EUROZONE IN RECESSION; FISCAL CLIFF TALKS START TODAY
Thursday’s European market activity ended showing the eurozone had slipped back into recession for the third quarter, which is likely to continue into the current quarter. The eurozone economy as a whole contracted 0.1 percent in the third quarter. This is on the heels of a 0.2 percent contraction from the second quarter. This news is troubling for the U.S., as Europe is our largest trading partner.
Congress and the president begin negotiations today trying to find common ground on $600 billion in tax hikes and across-the-board spending cuts that will otherwise automatically take effect in January. The fear is that if our leaders don’t come to terms, the measures could push us back into recession. Rebecca O’Keefe, head of investment at Interactive Investor in London, said, “Investors will be hoping that there is enough collective desire to reach agreement, [but it is] almost inevitable that discussions will be protracted and go down to the wire, which is likely to keep markets erratic and volatile over the coming weeks.”
Gold may be a beneficiary of the fiscal cliff as it has many people on edge. Gold is seen as a safe haven for their money. Peter Schiff, CEO of Euro Pacific Precious Metals in New York, said, “I think the price of Gold is going to go a lot higher than $2,000” and that people’s lack of understanding of the country’s current economic challenges is keeping the price down.
At 9 a.m. (EST), the APMEX Precious Metals spot prices were:
- Gold, $1,714.50, Down $1.40.
- Silver, $32.50, Down $0.23.
- Platinum, $1,555.00, Down $18.30.
- Palladium, $624.30, Down $7.90.
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