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The Week in Review – August 20th, 2010

August 20, 2010

There was much celebration this week (though it turned out to be short-lived) when the DOW turned positive for the year once again. Since no one in the media seems to be bringing it up and we feel that you should have all the facts, here is the data for precious metals: gold turned positive for the year on March 1^st and has remained there since, silver turned positive for the year on March 28^th and has remained there since, the only time platinum was negative for the year was 5 days in early February and palladium has remained positive for the year since February 15^th.

Fidelity released the results of a survey Friday that showed that a record number of US workers are using their retirement accounts to make it through the economic downturn. 401k loans and hardship withdrawals are both on the rise. Consumer Bankruptcies are up 21 percent from last year

New claims for unemployment broke through the 500,000 level this past week. Individuals who are claiming benefits under the Emergency Unemployment Compensation provision since they exhausted their benefits have now reached over 4.7 million, 60.5% higher than the same measure in 2009. Small business owners are still holding off on hiring as the economic and regulatory uncertainties continue to weigh on their revenues.

California will once again run out of cash in October, perhaps leading to the issuance of IOUs once again. The state has begun limiting operation hours of government offices in an effort to save as much cash as they can.

Germany’s recovery, which helped boost the GDP figure for all of the Eurozone last week may slow down in the second half of the year according to the German Finance Ministry. According to the ministry, “economic momentum will likely be considerably less strong in the second half of the year than in the first.”

Russia intends to switch on Iran’s first nuclear power plant Saturday making Iran the first Middle East country to produce atomic energy. Tensions are running high in the region as animosity between Iran and Israel runs deep. Once the facility is operational, military action against it will become extraordinarily dangerous due to risk of radiation fallout. In further Mid-East news, the final US combat troops are pulling out of Iran’s neighboring country, Iraq.

The euro and the yen both traded basically sideways against the dollar this week. As the printing presses accelerate the printing of money, the dollar may begin to decline against both of those currencies once again.

Mortgage rates set another record low for the ninth week in a row, but that still does not appear to have helped the housing market at all. Home sales continue to lag and one fourth of all renters now say that they will never buy a home. According to a report from Zillow.com, one third of all homeowners in the US still think that the housing market has not hit bottom yet and that the worst is yet to come. As the current administration discusses how to fix Fannie and Freddie, two of the largest mortgage financers in the US, consumer confidence in the housing market continues to plummet.

Crude oil remains bound in the mid-$70 a barrel range, seemingly trapped there by gloomy economic news for the week.

Friday to Friday Close

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

Volatility should be expected to continue. Economic data continues to point to a stalling recovery. Consumers continue to hoard their cash and the long hoped for housing recovery does not look like it will be appearing on the horizon any time soon. Economist and former banker Alasdair Macleod, in a commentary titled “Gold manipulation: Central banks are now in deep trouble” believes demand for physical metals is outpacing the ability of bullion banks to deliver. Savvy investors in precious metals have been purchasing product as price dips occur to hold for the long term, which Mr. Macleod refers to in his commentary as “hoarding”. This results in a reduction in the supply of product available not only for investors to purchase but for bullion banks, which have sold paper representations of those products, to deliver when their customers request physical delivery. A shortage in market supply of a product typically leads to one thing: an upward explosion in the price. As economic uncertainties continue to mount, and fiat currencies deteriorate as governments fire up the printing presses again to create paper money out of thin air, investment demand for precious metals as a “safe haven” is increasing. Taking advantage of price dips at these levels to accumulate more metals for your portfolio may be an extremely wise move in the face of growing economic and geo-political uncertainty. 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.

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

The Week in Review – August 20th, 2010
Posted by Worldwide Precious Metals on Friday, August 20, 2010

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