Morning Gold & Silver Market Report – 7/11/2011
ARE WE GETTING TALLER? THE CEILING SEEMS CLOSER.
Mohamed El-Erian, CEO of PIMCO, is advising that we keep a close watch on Italy, as the market measures of Italian sovereign risk rose sharply last week. On Friday, the credit spread on five-year instruments spiked 30 basis points in one day, which is a very significant amount for a country with Italy’s economic and financial standing. The stocks of Italian banks went down as this spread spiked upwards. If this continues, it will spread the contagion of the European debt crisis and spur further concerns that it will eventually move into Spain.
There has been no further progress in the debt talks over the weekend. President Obama held a highly anticipated meeting on Sunday, but discussions have reverted back to where they started – arguing over taxes. The “grand bargain” looks like it is off the table and now leaders must struggle to find a more modest proposal that both sides can agree on. In order to avert a default on August 2, it would appear something needs to happen this week in order for there to be enough time for this to pass the House and Senate. Of course, passing the House and Senate could be another formidable issue.
Stock futures are falling in pre-market action as they are still reeling from Friday’s anemic jobs report, as well as the fears of further European debt contagion and the failure of our political leaders to come up with a proposal to raise the debt ceiling. Gold and silver are up on this news, while platinum and palladium are slightly down. HSBC analysts are predicting that stock prices will rebound as earnings season begins. They believe that strong earnings will initiate a third quarter rebound in the stock market.
At 8:00 am (CT) the APMEX precious metals spot prices were:
- Gold - $1,554.10 – Up $11.50 on the day.
- Silver - $36.83 – Up $0.23.
- Platinum - $1,733.00 – Down $0.40.
- Palladium - $772.30 – Down $8.70.