Morning Gold & Silver Market Report – 5/9/2011

Timothy Oakes

5/9/2011 8:14:00 AM

U.S. AND CHINA TALK, ECONOMY AND INFLATION CONCERNS

The U.S. and China begin two days of dialogue today, in the hope to smooth over their sometimes contentious policy differences. The Chinese are concerned over President Obama’s fiscal clean up policy. The U.S. has concerns that the yuan is undervalued and have serious concerns over human rights issues in China. According to Jin Canrong, a professor of international relations at Renmin University in Beijing, "There are structural conflicts in the China-U.S. relationship, although this year relations have had a good start, the problems are still there and could burst out at any time and lead to a step back in relations."

Rumor began over the weekend that Greece may be forced out of the EU, though the rumor proved false, concern grows due to the drop in the euro. The euro had been immune to the worry over Greece, Ireland and Spain over recent months. Jens Nordvig, global head of G-10 currency strategy at Nomura, says, “European policymakers are likely to continue to try to delay any restructuring as long as they can. We think Greece leaving the euro zone and adopting its own currency would be associated with default in its government debt, a collapse of the Greek banking system, and would probably tip the Greek economy into depression. Consequently this is not an option for the current government.”

Global concerns are still present in Syria, Yemen and Pakistan. In Syria, the president has moved tanks into a major city in retaliation of the uprising in his country against his rule. Yemeni forces fired on and killed three protestors who were blocking the entrance to a government building. The protest groups want their president to relinquish power and are appealing to Gulf states for support. Pakistani president Yusuf Raza Gilani is under fire as the opposition party in Pakistan is upset over the U.S. raid to remove Osama bin Laden. They claim it was a violation of Pakistan’s sovereign nation standing.

The global news has re-affirmed the safe haven appeal of gold and silver. The drop in oil prices and a retreating dollar also contribute to the rise in precious metals pricing.

At 8:06 AM (CT) the APMEX precious metals prices were:

• Gold price – $1503.90 (up $10.80)
• Silver price – $36.95 (up $1.61)
• Platinum price – $1787.90 (up $0.50)
• Palladium price - $726.10 (up $7.90)