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Closing Gold & Silver Market Report – 5/16/2012

FED REMAINS OPEN TO EASING; GREEK BANKING COLLAPSE POSSIBLE  

Precious Metals prices are down on technical selling, and stock markets also are down, as fears of a Greek exit from the euro increase. Those fears are so pronounced that in certain circles it has been given the moniker “Grexit.” Those fears have investors shifting their assets into the United States dollar. Robin Bahr said, “Clearly, with people staring into the abyss, it could (fall) $50 or even $100 lower as it washes out. That is the unpredictability of it all, and as equities fall, as the Greeks take money out of the banks and the banking sector collapses, I suppose you’d have to be wary of further price falls just to cover for losses in other markets.”

The minutes for April’s Federal Open Market Committee meeting were released to the public this afternoon, showing the hope of quantitative easing is not overly diminished. Quantitative easing has been good news for Gold in the past. Stagnation or declines in economic data would be a clear indicator for a number of policy-makers that further easing is needed. The FOMC policy-makers basically “indicated that additional monetary policy accommodation could be necessary if the economic recovery lost momentum or the downside risks to the forecast became great enough,” according to the minutes. A couple of risk indicators are Europe’s debt crisis and failure of American lawmakers to agree on a budget. Roberto Perli said, “It is easy to see how downside risks to the forecasts could become large because you have Europe, which could hit in the near term, and you have a U.S. fiscal cliff as we approach the end of the year.”

The Greek banking sector continues to feel the economic pinch as the European Central Bank has stopped doing business with some banks it suspects are insolvent. The news fanned the flames of worry that Greece will have to leave the eurozone. The news helped push the euro lower. Greek citizens are pulling their money out of banks, as well. The ECB only does business with solvent banks. According to an unidentified source, “As recapitalization wasn’t in place, the ECB stopped monetary policy operations. … Once the recapitalization process is finalized, and we expect this to be finalized soon, the banks will regain access to standard Eurosystem refinancing operations. The ECB/Eurosystem (of eurozone central banks) continues to support Greek banks.”

At 5:15 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold - $1,541.90 – Down $16.70.
  • Silver - $27.33 – Down $0.83.
  • Platinum - $1,435.90 – Down $11.60.
  • Palladium - $592.90 – Down $9.20.

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Disclaimer:
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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