Closing Gold & Silver Market Report, 9/13/2012

PRECIOUS METALS MARKETS REACT TO QE3 CONFIRMATION 

Further stimulus measures were announced today as the Federal Reserve announced the American economy would receive the third round of quantitative easing, also known as QE3, beginning tomorrow. The program consists of purchasing $40 billion in mortgage-backed securities each month in addition to an existing policy known as Operation Twist, which the Fed introduced earlier this year. The two plans combined will provide an additional $85 billion in long-term bonds to the Fed’s balance sheet per month. The focus is concentrated on maintaining extremely low interest rates and mortgage rates in order to increase consumer spending and to create new jobs. The Fed had previously stated that interest rates would remain extremely low until late 2014, but have now changed that timeframe to mid 2015.

Gold rose 2 percent today after the Fed announced QE3. Jeffery Sherman, at DoubleLine Capital said, "The Fed's inflationary behavior should be bearish for the dollar in the long run and drive investors to seek protection via the Gold market.”  Gold's safe-haven appeal is returning, and investors are turning to the yellow metal as a safe store of value due to the concern of devaluing currency when liquidity is added to markets.

At 5:05 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,768.80, Up $36.10.
• Silver, $34.74, Up $1.44.
• Platinum, $1,685.10, Up $34.50.
• Palladium, $688.90, Up $9.60.

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