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Mid-Day Gold & Silver Market Report – 5/23/2011

VOLCANO ERUPTION DISPERSES NEW FEARS

Precious metals stay steady while bombarded with conflicting news. Italy was downgraded from an A+ to an A-, and while seemingly insignificant, this goes to show even further decay of Europe’s financial situation. As well as the fact that analysts at UniCredit downgraded the insurance sector and the basic-resources sector in Europe to neutral from overweight today, and the industrial goods and services to underweight from neutral. Not only is America being plagued with floods and tornados, killing over hundreds people, Iceland has now been a victim to a massive volcano eruption. Some are crying out “déjà vu” as a year ago Iceland was hit with the same type of eruption, having grounded over 100,000 flights in the first 6 days. Officials say that the ashes could reach U.K. domestic airspace by Tuesday. This had a drastic affect on the airline stocks last year and there are fears of a repeat.

Christian Stocker, equity strategist at UniCredit Research, comments on the ensuing chaos, “Currently, we have two major fears, the first are concerns with Italy, and the downgrade of the outlook for Italy. That’s hurting insurers and the banking sector. For the insurers, it’s a portfolio argument as normally they have many sovereign bonds.” This just goes to show the importance of portfolio diversification.

News of Spain’s shift in government control and direction has been on the forefront of everyone’s mind, however David Gualtieri, Madrid-based director of equity sales at Intermoney Valores SV, added, “Any change of government always leads to volatility, but it’s more about Italy today.”

News that is not so common on everyone’s lips, yet still significant, is that the South African chamber of mines is facing strains as the gold miners’ two-year agreement for wages is up June 30 and the South African National Union of Mineworkers has yet to come to an agreement. South Africa, the world’s largest platinum producer and a major gold producer, is now strained in attempts to get this under wraps so that there is not a time of protests that set back production.

At 8AM (CT) the APMEX precious metal prices were:

  • Gold price - $1,514.80 (up $4.40)
  • Silver price - $34.90 (down 28 cents)
  • Platinum price - $1,756.00 (down $14.40)
  • Palladium price - $734.10 (down $5.40)

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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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