Closing Gold & Silver Market Report – 10/31/2011
MAJOR PLAYER IN GLOBAL FINANCE DECLARES BANKRUPTCY
MF Global, a multibillion-dollar trader in commodities and derivatives, filed for Chapter 11 bankruptcy protection today. The company was forced to take huge write-offs due to last week’s deal to prevent a Greek default. Part of the deal was for holders of Greek debt to voluntarily take a 50% write-off on the bonds they held. MF’s trading partners have already distanced themselves from the ailing company. The Federal Reserve suspended the firm’s status as a primary dealer today. CME Group also suspended MF’s trading privileges. Jack Scoville, vice president at Price Futures Group said, “It’s a real mess, and it’s all hands on deck. MF is in the top five in clearing for commodities, so it’s not an insignificant thing.”
The policy-setting committee of the Federal Reserve, known as the Federal Open Market Committee, is divided on the issue of monetary stimulus. At least three members are openly at odds with Fed Chairman Ben Bernanke as to the direction to take in stimulating the economy. At least two members say the Fed should be doing much more than it currently is to combat unemployment at the risk of causing higher inflation. “Given how badly we are doing on our employment mandate, we need to be willing to take a risk on inflation going modestly higher in the short run if that is a consequence of policies aimed at lowering unemployment,” said Charles L. Evans, president of the Federal Reserve Bank of Chicago.
Many economists argue that the Fed measures inflation incorrectly, and that inflation is already at very high levels. The so-called core Consumer Price Index, the Fed’s primary measure of inflation, excludes food and fuel prices, two categories that tend to hit consumers especially hard. The Fed excludes these because it says that price movements tend to be temporary and beyond its control. “Temporary” seems like a relative term, since CNBC reports that only four of the past 24 years have seen a decline in food and fuel prices.
At 4:15 PM (CT) the APMEX precious metals spot prices were:
- Gold - $1,717.90 – Down $31.30.
- Silver - $34.25 – Down $1.08.
- Platinum - $1,604.10 – Down $47.70.
- Palladium - $649.00 – Down $21.40.