Closing Gold & Silver Market Report – 8/16/2011
STOCKS SNAP WINNING STREAK, INVESTORS GET GOLD FEVER – Gold is up since the mid-day commentary, and stock closed for a loss of around 1%. The market seems jittery after hearing the announcement by leaders Sarkozy and Merkel regarding plans to deal with the EU debt crisis.
Many traders were hoping for a “Eurobond” program, a system where the European Central Bank, instead of individual countries, would sell bonds to borrow money, and those bonds would be guaranteed by every country in the Union. While this could potentially prevent a catastrophic default by one the EU’s larger nations, the more stable countries could be left on the hook for the riskier countries’ mistakes. Germany and France have both expressed apprehension for the plan. Frank McGhee, Head Precious Metals Trader at Integrated Brokerage Services LLC, said, “At the end of the day, it (Sarkozy-Merkel news) is going to put worries back into the market about the euro and euro zone that may have been quieting down. It's going to add additional volatility into the gold market.”
Despite the downgrade by Standard & Poor’s, interest rates on American bonds reached a new low, a sign that bond traders aren’t worried about the possibility of default. Although the downgrade set off a series of highly volatile stock trading sessions that resulted in trillions of dollars in losses in stocks, Edward Marrinan, the Head of Macro Credit Strategy at RBS Securities in Stamford, Connecticut, said, “The market is saying S&P’s rating decision is wrong. The Treasury bond is still seen as the ultimate risk-free security.” Interestingly enough, S&P recently upgraded the rating for communist China.
At 4:15 pm (CT) the APMEX precious metals spot prices were:
- Gold - $1,791.60 – Up $31.60.
- Silver - $40.03 – Up $0.61.
- Platinum - $1,820.10 - $22.90.
- Palladium - $760.70 – Up $12.30.