Weekly Gold & Silver Market Recap for April 06, 2012

by John Foster. Email John.

Modern-day meeting of the Federal Open Market ...

Modern-day meeting of the Federal Open Market Committee at the Eccles Building, Washington, D.C. (Photo credit: Wikipedia)


The major news of the week was the release of minutes from the Federal Open Market Committee meeting.  There was little discussion of any plans for future quantitative easing by the Federal Reserve.  Stocks and commodities — including precious metals — experienced a significant selloff, with prices for Gold and Silver dropping to levels not seen since mid-January, making both metals particularly attractive from a physical demand perspective. However, some analysts are saying that the Fed’s current policy can still support Gold prices, even without more easing. In a recent report, James Steel of banking giant HSBC said, “Policy is already ultra-accommodative by conventional monetary standards, and therefore Gold-friendly. This may be overlooked or underestimated in the current sell-off, we believe.”


The euro is feeling the effect of Spain’s debt crisis, which is not being fully contained at the same time borrowing costs are on the rise. “We haven’t seen any major improvements in the European debt situation,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. (8711), a currency-margin company. “After Greece, investors may be beginning to shift their focus onto countries like Spain, Portugal and Italy. I expect the euro will gradually sink as the region’s economy deteriorates.” In Spain, last week’s budget announcements coupled with the release of less-than-stellar debt-to-GDP ratio have a number of investors concerned, as the levels are well in excess of previous estimates. This is the highest debt level in 22 years. Last year, the debt-to-GDP ratio was 68.5 percent, while this year it has climbed to 79.8 percent. Although this ratio is less than the European Union average, it is still quite high and climbing.


The reduced likelihood of QE3 also put downward pressure on Brent and U.S. crude oil pricing. Adding to the potential pressure is news that Saudi Arabia will continue its increased output, even if many consumer countries tap their emergency stockpiles. A source familiar with the talks in Riyadh said, “Saudi production will unlikely change from the levels we see now, even if the stocks are released, because the stocks will not have an impact.”  Oil prices are receiving some support by continued supply disruption concerns. While actual supply from Syria, Yemen and South Sudan already has been cut, the Iranian oil supply is still the main worry for oil markets. Saudi Arabia is pumping nearly 10 million barrels per day, and OPEC’s production is at its highest since 2008.

Product of the Week: 2012 (S) 1 oz Silver American Eagle MS-70 PCGS Golden Gate 75th Anniversary Label

2012 (S) 1 oz Silver American Eagle MS-70 PCGS 75th Anniv.

The 2012 Silver American Eagle Golden Gate 75th Anniversary Label has all the qualities collectors and investors have come to love about Silver Eagles — .999-fine purity, appealing design, one full ounce of pure Silver content — with the added benefit of a new special label from PCGS. This renowned grading service is commemorating the 75th anniversary of the Golden Gate Bridge with a special label just for 2012 Silver Eagles minted in San Francisco.

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