Morning Gold & Silver Market Report – 8/2/2011
ECONOMY FEARS OUTWEIGH ‘GOOD’ NEWS OF DEBT DEAL
While the dominant story for many weeks has been the U.S. debt ceiling and whether Washington would avoid a sovereign default, now that a deal is seemingly imminent, most investors aren’t paying any attention. House leaders approved a debt ceiling deal yesterday and a vote is expected today in the Senate. The deadline to raise the debt ceiling and avert a default is finally here, however, the focus has shifted to the economy itself. Russian Prime Minister Vladimir Putin has scathing words regarding the U.S. yesterday. Unhappy with the effect the debt ceiling ordeal has had on Russia’s markets, he said, “They are living like parasites off the global economy and their monopoly of the dollar.”
Yesterday’s extremely disappointing manufacturing report and last week’s revision of first-quarter growth estimates caused this change in focus. More bad news for the economy was released this morning, as even though incomes rose in June, consumer spending fell (along with consumer prices). With most economists’ expectations of a credit rating downgrade from the top-notch AAA rating, stock futures are down and investors are flocking to safe havens, including gold, which hit a record high this morning.
South Korea’s central bank recognizes the importance of a fourth asset class in its portfolio. The bank increased the gold portion of its reserves from $80 million to $1.32 billion in just one month. When asked the reason for the investment in gold, the bank responded by saying that it will be a good thing for diversifying their reserves, and that it was a long-term investment. South Korea’s last gold purchase was in 1998 when a massive financial crisis hit most of East Asia.
At 8:00 am (CT) the APMEX precious metals spot prices were:
- Gold - $1,638.50 – Up $17.80.
- Silver - $40.26 – Up $0.89.
- Platinum - $1,798.00 – Up $3.40.
- Palladium - $827.50 – Down $4.00.