Closing Gold & Silver Market Report – 2/13/2012
REPUBLICANS MAY FORGO SPENDING CUTS; OBAMA SEEKS TAX HIKE ON DIVIDENDS
The Gold price continued creeping lower today, ending the day slightly down as investors were encouraged by Greece’s passage of austerity measures required as part of a European debt bailout deal. Despite the passage, there are doubts as whether they will be implemented. About Greece, Matt Zeman, the senior market strategist and head trader with Kingsview Financial, said, “One thing is to do a deal, the other is to actually enforce these austerity measures … but every time you turn the TV on, you see riots and chaos.” Others are expressing doubts that a Greek bailout will actually do good. In a note to clients, analyst Edward Meir with INTL FC Stone said that Greece will not be able to avoid “an eventual default” even with monetary aid from the eurozone. Meir said, “In fact, we think the odds are high that Greece will exit the euro sooner rather than later.” Silver ended the day slightly up, while Platinum and Palladium followed Gold downward.
In a reversal of past approaches to reaching an agreement to extend the payroll tax cut in the U.S., Republican leaders in Congress have made an offer to forgo spending cuts they previously demanded in return for a 10-month extension of the tax cut. Additionally, they have indicated that they might move forward with a House vote on such a plan even without an agreement from Democratic congressional leaders. The proposal is widely seen as both an effort by Republicans to avoid a battle over extending the cut (such as the one this past December, in which Republicans took much of the blame for their perceived failure to negotiate with Democrats), and to avoid a Democrat-proposed surtax on the incomes of citizens making more than $1 million a year. Estimates are that the spending cut-free proposal by the Republicans would increase the country’s deficit by $94 billion.
As mentioned in today’s Mid-Day Gold & Silver Market Report, President Barack Obama sent his 2013 budget proposal to Congress. One aspect of the budget that took many investors by surprise was that it calls for a substantial tax increase (to a maximum of nearly 40 percent) on dividend earnings for households that make above $250,000. The budget also calls for an increase in the tax rate for long-term capital gains, from the current 15 percent to 20 percent for wealthier Americans. A former top tax official with the U.S. Treasury Department said, “Companies may be more likely to retain earnings or seek alternatives ways to distribute their earnings, such as by buying back stock.”
At 4:07 p.m. (CST), the APMEX precious metals spot prices were:
- Gold - $1,723.20 - Down $1.10.
- Silver - $33.75 - Up $0.10.
- Platinum - $1,656.30 - Down $4.50.
- Palladium - $698.20 - Down $5.80.