Closing Gold & Silver Market Report – 3/8/2012
GREEK BONDHOLDERS ON BOARD; MARKETS RALLY ON NEWS
Prices for precious metals continued to climb today. The growing optimism over Greece completing its debt-swap deal with private bondholders has helped strengthen the euro. Gold and the euro historically have had a positive correlation to one another, and the recent rise and fall of both reconfirms that notion. Frank Lesh, a broker and futures analyst at FuturePath Trading, said, “Risk is back on the table. While a successful swap in Greece does not fix everything, it’s pushed markets higher for the time being.” One analyst said, “Fears of rising inflation and low rates of interest long term should have a positive impact on the Gold price.”
Acceptance of the Greek debt haircut by investors has exceeded minimum expectations of 75 percent participation. Hopes are still high that 90 percent agreement can be achieved, but the current 85 percent participation is really rallying markets. Greece’s Finance Minister Evangelos Venizelos told the Greek Parliament that “if all goes well, tomorrow we will be able to announce that a debt burden of 105 billion euros has been lifted from the Greek people. … For the first time we are cutting debt instead of adding to it.” The optimism is tempered to some extent by Greece’s historical inability to follow through on its promises. German Finance Minister Wolfgang Schaeuble said, “We have shown a lot of solidarity with Greece. … Everyone knows that the real problems of Greek society are in Greece and not abroad.”
With concerns over Europe’s debt crisis waning, U.S. stocks rallied for the best two-day performance of 2012. However, just like Germany, doubts persist over just how long this good will and settling will last. Silvercrest Vice Chairman Stanley Nabi said, “Greece has no choice, and the bondholders have no choice. … They’re both in the mud. The swap will go through. That will cause a moderate sigh of relief in the market. How long it will extend -- that’s the big question mark.” The total participation of Greek private creditors should be known at 8 a.m. Athens time (midnight CST).
At 4:03 p.m. (CST), the APMEX precious metals spot prices were:
- Gold - $1,701.10 – Up $16.10.
- Silver - $33.91 – Up $0.30.
- Platinum - $1,664.10 – Up $35.80.
- Palladium - $702.50 – Up $17.20.