Mid-Day Gold & Silver Market Report – 10/18/2011
Precious Metals Prices Move Up -The prices of precious metals have rallied from the Morning Gold & Silver Market Report. The concerns involving Chinese economic slowdown, the Greek debt crisis and France being under a credit review for possible downgrade by Moody’s to its AAA rating should boost the safe-haven appeal of gold. The term safe-haven might have a different connotation to different people, and in some cases, using the word safe might be taken as having no risk. As applied to gold, safe-haven has more to do with its negative correlation to the stock market. An asset class such as gold helps to balance a portfolio by managing the risks within the portfolio.
The Chinese economy’s growth has started to slow based on statistics bureau data released in Beijing today. The economy is still growing, 9.1% in the third quarter, but is less than the 9.3-9.5% anticipated by a panel of economists. The pace is slowest since 2009, which combined with growing euro zone concerns is driving down stock markets. However, some economists, like Tim Condon a Singapore-based Head of Asian research at ING Groep NV (INGA) and a former World Bank economist believe that to create a “hard landing” for China, a larger “shock” to growth would need to take place.
The current French credit review by Moody’s threatens a number of initiatives in place from the Greek debt relief to overall funding and availability of funds in loans for the recapitalization movement for European Union (EU) banks. France is currently the second to Germany in terms of who has a say in financial matters. The unusual part was Moody’s has almost bypassed a step, not having actually put France on a ratings watch. A lot of this is more to keep France’s growth projections in-line. The 1.75% growth originally projected was overly optimistic and needs revision going forward. According to Moody’s, "The deterioration in debt metrics and the potential for further contingent liabilities to emerge are exerting pressure on the stable outlook of the government's Aaa debt rating." According to French Economy Minister, Francois Baroin, though, "The triple-A is not in danger because we will be even ahead of schedule on passing deficit reduction measures…We will do everything to avoid being downgraded."
At 12:23 PM (CT) the APMEX precious metals prices were:
- Gold price - $1,655.70 – Down $22.90.
- Silver price - $31.88 – Up $0.02.
- Platinum price - $1,537.50 – Down $14.30.
- Palladium price - $620.20 – Up $1.40.