Morning Gold & Silver Market Report – 6/21/2011
MAJOR CONFIDENCE VOTE IN GREECE TODAY, FITCH THREATENS U.S. RATING
U.S. stock futures are up this morning, pointing to a higher opening for Wall Street amid optimism over the situation in Greece. Prime Minister George Papandreou is expected to hold a major confidence vote in parliament today, and strategists at Lloyds TSB in London say the government is likely to survive. They added that if the government does not survive the vote, it “would not only rile markets further, but would also complicate the upcoming timetable [for additional aid] in light of the delays involved in processing a general election.” Gold is slightly higher this morning thanks to a weaker dollar, as the euro is gaining strength due to the perceived optimism in Greece.
Bloomberg has a bit of an alternative view to the situation in Greece. They say it is similar to the situation in Russia from the mid-1990’s, when Russia tied the ruble to the dollar, giving it a competitive disadvantage. Eventually, after loans from Germany, Japan, the U.S., the IMF and the World Bank, Russia did the unthinkable – defaulted on billions of dollars in debt. The world feared a catastrophe, but it just didn’t happen. The author notes that Russia could hold some lessons for Greece, but does go on to say that although the economics are strikingly similar, the political capital invested in the euro is greater than anything in emerging markets (like Russia 13 years ago).
Fitch Ratings has warned the U.S. that if a debt ceiling deal is not reached by August 2nd, six weeks away, it would place the country’s credit rating on watch negative. Fitch does believe that a deal will be met, the debt ceiling will be raised, and default will be avoided, however. Lawmakers in Washington said yesterday that they realize that they will have to make significant progress this week regarding spending in order to maintain the country’s top-notch rating.
At 8:00 am (CT) the APMEX precious metals spot prices were:
- Gold – $1,543.50 (up $1.00 on the day)
- Silver – $36.16 (even)
- Platinum – $1,745.30 (up $13.80)
- Palladium - $761.00 (up $10.80)