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Closing Gold & Silver Market Report – 7/27/2011

STOCKS FALL AS DEBT LIMIT DISAGREEMENTS CONTINUE; TREASURY STRESSES AUGUST 2ND DEADLINE

As an agreement on raising the debt ceiling continued to elude lawmakers, stocks in the U.S. fell, with the Dow Jones Industrial Average dropping by 198.75 points and the Standard & Poor’s 500 Index sinking by 2%, the largest drop in two months. Meanwhile, both Democrats and Republicans are scrambling to revise the competing plans that have been put forth. A vote on the plan put forth by House Speaker John Boehner was postponed after resistance by both Democrats and Republicans in Congress, and the plan offered by Senate Majority Leader Harry Reid faces criticism after the Congressional Budget Office indicated that the amount the plan would cut from deficits was less than promised.

The Treasury Department is refuting statements made by Barclays PLC and other financial firms that, because the Treasury received a higher than expected amount of tax receipts in June in July, the August 2nd deadline to raise the federal debt limit is not as critical has been claimed. In a note released last week, Barclays stated, “It now appears that tax receipt inflows from July 14 to date have been considerably stronger than we were expecting. This suggests that the date on which the Treasury will run out of cash to pay its obligations might not be August 2; it might be around August 10 instead." A managing director at Jefferies & Co. suggested August 15th as the day the U.S. runs out of money, while the financial services company Nomura issued a note that gave an even later date of September 9. However, Treasury officials are stressing that tax receipts weren’t higher than expected, and that even if they had been they wouldn’t be a factor in the importance of the August 2nd date. The issue, according to the Treasury, is that August 2nd is the day that U.S. borrowing authority (which is the government’s ability to raise money by issuing bonds, bills, and notes) will run out. A Treasury spokesperson said, “Tax receipts were as expected for June and July. The fact remains that the U.S. will exhaust borrowing authority on August 2nd and after that date there is no way to guarantee we will be able to meet all of the nation's obligations.”

At 4:30 pm (CT), the APMEX precious metals spot prices were:

  • Gold - $1,615.20 - Down $2.60
  • Silver - $40.31 - Down $0.45
  • Platinum - $1,792.00 - Down $15.20
  • Palladium - $829.00 - Down $9.10

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APMEX’s ‘Market Reports’ provide our readers with a review of spot price activity and some of the factors that may be affecting the market for precious metals, three times during the trading day. While the information is obtained from sources we believe to be reliable, we do not guarantee its accuracy or its completeness and we encourage you to conduct your own investigation prior to making any decision based on the information. The "News and Commentaries" are not intended as a comprehensive discussion and there may be other factors that may be affecting the financial marketplace. These "News and Commentaries" are provided for informational purposes only and do not constitute a recommendation by APMEX to hold, to purchase or to sell any precious metal product. All orders, all purchases and all sales, if any, are subject to the terms of the User Agreement and other applicable policies.

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