Closing Gold & Silver Market Report – 10/21/2011
It is Still All About Europe – The U.S. stock market soared along with precious metals prices on continued optimism going into this weekend’s European summit. Although there are some important differences between France and Germany that have not been worked out, the market is betting a plan will eventually fall into place. It is also being reported that the Euro zone finance ministers and the International Monetary Fund will approve the next tranche of financial support for Greece. If approved, this will at least keep Greece from defaulting on their debts this year.
The deadline for the U.S. congressional “super committee” is only weeks away and there are no signs of a plan and no signs of an end to bi-partisan bickering. This committee was charged with developing a bi-partisan deficit reduction plan. If they fail to come up with a plan or if their plan fails to be approved, automatic reduction triggers will enact spending cuts across the board. Neither party would favor the trigger of these automatic spending cuts.
A story that could be very important to future gold prices has not made much news this week. The Hong Kong Chinese Gold & Silver Exchange began trading gold quoted in the Chinese yuan on Monday. It is expected that this could generate as much as HK$6 billion ($770 million) in trades each day. Hong Kong’s demand for gold as a safe haven against stock risks has increased over 400% this year. Hong Kong Exchange President Haywood Cheung said “The sudden influx into gold bars may take away half of the yuan liquidity in Hong Kong. The uncertainties in the global economy are supporting gold.” It is well known that the Asian markets have a voracious appetite for gold. According to the World Gold Council, India and China accounted for 52% of the gold sales in 2010. Allowing for the purchase of gold based on the yuan should only exacerbate the move from paper currency to gold.
At 4PM (CT) the APMEX precious metals prices were:
- Gold price - $1,644.70 – up $30.00
- Silver price - $31.44 – up $1.12
- Platinum price - $1,514.50 – up $24.10
- Palladium price - $616.40 – up $30.00