Closing Gold & Silver Market Report – 7/26/2011
GOLD RISES FOR THIRD STRAIGHT DAY AS STALEMATE CONTINUES
In the continuing trend of reporters having nothing to report, the debt stalemate in Washington has continued for another day. With the possibility of default less than one week away, tensions are running high as the world watches and waits for something – anything - to happen.
Gold prices have rises throughout the stalemate, and have hit new highs in the last few days. “The flight-to-quality money is reasserting itself into gold. The budget problems are persistent, and people want to own gold during this calamity,” said Adam Klopfenstein, a senior strategist at Lind-Waldock.
Even without a default, if the U.S. has to pay higher interest rates because of a ratings downgrade, those rates will most likely trickle down to consumers in the form of higher interest rates on mortgages and other loans. In addition, a downgrade of the U.S. credit rating could cost the government $100 billion per year, according Bloomberg, who cited Wall Street bond dealers.
Despite all the news about the looming debt ceiling and the very real possibility of a U.S. default, the $3 trillion bond market seems not to care. “[S]omebody forgot to tell the traders…” said a CNBC article. Demand at today’s $35 billion bond auction drew substantial demand. According to Christian Cooper, head of U.S. dollar derivatives trading for Jefferies Group, Inc., “It was a reassuring auction. The market is really not ready to acknowledge default as a possibility at the point.”
At 4:15 pm (CT) the APMEX precious metals spot prices were:
- Gold – $1621.00 - Up $7.80.
- Silver – $40.98 - Up $0.56.
- Platinum – $1808.10 – Up $14.10.
- Palladium - $838.50 – Up $27.40.