Morning Gold & Silver Market Report – 5/12/2011

Timothy Oakes

5/12/2011 7:59:00 AM

JOBLESS CLAIMS FALL; EUROPEAN DEBT CONCERNS STILL THERE

In a public address last night, President Obama urged American companies to “step up”. He urged banks and corporations to do more to help the economy. The outlook for a full recovery is still several years away. He said, "American taxpayers contributed to that process of stabilizing the economy. Companies have benefited from that, and they're making a lot of money, and now's the time for them to start betting on American workers and American products." This morning the unemployment claims report dropped 44,000 partially retreating from previous April highs. This news comes on the heels of China raising its reserve requirements for the fifth time this year. This came on Chinese reports that inflation and lending are exceeding their expectations. Wang Qing, chief China economist at Morgan Stanley says, “The slowdown we’ve seen so far doesn’t indicate there is a risk of a hard landing, that’s why the policy priority at the moment is still to control inflation.”

The IMF today warns the European debt crisis could still spill over to core euro zone countries. The IMF stands poised to offer assistance to Greece, if asked. There is an overwhelming concern Greece will not be able to get out of its debt even with additional assistance, which is causing investors to be very wary of measures taken to help the country. The good news for Greece, the IMF does not believe the country is bankrupt. According to Antonio Borges, the IMF’s European department director, "All IMF programs are based on debt sustainability, so as long as a program is in place that means that the IMF believes Greek debt is sustainable."

The U.S. Dollar is on the rise. It has hit its highest point against other currencies in almost three weeks. Dollar strength makes asset purchases more expensive to other currencies. Daniel Briesemann, an analyst with Commerzbank, says, "External factors are playing the most important role here — the firmer dollar, and secondly somewhat weaker equity markets which reflect higher risk aversion among market players at the moment…Given that commodities still show quite good price performance over the last 12 months and are still in positive territory, some market players are taking profits to cover losses elsewhere.”

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

• Gold price – $1,490.40 (down $12.50)
• Silver price – $33.59 (down $1.99)
• Platinum price – $1,766.00 (down $12.80)
• Palladium price - $715.50 (down $2.00)