Mid-Day Gold & Silver Market Report 2/22/2012

GREEK PROTESTS PLANNED; DEFAULT SWAPS ARE CONCERN  

Precious metals prices have moved little today with the exception of Platinum’s, which is up considerably since this morning. Platinum’s price has rallied due to a labor dispute at one of the world’s largest Platinum mines, Impala Platinum’s Rustenberg Facility. The disagreement at the mine has led to a loss of 80,000 ounces in output. Credit Suisse said in a note, “The market does not ‘need’ those ounces at present: Industrial and jewelry demand are both currently subdued, and Platinum sponge is trading at a significant discount to ingot.”

In Greece, protests were planned today by two major trade unions, the unemployed, journalists and even motorcyclists. Greek people want to unite to show their frustrations with the new austerity measures that supposedly will save the country from a recession that has plagued it for the past five years. Dutch Finance Minister Jan Kees de Jager expressed concerns with the Greek bailout package, saying, “To be honest, I have doubts, but it’s the best we could do.”

Credit-default swaps have become a concern after the bailout agreement for Greece. Investors look at credit-default swaps as their insurance policy for a bond they have bought from an unstable country, such as Greece. Europe’s policymakers are hoping for a voluntary debt swap that would allow an investor to swap his current bond for a lower-interest bond. If this method is chosen, it would prevent credit-default swaps that could damage Europe’s financial system. For Greece to receive the utmost benefit in debt relief, as many eligible bonds as possible must become part of the restructuring scheme. The Greek Parliament is considering inserting a collective action clause into bonds issued under Greek law, which will force investors to accept the lower-interest bond swap. This would affect about 90 percent of the bonds. If invoked, the collective action clause would most certainly set off default swaps, experts said.

At noon (CST), the APMEX precious metals spot prices were:

• Gold - $1,757.70 – Up $0.20.
• Silver - $34.17 – Down $0.34.
• Platinum - $1,722.00 – Up $36.10.
• Palladium - $718.40 – Up $6.70.