Newsroom

The Week in Review

March 12, 2010

The Week in Review

As the drama unfolds and the investigations continue into how Goldman Sachs may have helped Greece hide the size of its deficit through complex derivative trades back in 2001, Europe remains a looming issue on the financial front.  Media outlets have come up with the clever acronym PIGS (Portugal, Ireland, Greece and Spain) when referring to the European debt crisis.  They may need to add another I to their acronym in the near future.  Almost 500 small and large Italian cities are facing mark-to-market losses of 2.5 billion euros on complex derivative contracts, according to the Bank of Italy.  Several cities in Italy are trying to get out of the contracts and are trying to sue the banks that put those contracts together.  A judge in Milan will soon decide whether to try 13 people and four banks for aggravated fraud over the deals.  The banks involved are UBS, Deutsche Bank, Depfa and JPMorgan Chase.

Initial claims for unemployment dropped again this past week, but it was less than expected.  The four-week moving average of new claims, which is supposed to smooth out week-to-week volatility, rose to its highest level since last November.

Negotiations between US Congressmen Chris Dodd and Bob Corker on new financial regulations broke down Thursday.  Dodd announced that he would be introducing his own version of a financial reform bill saying “It’s not a reflection of something breaking down, the process is moving along very well.”  His reasons for breaking off negotiations and submitting his own bill?  Apparently it was because there is “not a lot of time left” to get such a complicated piece of legislation passed during an election year.  Dodd went on to say “We need to move along, the clock has become a rather demanding member [of Congress]”.  This is politics at its finest – rather than proceed with negotiations that appeared to be on the verge of successfully working out a highly complicated piece of legislation that was thoroughly analyzed and debated, Dodd apparently opted to shortcut things so that Congress can dispense with all of this “will of the people” nonsense, which is apparently keeping them from getting out on the campaign trail faster.  

Retail sales were up 0.3 percent in February, compared to an expected slip of 0.2 percent.  Friday’s announcement seemed to help push stocks higher and lead media outlets to declare “The Consumer is Back!” ignoring the fact that January’s data was revised down to a mere 0.1 percent rise from an original 0.5 percent rise.  Consumer sentiment, announced later Friday, came in weaker than expected and dampened the enthusiasm somewhat.

US crude oil prices were above $82 a barrel on demand forecasts by the International Energy Agency.  

The US Dollar fell to a 3 week low against the euro apparently on news out of Europe that Greece’s problems are contained.

Anton Valukas, chairman of Jenner & Block reported the results of that law firm’s more than year-long investigation into who could be blamed for Lehman Brothers collapse.  The report said that Lehman could have claims against JPMorgan Chase and Citigroup for helping to accelerate the collapse by modifying guarantee agreements and demanding more collateral.

Finally, as we discussed in our February 26th memo, the time is drawing near for the March 25th meeting of the CFTC to discuss position limits in the precious metals markets.  It has long been speculated that the precious metals markets are being manipulated by large bullion banks, primarily JPMorgan and HSBC.  With the sheer amount of bad press regarding possible wrongdoing by these very banks (not only in the US, but across the entire planet), the CFTC would look like a hero if they could not only show evidence of this manipulation, but begin putting steps in place to finally shut it down.  The CFTC is under tremendous scrutiny and is receiving hundreds of letters from industry participants demanding this market manipulation be brought to a halt.  Some being so bold as to make statements to the CFTC that they are either too ignorant to recognize the manipulation tactics of these major banks or they are knowingly a part of it.

Friday to Friday Close

Here are your Short Term Support and Resistance Levels for the upcoming week.

Volatility should be expected to continue.  China is reporting that inflation is on the rise and that they may have to begin raising interest rates.  It is becoming more and more evident that the US Congress is worried more about campaigning than actually reading and debating the legislation that is being put forth.  Rushing through and hastily signing into law any type of legislation is never a good idea, especially when those legislative items are as complex as the financial reform and health care bills.  As the debt crisis fallout continues in Europe the large banks are taking even more damage to their already battered reputations.  Should the CFTC conclude that there is sufficient evidence of market manipulation by those very same banks at their March 25th meeting, it may signal the end of such manipulation and the “free” market will finally be free to determine what prices should be instead of a handful of banks.  Remember, the key to profitability through the ownership of physical precious metals is to actually own the physical product and hold them for the long term.  Never over-extend your ability to maintain ownership of your product over the long term.  

Trading Department – Precious Metals International, Ltd.  

This is not a solicitation to purchase or sell.

© 2010, Precious Metals International, Ltd.

© 2012, Precious Metals International Ltd.
www.wwpmc.com

The Week in Review
Posted by Worldwide Precious Metals on Friday, March 12, 2010

• Home
• About Us
• Info Request
• Open An Account
• Bullion
• Newsroom
• Testimonials
• Contact Us
• Client Login
• Sitemap