Mid-Day Gold & Silver Market Report – 7/15/2011
EURO BANKS FAIL STRESS TEST
Fears abound that the Greek debt crisis is spreading to bigger countries such as Spain and Italy. As a repercussion, investors have been panicking and causing European bank shares to fall to a two-year-low. Eight European banks failed stress tests, while as many as 15 are needing more capital to withstand a prolonged recession. With all that being said, a potential default in Greece has not been added into the equation. This will pile up the losses for German and French banks, which hold a large amount of the country’s debt. For those banks that failed, they must produce plans by September as to how they will plug capital shortfalls by the end of the year.
The dollar strengthened for a second day against the euro after a report showed that U.S. consumer prices, excluding food and energy, increased for a second month. Earlier, the Dollar Index took a dive after Standard & Poor’s said that even if Congress reaches an agreement on raising the debt ceiling, there is still a 50% chance that the U.S. will lose its top credit rating. “The bar is set very high for more quantitative easing if you can’t point to disinflation or deflation, but you actually are pointing to a rise in inflation, some of which is not anticipated,” said Alan Ruskin of Deutsche Bank.
President Obama held a press conference today to discuss the progress, or the lack thereof, in the debt ceiling negotiations. Obama made his position clear, stating, “Show me a plan in terms of what you’re doing in terms of debt and deficit reduction. If they show me a serious plan I’m ready to move, even if it requires me to make some tough decisions.” House Speaker Boehner countered later and said that Obama and the Democrats have “been unwilling to put a real plan on the table. Without serious spending cuts…this problem is not going to be solved.”
At 12:07 pm (CT) the APMEX precious metals spot prices were:
- Gold - $1,591.70 – Up $1.50 on the day.
- Silver - $38.96 – Up $0.21.
- Platinum - $1,756.00 – Down $18.30.
- Palladium - $782.80 – Down $2.60.