Morning Gold & Silver Market Report – 7/15/2011
MANUFACTURING DECLINES; S&P JOINS MOODY’S IN POTENTIAL DOWNGRADE
The “Empire State” manufacturing gauge unexpectedly declined for a second month in a row, while the Labor Department reports that the core Consumer Price Index rose 0.3 per cent after a similar gain in May. This was above economists’ forecast of 0.2 per cent.
Standard & Poor’s (S&P) credit rating service has joined Moody’s rating service in their warning of a potential downgrade of U.S. debt. S&P stated yesterday that they see a 50% chance of a downgrade. The S&P had already lowered their outlook on U.S. Aaa long-term rating to negative in April, and the current political debate on whether to raise the debt ceiling does not inspire confidence that a measure will be passed by August 2.
President Obama has suspended budget talks today in order to give both sides time to weigh options and come up with a plan. Talks may resume over the weekend. Financial markets are still uncertain as to whether the two sides will come to an agreement.
Central banks are continuing to buy gold at a record pace. In 2010, central banks became net buyers of gold for the first time in two decades. Anyone was thinking this would be a one-year event would be wrong, as according to the World Gold Council, central banks have already bought more gold in 2011 than they did in 2010. According to Juan Carlos Artigas of the World Gold Council, "In the same way, investors look to diversify their portfolios and find a way to manage risks effectively, gold has been one of the choices with central bankers especially in developing economies to create that balance."
At 8:21 AM CDT, the APMEX precious metals spot prices were:
- Gold - $1,584.40 – Down $5.90 on the day.
- Silver - $38.54 – Down $0.22.
- Platinum - $1,761.00 – Up $13.30.
- Palladium - $778.00 – Down $7.40.