Closing Gold & Silver Market Report, 8/27/2012

Brandi Brundidge

8/27/2012 4:02:00 PM

GOLD STANDARD’S RETURN WEIGHED; EURO GAINS MOMENTUM  

The upcoming United States presidential election in November has been a big part of the news, and the economy has been the main point of focus. One idea has been to bring back the Gold standard that was abandoned over 40 years ago. Simply put, the American dollar would have to be backed by actual Gold. Experts believe the idea is farfetched because the ramifications would have a negative effect on the international trade balance. It is believed this idea of going back to the Gold standard is a way to point out the major issues the economy is facing. “Examining a return to the Gold standard is one avenue to show the public and markets a level of seriousness about the U.S. dollar, monetary policy and the budget deficit,” said Jeffrey Wright, managing director of Global Hunter Securities. 

The other major economic storyline continues to be the future of the euro. While the outlook had been gloomy for the past few weeks, there are signs that conditions are improving. The euro’s value was around a seven week high Monday, influenced by talks between Germany and France. They are planning to work together to assist the European Union’s monetary situation.

As speculation continues to rise about the possibility of a third round of monetary easing by the United States Federal Reserve, many observers have said they don’t see the benefits of it. The idea of pushing more cash into the system brings up the topic of more inflation and the long term effects. “I question why the Fed would inject extraordinary stimulus on top of that. An enormous cash infusion would certainly drive up asset prices and maybe improve market and consumer sentiment, but with the S&P 500 up 11 percent this year, why do we need more help? It’s time to get back to a normal economic recovery,” said Doug Cote, chief market strategist at ING Investment Management.

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

• Gold, $1664.60, Down $6.80.
• Silver, $30.77, Up $0.06.
• Platinum, $1,545.40, Down $10.
• Palladium, $651.00, Down $2.60.

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