Closing Gold & Silver Market Report – 11/17/2011
EUROPEAN CONCERNS CONTINUE TO WEIGH ON MARKETS
Precious metals prices have remained steady since declining sharply in early trading. The Dow market experienced another triple-digit loss, while the NASDAQ was down almost 2%. Gold and silver prices dropped today as a reaction to the equity market decline, as investors covered margins. European debt concerns flared, driving down the value of the euro and thus increasing the value of the U.S. dollar.This also put downward pressure on gold prices. The safe-haven appeal of gold was pushed aside but is still viewed as a “store of value first. … Physical metal is being monetized as coin and bar more surely and steadily than any time since the mid-1930s,” one analyst said.
The protests in Greece and the major reforms being passed in Italy have pushed borrowing costs higher for France and Spain. Based on recent history, this is not a particularly good sign for the eurozone. Marc Ostwald, a strategist with Monument Securities, said, “The eurozone has got to deliver something which is going to calm markets down, and at the moment, markets feel like they are being given no comfort whatsoever.”
There is a lot of fear, warranted or not, over the exposure of U.S. banks to the debt crisis in Europe. The source is not any of the countries we’ve heard about over the past few months, but the exposure of U.S. banks to French and British debt. The exposure to Greece, Ireland, Italy, Portugal and Spain totaled about $50 billion as of Sept. 30. The exposure to French debt is about $188 billion and about $114 billion to French banks. The British exposure is about $225 billion to British debt and about $51 billion to British banks. However, other analysts said they feel that the banking exposure is a good thing. Analyst Dick Bove said, “Holders of funds in European banks shift them to safer regimes. American banks are getting some of this money. European banks need to shrink and recapitalize. They are selling loans and assets at reduced prices. American banks can obtain good loans on American companies by buying these credits.”
At 4:01 p.m. (CST), the APMEX precious metals spot prices were:
- Gold - $1,724.00 – Down $52.30.
- Silver - $31.74 – Down $2.12.
- Platinum - $1,585.80 – Down $45.40.
- Palladium - $611.00 – Down $45.50.