Closing Gold & Silver Market Report – 2/7/2012
MORE DELAYS FOR GREECE; PIMCO CEO FAVORS GOLD
Gold continued its rise this afternoon, ending the day up as the dollar fell. According to Jim Steel, precious metals analyst with HSBC, “We are showing a quite strong rally in the gold market.” Steel pointed to Fed Chairman Ben Bernanke’s statements to Congress today that continued to indicate more monetary easing is on the way, as well as the potential for an agreement on Greece’s debt issues, as reasons for the rally. The other three precious metals, Silver, Platinum, and Palladium, all ended the day in positive territory as well.
Another day, another delay for political leaders in Greece, who were supposed to meet today and hammer out the details on proposed cuts and reforms for that country. However, for the second day in a row, Greek Prime Minister Lucas Papademos has postponed the scheduled meeting of Greek political party heads, opting to instead meet with the “troika” of the European Commission, the European Central Bank, and the International Monetary Fund about the proposed 130 billion-euro bailout package Greece needs to avoid a default on its debt. The meeting is important because even though politicians in Greece have come to an agreement on making cuts equivalent to 1.5% of Greece’s GDP, there is still dissension on some of the measures required by Greece’s creditors as terms of the bailout. Patrick Legland, head of research at Societe Generale SA, had this to say: “It is clear we are going into another drama for Greece with many questions unanswered,”
With geopolitical turmoil threatening the global economy’s stability, one prominent investment officer is recommending that investors look to Gold and other commodities. In an interview given today, Mohamed El-Erian, the CEO and Co-Chief Investment Officer of global investment management firm PIMCO, stated that investors should be favoring “selected commodities” like Gold and oil, while staying underweight on equities. Despite recent promising economic data here in the U.S., El-Erian indicated that it was too early to "declare victory" and cited ongoing problems in Iran and Europe as areas to be concerned about. On the European debt crisis, El-Erian compared it to the collapse of Lehman Brothers that took place in 2008, warning of the effect a “Lehman Moment” in Europe could have on central banks. “If you define it as the economy being able to take the shock, that's in fact a higher risk because we are in a worse place than we were in '08.”
At 4:15 p.m. (CST), the APMEX precious metals spot prices were:
· Gold - $1,745.70 - Up $22.30.
· Silver - $34.21 - Up $0.40.
· Platinum - $1,654.20 - Up $23.40.
· Palladium - $710.00 - Up $3.00.