Mid-Day Gold & Silver Market Report – 9/6/2011
ECONOMIC CONFIDENCE SAGS ON EUROPE NEWS
Precious metals have remained steady since the Morning Gold & Silver Market Report. Gold is beholden to its safe-haven status in part due to the startling news out of Switzerland that the Swiss franc is now going to be pegged to other currencies in the world in order to avoid a potential inflationary recession in Switzerland. "It's the fact that we are seeing one of the central banks making a move and taking a decision. We've been left in limbo for days in Europe," said Saxo Bank Senior Manager Ole Hansen. "If we see the Swiss franc pegged, where else can you go if the uncertainties continue other than into gold?"
The Swiss franc is deemed a safe-haven currency due to its direct correlation of gold to Gross Domestic Product (GDP). The problem came about due to a large number of countries purchasing the Swiss franc as a safe-haven but drove up domestic pricing for the Swiss population. The Swiss central bank, in an email, stated it will defend the franc with “utmost determination…aiming for a substantial and sustained weakening of the franc…With immediate effect, it will no longer tolerate a euro-franc exchange rate below the minimum rate of 1.20 francs.” The bank is also “prepared to buy foreign currency in unlimited quantities.” The feeling among investors is that a ‘currency war’ could be heating up.
The issues in Europe are seen as the head of the economic beast, so to speak. According to Stephen Massocca, Managing Director at Wedbush Morgan in San Francisco, "Isn't everything about Europe right now? Realistically, it's what is going to happen with Italy, what is going to happen with Greece, what is going to happen with Germany. That is the big issue. Europe is where you have to be focused right now, and Europe doesn't look good."
At 12:01 PM (CT) the APMEX precious metal prices were:
- Gold price - $1,882.40 – up $3.50.
- Silver price - $42.09 – down $1.05.
- Platinum price - $1,861.10 – down $24.70.
- Palladium price - $751.00 – down $32.20