Morning Gold & Silver Market Report – 11/10/2011
EUROPEAN UNION WARNS OF ‘DEEP PROLONGED RECESSION’
The European Union (EU) has significantly slashed its 2012 growth forecasts for its 17-country euro zone members. In spring, the 2012 growth forecast for the EU was set at 1.8%, but that has been revised down to a worrisome 0.5%. At a fragile growth rate of 0.5%, the euro zone easily could fall back into a depression on matters related to the current debt crisis. In a CNBC interview Tuesday, Sean Egan of Egans-Jones Rating Co. explained the European debt crisis this way: The EU is dealing with $2.5 trillion euros in debt. Even if it were only $1.5 trillion, that is a huge hole to fill, and there are only four ways to fill it:
1. Experience some massive growth in the economy that comes from out of nowhere.
2. Funds are found to fill in the hole. Although not considered likely, perhaps the United States or China could step up and provide the money.
3. Massive defaults by sovereign nations and large banks. This is a worst-case scenario that should be prevented at all costs.
4. Everyone comes clean and admits they cannot pay their debts, so they roll out the printing presses and begin printing huge amounts of cash that they will use to pay their debts.
Gold prices are moving off morning lows, and the U.S. stock futures are positive on the news that Italian bonds have slipped below 7%. Yesterday, the U.S. stock market experienced its biggest sell-off since August. Also helping today’s rebound, initial claims for jobless benefits fell to 390,000 for the week ending Nov. 5. This was better than estimates by analysts polled by Reuters that the number of claims would be 400,000.
At 8 a.m. (CST), the APMEX precious metals prices were:
- Gold price - $1,775.30 – down $18.30.
- Silver price - $34.27 – down 13 cents.
- Platinum price - $1,631.10 – down $12.60.
- Palladium price - $650.30 – down $6.60.