Closing Gold & Silver Market Report, 5/25/2012

Timothy Oakes

5/25/2012 4:03:00 PM

METALS RALLY AHEAD OF HOLIDAY; SPAIN FACES BANKING TROUBLE  

Precious Metals continued to rally through afternoon trading. The euro recouped some losses through the week, which helped boost prices. Gold felt the brunt of investor selloffs in other markets. However, ahead of the holiday weekend, not a lot of position changes were expected with bullion or currencies. The eurozone continues to be the epicenter of market movements. Macroeconomist Peter Morici said, “The euro was a bad idea with the best intentions, and now the sensible course for all involved is to cut their losses and return to the sanity of national currencies. … The euro has failed, and the time has long passed for Greece to bail out. Sooner or later, Spain, Portugal and perhaps Italy and Ireland will have to follow. But after the world does not end with Greek withdrawal, those would be easier and less painful decisions to manage.”

Spain’s fourth largest bank, Bankia, is set to be nationalized with an expected national bailout of 15 billion euros. The issue this presents is it increases Spanish debt. The purported shortfall is seen by a number of investors as a sign that Spain may need to seek international aid to curb the crisis. One analyst said, “Whatever they say, people are going to think it’s not enough. The process has been going on for so long already.” Spain is joining Greece as a growing sign of investor concern within the eurozone. A review of Spanish banks is set by the end of May.

However, signs of hope continue to be seen within the eurozone. Pending member countries Poland and Turkey continue to prove their worth. Turkey survived the 2008 collapse and by last year had an even higher GDP rating than before the 2008 crisis. Poland was the only European country to actually avoid the recession in 2008 and has shown strong economic growth. Both nations are viewed as potentially strong investments as the BRIC nations continue to underwhelm, as well. Sam Vecht said, “Emerging Europe is the cheapest region in the world, trading at three to four times earnings. It’s cheap relative to anything else in the world.”

At 5 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,574.20, Up $14.90.
• Silver, $28.58, Up $0.34.
• Platinum, $1,434.00, Up $9.60.
• Palladium, $591.40, Up $1.80.

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