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Closing Gold & Silver Market Report – 12/27/2011

CHINA-U.S. CURRENCY ‘WAR’ ESCALATING?  

Since the Mid-Day Gold & Silver Market Report, precious metals prices have remained relatively steady with some marginal gains. Between now and the new year, the Gold market “will see odd movements this week as many money managers have closed out the year, leaving the market with technical and headline-sensitive traders,” said Carlos Perez-Santalla of PVM Futures. The long-term outlook for Gold continues to be supported by continuing Gold purchases by central banks.

After a meeting Monday between Japanese Prime Minister Yoshihiko Noda and Chinese officials, an agreement between the two nations has been reached to start directly trading their currencies with each other. This has been an ongoing issue between the United States and China as China views the current currency landscape as influenced too much by the U.S. dollar. The short-term effect is relatively limited to helping the current U.S. trade deficit with China, but the long-term effect could be a devaluation of the U.S. dollar. Georgetown University professor of international affairs Charles Kupchan said, “Chinese officials have made it clear that they believe the international economy is too heavily dominated by the dollar. … They believe, as part of China’s rise, that the international system should move to a more balanced structure. … With markets looking askance at both the euro and the U.S. dollar, investors in both China and Japan would find it attractive to trade directly.”

Another topic of conversation between Japan and China dealt with the role they would play in keeping tabs on North Korea during the transition to new leadership, which is not expected to become final until all North Korean political parties convene in February or March but is likely to be just a formality. The hope is that the leadership transition is peaceful. Chinese President Hu Jintao said, “China is ready to make joint efforts with all relevant parties, including Japan, to maintain peace and stability on the Korean peninsula and to achieve lasting peace, security and order on the peninsula and (in) northeast Asia.” The six parties are North and South Korea, China, Japan, Russia and the United States, which are resolved to mollify North Korea’s quest to further develop its nuclear weapons.

At 4:01 p.m. (CST), the APMEX precious metals spot prices were:

  • Gold - $1,595.20 – Down $11.80.
  • Silver - $28.70 – Down $0.44.
  • Platinum - $1,435.50 – Up $3.30.
  • Palladium - $663.50 – Down $3.80.

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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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