Mid-Day Gold & Silver Market Report – 8/2/2011
DEBT DEAL HAS THE VOTES BUT CAN IT CURTAIL DOWNGRADE TALK?
The clearest hurdle to the passage of the debt ceiling measures in Congress boiled down to whether or not certain plans would have enough votes to pass through the House and Senate. The House voted 269-161 yesterday to send it to the Senate, which in the last hour, had enough votes to put the measure on the President’s desk. There is a lot of fiscal pain on both sides with this current agreement. Lamar Alexander, a Republican Senator from Tennessee, said, “Finally, Washington is taking some responsibility for spending money we don’t have…Make no mistake, this is a change in behavior from spend, spend, spend to cut, cut, cut.” Dick Durbin, a Democratic Senator from Illinois, says the plan “does not come without pain” because of where the cuts in spending directly affect, like education programs and disease research.
Treasury Secretary Timothy Geithner spoke on a number of issues the debt ceiling debate would affect. Primarily whether or not enough has been done to offset the credit rating agencies, Moody’s and Standard & Poor’s, decision on whether to cut the U.S.’s current AAA rating. He said that decision is not “my judgment to make” in terms of enough deficit reduction taking place to offset a downgrade. He also adds quite a bit in other remarks, "You know this is in some ways a judgment on the capacity of Congress to act. And what this deal does is put us in a much better position to make those tough choices because the down payment's pretty strong and this special committee, this mechanism for the reforms is a much more powerful device than we've had in the past…I think this is a good result but a terrible process. And ... I think as the world watched Congress step up to the edge of the abyss, it made them really wonder whether this place can work. But this is a good deal. It's a good agreement.”
If we can turn our attention away from the U.S. debt issues for a moment, the European debt crisis is starting to worsen as Italy is now falling squarely in the line of fire. Italian authorities are calling together emergency talks and cutting short holidays to get together as the concerns again mount in the EU. "The fear of the market is that the world is going into recession again... and in the euro zone the peripheral markets are the ones that will suffer most," said Alessandro Giansanti, strategist at ING in Amsterdam.
At 12:00 pm (CT) the APMEX precious metals spot prices were:
- Gold - $1,644.00 – Up $23.30.
- Silver - $40.21 – Up $0.85.
- Platinum - $1,793.00 – Down $1.60.
- Palladium - $828.50 – Down $3.00.