GOLD ENDS LOWER; AMERICAN DEBT IN THE SPOTLIGHT
Today saw the price of Gold drop from the seven month high that the Precious Metal hit yesterday. However, it may be just a temporary low based on the actions of central banks around the world. Many analysts believe the monetary easing that gave Gold a boost in the past few weeks is just getting started and will continue for some time. Analysts at Deutsche Bank were quoted as saying, “we believe that expanding monetary conditions globally will provide the catalyst for higher gold prices and those prices will likely exceed $2,000 an ounce in the first half of 2013.”
In Europe, the debt has taken an economic toll and correcting the issues has been anything but easy. The European Central Bank is looking to another large financial group for assistance. The International Monetary Fund (IMF) has focused mostly on smaller economies and the worry is that the IMF will not be able to handle the European Union’s complicated situation. “I don't know of any example in history where the political leadership or the electorate has been pleased to see the IMF come in to review the books and find out what the governments are doing. It's even more difficult for Spain and Italy, which are large countries with a political culture or perception that their sovereignty should not be challenged by officials poking their noses into what they're doing.” said Fredrick Erixon, director of the Brussels-based European Center for International Political Economy.
In the United States, the national debt has been the topic of discussion for years, and now that it is an election year those talks are magnified. The situation is clear when you look at the numbers. The national debt is more than $16 trillion and the gross domestic product (GDP) is approximately 11 percent less than that. That gap between the debt and the GDP is very alarming to most economists. Pimco's Bill Gross said Tuesday, "Unless we begin to close this gap, then the inevitable result will be that our debt/GDP ratio will continue to rise, the Fed would print money to pay for the deficiency, inflation would follow and the dollar would inevitably decline. Bonds would be burned to a crisp and stocks would certainly be singed; only gold and real assets would thrive.”
At 5 p.m. (EDT), the APMEX Precious Metals spot prices were:
- Gold, $1775.50, Down $6.80.
- Silver, $34.65, Down $0.30.
- Platinum, $1679.30, Down $3.50.
- Palladium, $654.80, Up $8.20.
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