Morning Gold & Silver Market Report, 8/7/2012
BANKING TAKES ANOTHER DIRECT HIT; GOLD PRICE UP
Precious Metals prices were up again in early morning trading as the euro gained on the American dollar on the hope that the European Central Bank will step in with a quality easing plan. However, concerns persist over our own fiscal cliff and investor outlook for further Fed easing domestically. Analyst David Wilson hit on both concerns, saying, “It’s all about the exchange rates. We’ve had a slightly softer dollar, and that’s been supportive. Every so often we get some more optimism that Europe is sorting out its problems, as we did over the second half of last week, but I don't think this (strength) will continue. For that, we really need to see a significantly softer dollar, and that won’t happen until the Fed takes action.”
Meanwhile, reputable or “safe” banks are starting to show their faults. Standard Chartered’s reputation has taken a huge hit as dealings have come to light that suggest the British bank hid $250 billion for Iran over the past 10 years in almost 60,000 transactions. If so, the bank could lose its New York banking market license. Analyst Gareth Hunt said, “Some people were walking around under the illusion that Standard Chartered was the world’s first riskless bank, and it’s not. We’ve discovered that Standard Chartered is a mortal bank, as they all are.” Standard Chartered was one of the least affected global banks during the global financial crisis. This credibility hit, coming when banks need to step up and lend during globally uncertain times, is alarming.
The world’s wealthier people seem to have taken notice of this growing uncertainty with banks and have begun branching out into smaller wealth management services, such as multifamily offices. The top growing firms for the ultra wealthy are family offices that actually have no banking affiliation. Chief investment officer Rick Pitcairn has said, “If you are able to serve one of these complex families in an excellent way, you have the added benefit of creating an annuity effect by forming long term relationships. While the margins may be smaller in the beginning, the opportunity to build and expand these relationships over time is far greater.” The alternative benefits certainly aren’t anything to sniff at, either. But considering the lack of outside influence, the popularity of this business model continues to grow.
At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:
- Gold, $1,615.60, Up $1.40.
- Silver, $28.21, Up $0.24.
- Platinum, $1,414.00, Up $11.10.
- Palladium, $587.30, Up $6.20.
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