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The Week in Review – June 4th, 2010
June 4, 2010
The week opened spectacularly, as far as news is concerned. Canada raised interest rates a quarter point, the first of the so-called “G-7” nations to do so. The European Central Bank warned on Monday that there was another 195 billion euros in potential loan losses for European banks over the next 18 months. That announcement was immediately followed up by the news that Spain’s second largest savings bank has asked for up to 3 billion euros from a government rescue fund.
The Labor Department’s report released Friday showed that, aside from a boost provided by the hiring of temporary Census by the government, the private sector is still not hiring. Unemployment dropped to 9.7%, but that figure is apparently a reflection that people are simply giving up looking for work and therefore falling out of the calculation.
On Thursday, three top Federal Reserve officials said that it may soon be time to begin raising interest rates. Such a move is not likely to take place at the June 22-23 policy meeting, but it is notable that they are beginning to discuss such a move more openly.
On Friday, a spokesman for Hungary’s prime minister supported the view that Hungary had only a slim chance of avoiding a debt crisis similar to Greece. Danske Bank said “The comparison with Greece might be ‘overdone’, but one can hardly say that public finances are in good shape in Hungary.”
European trade unions said on Friday that European government budget cuts to combat debt crises are going too far and could trigger an economic depression. John Monks, the head of the European Trade Union Confederation said that there was “quite a bit of social unrest in some countries” over austerity measures. He went on to say “We’re seeing cut, cut, cut in all the countries simultaneously which is what they did in 1931 and that caused the Great Depression”
BP finally got a cap in place over the well that is supposed to theoretically capture up to 90% of the oil coming out of the blown out well in the Gulf of Mexico. President Obama, speaking before Carnegie Mellon University this week, declared that it is time to tap the nations Natural Gas Reserves in a move to cleaner energy. Oil moved back down to the $72 a barrel range.
The Euro dropped to fresh four year lows against the dollar on continued news out of Europe. According to Ashok Shah, the CIO at London & Capital, “There is a risk that the sovereign debt crisis could morph into another run on under-capitalized banks in Europe.” Shah went on to say that “The IMF can support liquidity, but can do nothing about solvency.”
Friday to Friday Close
| May. 31st | June. 4th | Net Change | |
|---|---|---|---|
| Gold | $1216.00 | $1219.00 | 3.00 + 0.25% |
| Silver | $18.41 | $17.40 | (1.01) – 5.49% |
| Platinum | $1551.00 | $1524.00 | (27.00) – 1.74% |
| Palladium | $463.00 | $430.00 | (33.00) – 7.13% |
Month End to Month End Close
| Apr. 30th | May. 31st | Net Change | |
|---|---|---|---|
| Gold | $1180.00 | $1216.00 | 36.00 + 3.05% |
| Silver | $18.60 | $18.41 | (0.19) – 1.02% |
| Platinum | $1740.00 | $1551.00 | (189.00) – 10.86% |
| Palladium | $553.00 | $463.00 | (90.00) – 16.27% |
Year to Date Close
| Dec. 31st | May. 31st | Net Change | |
|---|---|---|---|
| Gold | $1098.00 | $1216.00 | 118.00 + 10.75% |
| Silver | $16.95 | $18.41 | 1.46 + 8.61% |
| Platinum | $1470.00 | $1551.00 | 81.00 + 5.51% |
| Palladium | $407.00 | $463.00 | 56.00 + 13.76% |
Here are your Short Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
|---|---|---|
| Support | 1200/1180/1170 | 17.40/17.00/16.75 |
| Resistance | 1220/1225/1250 | 18.00/18.50/19.00 |
| Platinum | Palladium | |
|---|---|---|
| Support | 1500/1480/1450 | 425/415/400 |
| Resistance | 1550/1575/1600 | 450/470/500 |
Volatility should be expected to continue. As the crisis in Europe continues to deepen, it seems people continue to lose faith in the fiat paper currencies printed up by world governments. Geo-political tensions between North and South Korea continue to inject fear into the marketplace. The oil industry as a whole is coming under fire from the US government. Despite BP’s assurance that they will pay to clean up “every drop” of oil that has spilled from the runaway well in the Gulf of Mexico, there are rumors and suggestions that the US government should seize BP’s assets. Such rumors are stoking fear by foreign companies to invest in the US. The labor market is weak, with nearly all growth this month coming from the government’s hiring of temporary census workers. The investing public at large seems to be quickly losing confidence in the administration’s ability to handle the growing problems it is facing. Much of the lack of confidence seems to be fueled by the constant rhetoric that none of what is going on is the current administration’s fault. Even the public grows tired of Obama’s constant repetition of “none of this is the fault of this administration, we inherited this problem, but we will take responsibility for it.” Blaming the previous administration for everything, especially when Obama’s own administration has been in office for close to two years, with Democrats in control of Congress for even longer than that, is starting to wear down the American people. Mid-term elections should prove to be interesting this coming November. Remember, the key to profitability through the ownership of physical precious metals is to actually own the physical products and to 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 – June 4th, 2010
Posted by Worldwide Precious Metals on Friday, June 4, 2010
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