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Mid-Day Gold & Silver Market Report – 5/31/2011

IS GOLD THE NEXT CURRENCY?

Gold is being seen more and more as a non-fiat currency as geopolitical tensions still rising, continued downgraded credit ratings of many of the European countries as well as the dire outlook for the U.S. economy. Gold has been a safe haven against failing currencies throughout the ages and continues to do so as even central banks have run to the safety the metal provides. However, it seems as though major investors and financial institutions, as well as consumers, have taken their cue from the central banks as seen in the European Parliament as they have allowed clearing houses to use gold as collateral. It has but only a few more steps before it gets to the European Union in July. The question is posed again: Do these governments and financial institutions know something we don’t?

Let’s not forget America or the Asian countries (with China and Japan as the front runners) as news of their financial problems have taken a backseat to the news out of Greece. The U.S is still fighting inflation, continued lack of economic growth to the level needed for recovery. It is also flirting with the debt ceiling that may force a government shutdown. China and Japan are also fighting inflation and financial worries. There are even rumors about Japan falling in the near future. But unlike China and other Asian countries, the U.S. does not push its citizens to invest in precious metals any chance they get. These countries are becoming key players in today’s precious metals market and they are highly underestimated in their buying power.

Michael Power, Investec investment strategist comments on the ongoing U.S. debt crisis, “At the moment most members of Congress generally speaking, don’t see [the rising debt, approaching the debt ceiling] as a particular problem – they’re in denial.” He goes on to say that Americans think that because it is the U.S., big numbers are not a problem. He adds, “we see now that China is no longer the main owner of U.S. treasury bills, a far more frightening person is…the Federal Reserve itself.” Power feels this will eventually end up in tears. He finishes with, “We’ve seen with austerity in Greece over the weekend what the electorate thinks of that.  Well we ain’t seen nothing yet, because the Americans I suspect are going to be even more vocal than their Greek friends.”

At 12:20 PM (CT), the APMEX precious metals spot prices were:

  • Gold - $1,536.50 (down $2.00 on the day)
  • Silver – $38.20 (up $0.25)
  • Platinum - $1,829.70 (up $28.70)
  • Palladium - $781.00 (up $17.10)

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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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