Morning Gold & Silver Commentary – 10/3/2011
Gold & Silver rising on the news that Greece will not meet its deficit targets – Greece warned over the weekend that it will not meet its upcoming deficit targets set in July. These targets were set as a condition of a massive bailout package in order to avoid bankruptcy. This announcement sent gold and silver prices climbing, while triggering a selloff in equities. Asian markets were off over 4%, European markets off over 2%, and the U.S. markets are set to open lower.
As the price of gold has increased over the past ten years, it has not gone unnoticed by local governments. This year, it appears more and more governments are trying to tap into the gold mining company pockets. In some cases, it may be through increased taxation, such as in Australia, who announced a rent tax of 22%. In other cases, it’s been outright nationalization, such as what just happened in Venezuela. Either way, it is an increase in costs to the mining companies, which hurts their balance sheets. It could also ultimately decrease gold supply, as mining costs make it more and more expensive to get gold out of the ground.
The recent decline in gold prices is raising Indian gold traders’ expectations for a banner year. India, who is the world’s largest purchaser of gold, is moving into the festive season with expectations of gold purchases to jump by as much as 70%. Indians would be buyers of gold even when it reached $1900 per oz, but this recent drop has added an increased enthusiasm for the yellow metal.
At 8AM (CT) the APMEX precious metals prices were:
· Gold price - $1,657.90 – up $33.60
· Silver price - $30.68 – up 56 cents
· Platinum price - $1,509.10 – down $13.30
· Palladium price - $602.00 – down $14.60