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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.

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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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