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

YEMEN BOMBS OWN PEOPLE AND CIVIL WAR ERRUPTS; DOES ANOTHER MIDDLE EASTERN COUNTRY START TO FALL?

Precious metals were all rising today on the continued worries about the sovereign debt crisis as well as the ongoing worries about the United States’ debt limit approaching. The U.S. dollar took a hit and lost 0.66% in today’s trading while stocks seemed to pull ahead on holiday trading. There still seems to be a hold on how much the metals are moving while consumers wait to see how the IMF, European Union and the European Central Bank decide to handle the situation in Greece, since there are so many heavily invested parties. If Greece defaults then it could spark some serious safe haven buying, but on the flip side, a weaker euro could drive the dollar up and push people away from the metals.

There has been much talk about central banks buying gold and doubling their investments from previous years. The reason is protecting against situations like financial crises in their own countries, but also the countries whose debt they may hold (i.e. Greece, Portugal, Spain). Now may be the time that Greece and Portugal need to dip into their gold reserves and sell to keep afloat and avoid a complete financial collapse.
Some say that China’s demand for gold could make or break the metal. On the one hand, according to the World Gold Council, the Chinese demand for the precious metal could double in less than ten years. China alone took in 233.8 tons in the first quarter alone. On the other hand, there are fears that the continued rate hikes in China could dampen the investing as it makes it difficult for consumers to borrow money. However, Oliver Pursche, co-portfolio manager of the GMG Defensive Beta Fund, says this is not a worry but that it is just a “bump in the road… you can slow down the growth a little bit and you can play with the inflation numbers but ultimately speaking the modernization is going to drive demand and the supply demand shift isn’t going to change.”

GFMS estimates that China’s gold imports could top more than 400 tons in 2011 alone, which is not including what they produce in their own country. China is the largest producer of gold in the world, according to Reuters, and that gold demand would jump 22% in the next three years.

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At 4:00PM (CT) the APMEX precious metal prices were:

  • Gold price - $1,537.60 (up $13.40)
  • Silver price - $38.08 (up 66 cents)
  • Platinum price - $1,801.40 (up $22.30)
  • Palladium price -$764.50 (up $3.40)

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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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