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Closing Gold & Silver Market Report – 2/28/2012

Gold Hits a Three Month High, Silver a Four Month High; Pimco CEO Says Greek Bailout Will Fail

Shaking off yesterday’s downward ending, the price of Gold ended the afternoon at its highest point in three months. With analysts saying that long-term support for gold is solid, investors took advantage of the previous two sessions’ price drops and enthusiastically purchased the precious metal. The price of Silver also saw a healthy jump today, rising over 4.5% and ending its highest since this past September. Precious metals prices in general were helped out by rise in the euro and a drop in the dollar, and Platinum and Palladium ended the day up as well. According to precious metals analyst Jim Steel with HSBC in New York, “We’ve got a very nice jump for the euro. That has lifted gold up pretty strongly,”

In an interview with CNBC today, Pimco CEO Mohamed El-Erian stated that the Greek bailout package will probably fail. The real issue now, said El-Erian, is if Greece’s debt crisis can be contained or if they will spread to other countries in the eurozone. "Greece has been sacrificed in order to build that firewall," said El-Erian, referring to efforts by European leaders ensure that Europe’s banking system stays capitalized in the event of a member-country default. “In Greece, we are sustaining the unsustainable, and it comes at a cost and the cost is a society that has to put up with tremendous austerity without seeing a light at the end of the tunnel. That's why this package will fail just like the previous package failed.” El-Erian also said that if and when the Greek bailout fails, Portugal, which also has significant debt issues, will be the next country in the eurozone’s spotlight.

There has been a reasonable amount of speculation about the effects of rising fuel prices on consumers, with the general view being that the positive outlook on employment and the drop in natural gas prices have compensated for the increase in the cost of gas. However, recent data from research firm Consumer Edge Insight provides information about the possible consequences of a reversal in current optimism about employment. It also indicates that despite those trends, consumers are actually curtailing their spending. The firm’s data, which comes from measuring and comparing 32 discretionary categories against their performance from the previous year, shows that despite positive employment news, consumers had a negative outlook on the job market in February. Additionally, January’s pessimism by consumers about family income potential continued through February as well. The data also shows that consumer spending has dropped dramatically over the past month. Discretionary spending for February only increased by 0.4%, versus 1.3% in January and 2.3% in December. One has to wonder if consumer spending is slowing in the face of relatively good employment news, what would happen if employment numbers took another downturn, and what would be the overall affect on the economy?

At 4:09 p.m. (CST), the APMEX precious metals spot prices were:

· Gold - $1,784.20 - Up $10.30.

· Silver - $36.97 - Up $1.39.

· Platinum - $1,721.60 - Up $6.30.

· Palladium - $722.50 - Up $16.10.

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APMEX’s ‘Market Reports’ provide our readers with a review of spot price activity and some of the factors that may be affecting the market for precious metals, three times during the trading day. While the information is obtained from sources we believe to be reliable, we do not guarantee its accuracy or its completeness and we encourage you to conduct your own investigation prior to making any decision based on the information. The "News and Commentaries" are not intended as a comprehensive discussion and there may be other factors that may be affecting the financial marketplace. These "News and Commentaries" are provided for informational purposes only and do not constitute a recommendation by APMEX to hold, to purchase or to sell any precious metal product. All orders, all purchases and all sales, if any, are subject to the terms of the User Agreement and other applicable policies.

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