Morning Gold & Silver Market Report – 7/12/2011
CONTAGION FEARS HOLD MARKETS HOSTAGE
As the euro weakens against the dollar, the price of gold is mostly suppressed. This is the case this morning as gold is flat. However, when priced in the euro, gold is at an all-time high for the second day in a row. The fear that the debt crisis Greece is currently facing will spread to other weakened (and much larger) economies such as Italy and Spain is causing the euro to tumble. In fact, for the first time, leaders in the euro zone have acknowledged that default is a likely outcome for the situation in Greece. Until a meeting early this morning, default was excluded as an option. One finance minister described it as having more options. Contagion fears in Europe also fueled U.S. stock futures to decline sharply this morning. They have begun to recover, but only slightly.
The chief economist at Sarasin in Zurich, Jan Poser, said recently that “A U.S. sovereign default is definitely the worst outcome imaginable for financial markets.” He added that politicians are playing with fire regarding the debt ceiling, and that instead of hypocritical debate about government spending and whether to raise taxes, they should accept responsibility and work on a resolution. Getting a bit more into detail, he says that a “U.S. interest rate hike would put companies and consumers under pressure and trigger a global recession. Global banks … would immediately become insolvent.”
At 8:00 am (CT) the APMEX precious metals spot prices were:
- Gold - $1,549.50 – Down $0.70 on the day.
- Silver - $35.33 – Down $0.43.
- Platinum - $1,724.00 – Down $4.30.
- Palladium - $758.50 – Down $11.00.