Closing Gold & Silver Market Report – 7/6/2011
GOLD AS AN INSURANCE
Precious metals are trading higher today on continued news of the U.S. coming ever closer to the debt ceiling while there is still no deal in sight. News that also helped push the metals today is that of the Portugal credit downgrade, reviving fears of a eurozone debt contagion. George Gero, the precious metals strategist at RBC Capital Markets wrote in an email, “Gold continues to be the other haven as buyers from international funds added to positions after [the] Portugal downgrade. Upcoming debt ceiling negotiations, continued Middle East strife and next Friday’s figures as well as the euro and dollar fluctuations are bringing more interest to gold.”
Historically, people buy precious metals as a hedge against inflation as well as an insurance policy against great losses in other portions of their portfolio or lives. If this is the case, then why is Greece, in the middle of their second bailout, not cashing in their gold for cash? Greece holds at least 114 tons of gold which would cut out a large piece of their debt. Portugal also holds a considerable amount of gold. Up until 2007 these countries were net sellers of gold, while now they are net buyers of gold. Even during the midst of the debt chaos, they are still hoarding their gold. Why is this?
At 4:00 pm (CT) the APMEX precious metals spot prices were:
- Gold - $1,530.40 – Up $16.70 on the day.
- Silver - $35.96 – Up $0.49.
- Platinum - $1,729.20 – Down $12.90.
- Palladium - $768.50 – Down $9.10.