Morning Gold & Silver Market Report – 10/25/2011

PRIVATE DEBT HOLDERS REPORTEDLY ASKED TO TAKE 60% HIT ON GREECE

In overnight trading, gold and silver rose on worries over the euro zone.  U.S. stock futures are flat, also likely due to the news coming out of Europe.  One stock trader described activity as “very, very quiet,” and said it will probably remain so until U.S. economic data is released later this morning.  News from Greece is taking a slight turn towards the negative, as private bond holders are now being asked to take significantly bigger hits (one report says 60%) on the country’s debt burden than the originally agreed-upon 21%.

There is some outside speculation that China could be heading for a significant downturn in growth, which would be extremely dangerous for the global economy.  Most economists do not believe that this will happen, but it has not stopped the speculation.  Economists from Bank of America-Merrill Lynch said in a note, “It would take a severe shock to China for the negative spillovers to be transmitted beyond Asia,” but even just a 2% drop in gross domestic product could immediately impact areas like Malaysia, Singapore, South Korea, Taiwan, and Hong Kong.  A drop of 6%, a “full-blown crash,” would affect Europe’s biggest economies and even be felt in the U.S.

Gold is looking at more gains for the third day in a row.  “Nobody really wants to go short on gold,” said Bernard Sin of MKS Finance SA.  “I don’t think Europe will be out of the woods yet.  [Also, T]here is physical demand in India” due to the Diwali religious festival.  Nick Trevethan of Australia & New Zealand Banking Group Ltd. said, “We’re seeing some progress in Europe, but the market’s been disappointed before.  There’s still a lot of good reasons to be holding gold.  The world is still relatively shaky, we’re a low interest rate environment in many parts of the world.”

At 8:15 am (CT) the APMEX precious metals spot prices were:

• Gold - $1,659.20 – Up $4.90.
• Silver - $31.69 – Up $0.01.
• Platinum - $1,549.00 – Up $7.00.
• Palladium - $640.00 – Down $0.50.