Morning Gold & Silver Market Report – 11/9/2011
Yesterday, many analysts said an Italian 10–year bond above 6% would be unsustainable. Today, the Italian 10-year bond has climbed well above the 7% benchmark that no analyst disputes as being unsustainable. The 7% threshold is the point at which institutional investors, large banks and sovereign nations decide the risk of default is too great for the potential 7% reward. Furthermore, once rates rise above this level, odds greatly decrease that they will come down. We saw this with Greece, Ireland and Portugal, and each was forced to request a bailout after crossing the 7% threshold. Italian Prime Minister Silvio Berlusconi has promised to resign if austerity measures are voted in. Rumors of his resignation drove markets up yesterday, but today the 10-year bond yield is front and center.
The Gold and Silver markets should be watched carefully today. As often occurs when the stock market is heading toward a significantly down day, Gold prices retreat as stock margin calls begin to come in. Gold prices flirted with $1,800 per ounce yesterday and then retreated overnight to below $1,785 on the news of the Italian bonds. This morning, Gold prices were climbing and appear that they could flirt with the $1,800 level today. Certainly, the perception will be that there is even greater risk in the market today than yesterday, and there likely will be a continuing movement toward risk-management assets such as Gold. Italy’s economy is so large, it may be too big to bailout. Jim Rogers, CEO of Rogers Holdings, told CNBC today that there is a 100% chance of a crisis worse than that of 2008.
At 8 a.m. (CST), the APMEX precious metal prices were:
- Gold price - $1,801.80 - up 60 cents.
- Silver price – 34.89 – down 31 cents.
- Platinum price - $1,655.50 – down $17.60.
- Palladium price - $667.60 - down $11.70.