Closing Gold & Silver Market Report – 5/31/2011
FINANCIAL UNCERTAINTY LOOMS – Although good news broke on the Greek debt crisis today, other news stories point toward an uncertain financial future for the US and the world. Domestically, the Case-Schiller Index, which measures housing prices, hit an 8-year low. This indicates that we are headed toward, if not already in, a double-dip recession in the housing sector. With more and more homeowners underwater on their mortgages, one has to wonder what this means for consumer confidence and as a result, consumer spending (which drives a large part of the US economy).
The market for “derivatives” – highly complex financial instruments whose value is based on other, more basic variables (essentially side bets) – continues to spread and increase risk of another global crisis, according to Mark Mobius of Templeton Asset Management’s emerging markets group. “There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis,” he said. To put the derivatives market in perspective, the total value of all of the world’s derivatives is about 10 times more than the entire output of the entire world’s economy – approximately $600 trillion. That’s a six with fourteen zeroes behind it. The system is almost completely unregulated and is described as “chaotic.” Regulators recently announced that their efforts to implement rules for the derivatives market have failed. What is your insurance policy against the next black swan event? Gold has traditionally been an excellent way to preserve capital in times of great upheaval.
At 4:15 PM (CT), the APMEX precious metals spot prices were:
- Gold - $1,536.50 (down $1.30)
- Silver – $38.57 (up $0.62)
- Platinum - $1,836.20 (up $35.20)
- Palladium - $781.00 (up $17.10)