Morning Gold & Silver Market Report – 2/16/2011
At 8AM (CT) the APMEX precious metal prices were:
- Gold price -$1,372.90
- Silver price - $30.68
- Platinum price - $1,830.00
- Palladium price - $841.50
COMMENTARY: Precious metal prices are slightly down as we open, which leads me to believe that the news only minutes ago, that the PPI came in at .8% has not begun to spread. Gold spot price is off slightly by $1.70 – Silver price down 9 cents – Platinum spot price is off $1.60 – Palladium price is down 40 cents
The PPI (Producer Price Index) measures the costs of producing goods. The CPI (Consumer Price Index) measures the costs that consumers pay to buy these goods. These indexes are directly related in that as the costs of producing increase, it will drive prices up for the consumer. This morning’s report is going to fan the growing concerns that we are headed for inflation. Producer prices are rising even outside of food and energy. I would urge all investors to pay attention to this news. I have more than a few concerns.
First, you will see that the PPI rose 0.8%, which was right in line with expectations. Do not take any comfort, in that it met expectations. If you annualize 0.8% it comes to an annual PPI of 9.6%! This is not a good thing, whether we expect it or not. The second concern is that the Core Producer Prices rose as well. The Core Producer Prices do not include food or energy. Politicians point us to core prices because they do not increase as much. This is true for both the PPI and CPI. By excluding food and energy, politicians can divert our attention to a better number. My question: how many of you go without food or energy for even 12 hours?
Today’s report was particularly alarming because even the Core producer prices rose 0.5%. If you annualize this it is 6.0%. The analyst expectation was 0.2%, which would annualize at 2.4%. This is a significant jump. The CPI number will be reported soon and it does get more attention. We want to keep a close watch on this because if the cost of production goes up, we could see a jump in the CPI, and this will ring the inflation bell even louder.