Closing Gold & Silver Market Report – 8/8/11
DOW GIVES UP 634 POINTS – GOLD PRICES SOAR
The U.S. stock market plunged today, fueling speculation that the Fed is going to be pressured to take action. This was the worst day since the credit crisis began last Monday and sent the Dow below 11,000. Few expect that the Fed would engage in another round of bond buying, (although it is an option), but they could choose to re-invest proceeds from maturing bonds into longer term treasuries, to put downward pressure on long-term borrowing costs. The expectation is that Tuesday’s meeting will not generate a significant announcement, but pressure to act could continue to grow.
More reason to believe pressure will mount on the Fed to take action results from European Central Bank (ECB) purchasing Italian and Spanish government bonds. Please remember the ECB cannot print money like the Fed; they must use actual capital from their bank accounts. However there is the similar effect of pushing cash out into the marketplace, similar to a QE 1 & 2.
As politicians on both sides of the isle blast the Standard & Poor’s decision to downgrade U.S. debt, PIMCO’s co-CIO, Bill Gross applauds them for showing some “spine”. “I think the S&P has demonstrated some spine: they finally got it right” Gross said in a Bloomberg television interview. He categorized the U.S. has having “enormous problems.”
At 4:15 PM (CT) the APMEX precious metal prices were:
- Gold price – $1,721.80 - up $68.00
- Silver price - $39.16 – up 84 cents
- Platinum price - $1,721.00 – up $1.90
- Palladium price - $720.10 – down $23.60