear a repeat of what we experienced in 2008.

The U.S. Department of Labor reported this week that it’s seasonally adjusted index for the prices received by farms, factories and refineries increased by 0.8% after staying flat in August. Economists had set their expectations at only 0.2%. This is the largest increase in five months, which should increase debate about the potential for rising inflation.

Moody’s Credit Rating Service issued a warning that it might soon review France’s triple-A credit rating for a possible downgrade. Global stock and precious metals markets headed lower overnight on this news and continued concern whether European leaders can come up with a comprehensive solution to their debt problems. Stocks and precious metals have been up over the past couple of weeks on the expectation that the 17 countries of the euro would come up with a three-pronged solution to the debt crisis.

Moody’s credit review of France threatens a number of initiatives in place from the Greek debt relief to overall funding for
the recapitalization movement for European Union (EU) banks. The unusual part was Moody’s has almost bypassed a step by not initially putting France on a ratings watch. France is currently the second in financial power to Germany. France’s original 1.75% growth projection was overly optimistic and needs revision. According to Moody’s, “The deterioration in debt metrics and the
potential for further contingent liabilities to emerge are exerting pressure on the stable outlook of the government’s triple-A debt rating.” The French Economy Minister, Francois Baroin, clarified, “The triple-A is not in danger because we will be even ahead of
schedule on passing deficit reduction measures…We will do everything to avoid being downgraded.

The Federal Reserve released its Beige Book, prepared for the Federal Open Market Committee meeting, shows a very weak economic growth in the U.S. Among the weakest sectors of the economy were banking & finance. Analysts expect the current easy-money stimulus policies from the Fed to continue for some time.

Gold demand has been high and low during the week due to the uncertainty in Europe. Credit Agricole analyst Robin
Bhar explained, “At the end of the day, Gold has got the physical business that comes in on the dips, as well as investors so
that should [support it at the current price.] But even if [the price does come down], if we get some more funding crises, you have to think there will be even stronger support down at those numbers, so I’m not worried.”


Spot Gold prices opened this week at $1,683.80. The high was on Monday, Oct. 17th at $1,696.80, while the low for the week occurred on Thursday, Oct.20th at $1,604.70. Gold ended the week down $38.80 at $1,645.00. This week, the most popular Gold bullion products were 2011 Gold American Eagles, 1 oz. Pamp Suisse Gold Bars, and 2011 1 oz. Gold Maple Leafs.

Spot Silver prices opened this week at $32.21. Silver reached a high of $32.68 on Monday, Oct. 17th, while this week’s low for Silver occurred on Thursday, Oct. 20th at $29.94. Silver ended the week down $0.81 at $31.40. The most popular Silver products on APMEX.com this week were 2011 Silver American Eagles, 2011 Silver Maple Leafs, 1 oz. Silver Buffalo Rounds and 10 oz. APMEX Silver Bars.

Spot Platinum prices opened this week at $1,556.40 and ended the week down $41.60 at $1,514.80. Popular Platinum products this week included, 1 oz. Platinum Bars, 1/10 oz. Platinum American Eagles, and 1 oz. Platinum American Eagles.

Spot Palladium prices opened this week at $625.40 and ended the week down $9.00 at $616.40. Palladium investors preferred 1 oz. Pamp Suisse Palladium Bars and Palladium Canadian Maple Leafs this week at APMEX.com.

 Video: Gold American Eagle

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Beginning on January 3, 2011, the 2011 Gold American Eagle Coins became available to the United States Mint’s authorized purchasers. An official Gold bullion coin of the United States, the Gold Eagle Coin has become one of the most popular coins on the world market. Since its release by the U.S. Mint in 1986, the Gold Eagle has featured the same basic design. Displaying a design created by Augustus Saint Gaudens, the obverse of the Gold American Eagle depicts the figure of Lady Liberty, who holds a torch in her right hand and an olive branch in her left hand. In the background is a rendition of the Capitol building in Washington, D.C. The reverse of the Gold coin illustrates a nest of American eagles. A symbol of American nationalism and pride, the eagle is pictured carrying an olive branch and hovering over the nest.

Available in 1 oz, 1/2 oz, 1/4 oz, and 1/10 oz denominations, the 2011 Gold American Eagle appeals to both collectors and investors alike. In addition to its beautiful design, the Gold Eagle is also a Gold gem for its value. Containing 91.67% pure Gold, the 22-karat Gold American Eagle Coins have a market value that usually equals the market value of their Gold content. Moreover, the 2011 Gold American Eagles are eligible for precious metals IRA accounts and can potentially enhance any coin collection or investment
. Having gained international popularity since its debut, the Gold American Eagle is a coin that will most likely continue to attract attention from coin collectors all over the world. Buy Gold American Eagles today at APMEX.com.

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One thought on “10.21.11 Weekly Recap

  1. With Russia talking about gold purchases and the $1600 holding this week, it will be interesting to see if gold has bottomed or whether it needs to retest the 200 dma.

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