Morning Gold & Silver Market Report –5/27/2011

WHO LOSES BIG IF GREECE RESTRUCTURES? – There are many who even wonder why we should care if Greece defaults on their loans. So what if they can only pay back 50 cents on the dollar they borrowed? So what if they go in to bankruptcy? When you look at who is going to lose, it should be very alarming. Japanese banks hold $500 million in Greek debt. Spanish banks hold $600 million. US Banks hold $1.8 billion. Italian Banks hold $2.6 billion. UK Banks hold $3.2 billion. French banks hold $19.8 billion. Germany holds $26.3 billion and other Eurozone countries hold $15.7 billion. As staggering as this sum may look, it is a fraction of what these same banks hold in Portugal or Spain. If one domino falls (Greece) and others begin to fall, (Ireland, Portugal and Spain), there will be a massive credit failure much like the credit failure related to the housing market in 2008, and this failure, just like the one in 2008, will affect the entire globe.

Consumer spending rose less than expected in April, as high gasoline and food prices continue to put pressure on US households. Personal Consumption Expenditures (PCE) rose 0.3 percent after increasing 0.4% in March. This is not viewed as a good sign, it is viewed as an indicator that inflation may be heating more than expected.

Fitch ratings service has cut the Japanese sovereign debt outlook from stable to negative. Their concern was rising government debt, lack of plans to address an aging population and the unknown costs of their recent earthquake and tsunami.

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

• Gold price - $1,530.00 (up $5.70)
• Silver price - $37.94 (up 54 cents)
• Platinum price - $1,788.80 (up $9.70)
• Palladium price -$761.20 (up 10 cents)