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The Week in Review – May 25th, 2012
May 25, 2012
Well, so much for the distraction surrounding facebook’s IPO being past. Never before has a single IPO generated so many lawsuits and investigations. Morgan Stanley is next up on the list of banks to be investigated as a result of facebook’s failed IPO, taking a small fraction of the heat away from JP Morgan and its own mounting losses due to a failed trade. The CFTC’s investigation list is filling up fast. Hopefully the CFTC wraps these investigations up faster than their now four-year old (and still ongoing) silver manipulation one.
The Thomson Reuters/University of Michigan’s final consumer sentiment reading for May surprisingly was at its highest level in four years. The reading is surprising and may show that consumers in the United States are willfully ignoring the spiraling crisis in Europe and a marked slowdown in China’s economy, both of which will deeply affect the US economy, should they continue on the current path.
Initial claims for unemployment were at 370,000 last week, which the media chose to spin as “dipping” since the previous week’s 370,000 reading was revised upward. The fact that unemployment claims have seemingly stalled over the last several weeks may indicate that the unemployment rate might be unchanged when the US government releases its employment report on June 1st.
On Monday, the Institute of International Finance published a report saying that under a worst-case scenario, Spain’s losses in its banking sector might approach 260 billion euros, most of which would occur in commercial real estate. Artur Mas, the president of Catalonia which is the wealthiest autonomous region in Spain, said this week that the region is running out of options to refinance debt and will likely require government assistance. Mr. Mas said “We don’t care how they do it, but we need to make payments at the end of the month. Your economy can’t recover if you can’t pay your bills.” Spain’s fourth largest bank, Bankia, in the process of nationalization, will also require an additional 19 billion euros in bailouts apparently.
At a summit held in Brussels this week, European leaders emerged united, saying they were committed to Greece remaining in the Eurozone. Angela Merkel, the German Chancellor, said “We want Greece to stay in the euro, but we insist that Greece sticks to commitments that it has agreed to.” The Greek people will be returning to the polls on June 17 after the elections earlier this month failed to result in the formation of a government. We can expect the uncertainty surrounding Greece to continue to affect markets for most of June it seems.
Standard & Poor’s and Moody’s ratings agencies both issued reports on Thursday stating that a slowdown in apartment sales may indicate an impending cash shortage for many of China’s real estate developers, many of whom owe significant interest payments on bank loans. S&P went so far as to say “Weak property developers in China are likely to face a test of their survival this year.” This is just another sign of continued contraction in China’s economy.
Despite gains that were smaller than expected in crude oil inventories, oil prices remain under pressure at the bottom range of $90 a barrel. China’s continued slowdown and uncertainties in the Eurozone may continue to put downward pressure on oil for the near future.
The euro moved higher, albeit weakly, for the first part of the week, but dramatically reversed course by the end of the week, falling sharply on worries that Greece may have no choice but to exit the Eurozone. Escalating problems in Spain’s banking system are also pressuring the euro lower. The Japanese yen dropped sharply the first part of the week but recovered, for the most part, by the end of the week and appears it will only be marginally lower against the dollar for the week.
Late Friday, Standard & Poor’s downgraded 5 Spanish banks reinforcing fears that the contagion from Greece is already spreading outward from Greece to additional Eurozone members.
Friday to Friday Close
| May 18th | May 25th | Net Change | |
|---|---|---|---|
| Gold | $1592.00 | $1571.20 | (20.80) – 1.31% |
| Silver | $28.70 | $28.39 | (0.31) – 1.08% |
| Platinum | $1455.00 | $1426.50 | (28.50) – 1.96% |
| Palladium | $605.00 | $590.00 | (15.00) – 2.48% |
| Dow Jones | 12369.38 | 12446.50* | 77.12 + 0.62% |
Previous year Comparisons
| May 27th, 2011 | May 25th, 2012 | Net Change | |
|---|---|---|---|
| Gold | $1536.00 | $1571.20 | 35.20 + 2.29% |
| Silver | $37.85 | $28.39 | (9.46) – 24.99% |
| Platinum | $1800.00 | $1426.50 | (373.50) – 20.75% |
| Palladium | $758.00 | $590.00 | (168.00) – 22.16% |
| Dow Jones | 12441.58 | 12446.50* | 4.92 + 0.04% |
* Current at time of writing
Here are your Short Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
|---|---|---|
| Support | 1550/1525/1500 | 27.80/27.50/27.00 |
| Resistance | 1580/1600/1650 | 29.00/29.50/30.00 |
| Platinum | Palladium | |
|---|---|---|
| Support | 1415/1400/1380 | 580/550/525 |
| Resistance | 1450/1480/1500 | 600/620/650 |
Volatility should be expected to continue and perhaps increase further as the situation in Europe continues to create a drag on the global economy. The situation in Greece in particular has become so volatile that mainstream media outlets are already speculating that there will be full-out “runs” on Greek banks. Cash has been steadily leaving Greek banks lately but, as of yet, there have been no officially acknowledged runs reported. The same media outlets speculating on Greek bank runs are also broadcasting potential methods in which Greece might successfully exit the Eurozone and reintroduce their own fiat currency once again. Standard & Poor’s downgrade of 5 additional Spanish banks on Friday may trigger increased fears and an also increase the chance of depositors withdrawing their funds in that country as well. Reportedly, according to Goldman Sachs, corporate deposits in Spanish banks have been fleeing at a rate of nearly 14%. Many individual depositors in Spain, faced with deteriorating conditions in the banking sector, may begin moving their money from their smaller, regional banks to larger institutions such as Santander, creating essentially an escalating series of “mini-runs” on regional banks in the country in the process. Such a scenario would likely be the death sentence for the smaller regional banks in Spain and would likely cripple banking within the country. In Asia, China’s slowdown appears to be deeper than initially expected with one Chinese cabinet advisor posting on the official government web site calling it a “sharp slowdown in the economy”. If the slowdown in China continues to accelerate, it will add additional pressure on Europe and the United States as a global economic contraction sets in. The latest figures from the International Monetary Fund show that central banks across the globe are continuing to boost their gold holdings. If the buying continues at current rates, central banks may be set to purchase even more gold this year than last year’s figure of 450 tons, which was the highest level of gold purchasing by central banks in nearly 50 years. The Memorial Day holiday in the United States will lead to a shortened trading week next week, so it is important to stay on top of news items that come out of Europe and Asia over the weekend so that you are prepared to act. Taking advantage of buying opportunities that present themselves, perhaps as a result of the crisis in Europe or the deepening slowdown in Asia, might be looked back on as an incredibly wise decision if fiat currencies across the globe go into a free-fall as their respective governments are forced to print more and more money to try to prevent a new global financial crisis from unfolding even as we continue to struggle with the after effects of the most recent one. The uncertainties surrounding Greece and whether it will be forced out of the Eurozone will likely continue to plague all markets for the weeks to come. It is important during this time period to keep the fundamentals for owning precious metals first and foremost in your mind. As Greece, Spain, Italy, and the Eurozone as a whole, continue to flounder under massive and compounding debt loads, it seems to be more and more apparent that the printing presses will continue to run full tilt, speeding up the devaluation of fiat currencies across the planet. In such times, the fundamentals that support owning hard assets such as precious metals are blatantly obvious. Remember that precious metals should be viewed as a long-term investment and that 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 overextend your ability to maintain ownership of your precious metals over the long term.
Trading Department – Precious Metals International, Ltd.
© 2013, Precious Metals International Ltd.
www.wwpmc.com
The Week in Review – May 25th, 2012
Posted by Worldwide Precious Metals on Friday, May 25, 2012
The Week in Review – May 18th, 2012
May 18, 2012
Well it finally happened; JP Morgan has opened the proverbial “Pandora’s Box” and angered regulatory bodies on both sides of the Atlantic Ocean. Pressure is building in the global financial markets, with all of Europe sitting at the center of the storm. Pay attention to the fundamentals for precious metals, especially while the media outlets and stock markets are all totally distracted by facebook, or you may miss buying opportunities.
Tim Johnson, Senate Banking Committee Chairman, will be “inviting” Jamie Dimon to testify before Congress as a result of the recently announced massive losses at JP Morgan. Initially JP Morgan announced it had suffered at least $2 billion in losses, and that estimation has now escalated to $3 billion and looks as if it will climb even higher as hedge funds that are on the winning side of JP Morgan’s risky bet turn the screws to squeeze more profit out of them. According to the Financial Times (FT), more than a dozen “senior traders and credit experts” have told the FT that the Chief Investment Office, the unit responsible for the bad trade at JP Morgan, also has as much as an additional $100 billion in the very same risky bonds that crippled the financial system in 2008.
Initial claims for unemployment were at 370,000 last week, which the media spun as “holding steady” since the previous week’s figures were revised upward. The Philadelphia Federal Reserve’s index on business activity went negative in April, an indication that manufacturing in the region has gone from growth to contraction, which does not bode well.
Moody’s downgraded the credit rating of 16 Spanish banks this week, citing that “banks will continue to face highly adverse operating and market funding conditions that pose a threat to their creditworthiness.” Moody’s also stated “the Spanish economy has fallen back into recession in first-quarter 2012″ and that it does not expect conditions in Spain to improve this year.
World stocks, according to the MSCI Index, have given back all of their gains for the year. The ongoing financial crisis in Europe, particularly the escalating banking crisis in Spain seem to be key in the decline. Bad loans among Spanish banks reportedly hit their highest levels in 18 years this week according to the Bank of Spain. These figures were released only hours after Moody’s downgrade, adding additional pressure on Spain’s government to find a way to salvage the banking industry of Europe’s fourth largest economy.
US home mortgage rates are once again setting record lows, but no one seems to be buying. Tighter credit conditions continue to plague potential home buyers and a continuing decline in home prices has made those who do qualify for credit leery to get back into the market for fear that the bottom is not in yet.
In Asia, China’s home prices fell for the second month in a row as the government continues to try to rein in speculation in the property market in an effort to prevent a similar real estate bubble to that which struck the US as the financial crisis exploded across the globe.
The spiraling crisis in Europe seems to have definitively pulled the $100 floor out from under crude oil, and appears to now be threatening to push prices below $90 a barrel.
According to the European Union’s trade commissioner Karel De Gucht, continency plans are in the works in case Greece has to exit the Eurozone. This even as we hear constant, nearly daily reassurances by European policymakers that Greece will remain in the Eurozone. A German spokeswoman for the finance ministry, when asked about plans for a Greek Eurozone exit, said “The German government naturally has the responsibility to its citizens to be prepared for any eventuality.”
The euro continued its dramatic downward slide against the US dollar this week. The Japanese yen was dropping against the dollar for much of the week, but reversed course and ended the week higher against the dollar.
Friday to Friday Close
| May 11th | May 18th | Net Change | |
|---|---|---|---|
| Gold | $1584.00 | $1592.00 | 8.00 + 0.51% |
| Silver | $28.85 | $28.70 | (0.15) – 0.52% |
| Platinum | $1470.00 | $1455.00 | (15.00) – 1.02% |
| Palladium | $600.00 | $605.00 | 5.00 + 0.83% |
| Dow Jones | 12820.60 | 12375.13* | (445.47) – 3.47% |
Previous year Comparisons
| May 20th, 2011 | May 18th, 2012 | Net Change | |
|---|---|---|---|
| Gold | $1509.00 | $1592.00 | 83.00 + 5.50% |
| Silver | $35.10 | $28.70 | (6.40) – 18.23% |
| Platinum | $1770.00 | $1455.00 | (315.00) – 17.80% |
| Palladium | $735.00 | $605.00 | (130.00) – 17.69% |
| Dow Jones | 12512.04 | 12375.13* | (136.91) – 1.09% |
* Current at time of writing
Here are your Short Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
|---|---|---|
| Support | 1570/1550/1525 | 28.00/27.50/27.10 |
| Resistance | 1600/1640/1670 | 29.00/29.50/30.00 |
| Platinum | Palladium | |
|---|---|---|
| Support | 1440/1420/1400 | 580/550/525 |
| Resistance | 1475/1500/1520 | 620/640/680 |
Volatility should be expected to continue and perhaps increase further. As we said at the start of this memo, JP Morgan has opened the proverbial “Pandora’s Box” this time. Their previous $2 billion trading loss has ballooned to $3 billion in just 4 trading days, and looks set to continue to escalate as hedge funds on the other side of the trade smell blood in the water and step up efforts to keep JP Morgan from unwinding their massive and failed trade. On top of the already staggering losses already admitted to by Mr. Jamie Dimon himself, reports are surfacing that there may be another $100 billion in risky bond bets still sitting in the wings! Aside from JP Morgan’s woes, Joseph E. Floren, a lawyer at Morgan Lewis, the firm which has been defending Goldman Sachs against a litigation filed by Overstock.com, apparently filed something to which he attached a non redacted copy of one of the very documents that the law firm was trying to keep under court seal. The motion can be found here: Morgan Lewis Motion and you should take a good close look at pages 14-19. DeepCapture has the story, with links to stories at Bloomberg and the Economist here: DeepCapture Floren Story. It looks like the game may finally be up for “Da Boyz” and their market manipulation tactics. JP Morgan has finally hung themselves out to dry and the cries are already calling for Jamie Dimon to lose his job over the fiasco. The media outlets are all trying to play it off, coming to Mr. Dimon’s defense and saying “since when is it a crime to lose your own money?” in reference to JP Morgan using its own money for its failed trade. But the damage is becoming too large for it not to take down Jamie Dimon’s “Golden Boy” image. It is also becoming apparent that JP Morgan has been unloading its short positions in silver as they scramble to contain the damage. JP Morgan faces an angered Department of Justice and an even more enraged US Congress over their actions regarding this loss, and this may be the event, combined with the exposures in the Goldman Sachs suit, that finally puts a stop to the ability of these banks to manipulate markets, be they Stock Markets or the Precious Metals Market. “Da Boyz” appear to be losing their grip on the precious metals market, and Wednesday’s low tick of $26.58 in silver might be looked back on as a “gift” from them to the private investors they’ve apparently had no remorse over “taking to the cleaners” time and again. Europe’s woes appear to be approaching the meltdown stage. Greece is reporting massive withdrawals from its banks; Spain’s borrowing costs are escalating again, and Moody’s downgrade of 16 Spanish banks may trigger an exodus of cash from Spanish banks just as is happening in Greece. The distraction of facebook’s IPO is now past, though we are certain that it will be weeks before all the major media outlets get back to reporting on the world events that appear to be verging on triggering another major financial crisis. Watch the news and look for additional buying opportunities in the coming weeks as the EU struggles to come up with a solution to its massive debt woes. In the end, the answer to their woes may simply be to “print more money” and the US probably won’t be far behind in firing up the printing presses. In the current global environment, as Jim Rogers said in his CNBC piece on Thursday, it is best to “own real assets [such as gold and silver] because if the world economy gets better I’ll make money because of shortages and if things get worse they’ll print more money, which will drive up the value of hard assets.” Remember that precious metals should be viewed as a long-term investment and that 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 overextend your ability to maintain ownership of your precious metals over the long term.
Trading Department – Precious Metals International, Ltd.
© 2013, Precious Metals International Ltd.
www.wwpmc.com
The Week in Review – May 18th, 2012
Posted by Worldwide Precious Metals on Friday, May 18, 2012
The Week in Review – May 11th, 2012
May 14, 2012
What an insane week. That’s the best term we can think to describe it, total insanity. News out of Europe triggered meltdowns across all markets this week. As usual, the media outlets were quick to start seeking out doomsayers in an attempt to talk precious metals prices lower.
Initial claims for unemployment in the US slipped marginally lower last week, falling only a net of 1,000 to 367,000 once the previous week’s figure was revised upward. The number was better than expected, but weak enough that it still signals a sluggish and floundering jobs market in the US.
Election results are in across Europe. In France, Socialist Francois Hollande emerged victorious and is widely expected to try to renegotiate the terms of the fiscal pact signed by the majority of the member countries of the European Union. In Greece, the elections were a fiasco. Alexis Tsipras, leader of Greece’s Radical Left Coalition party, which came in second during the weekend election, was unable to form a coalition government and there will likely be a repeat vote. Tsipras caused a massive panic earlier this week by declaring that Greece’s existing bailout agreement was “null and void”. Tsipras in Greece, and Hollande in France both oppose the austerity measures that have gone into place in so much of the Eurozone, with Tsipras even describing them as “barbaric”.
The Bank of England voted not to continue its Quantitative Easing program on Thursday over concerns that inflation was beginning to outweigh the possibility of a prolonged recession. Inflation in the UK rose to 3.5 percent in March, far outpacing the BoE’s target. The UK’s economy also officially went back into recession after shrinking 0.2 percent during the first three months of this year.
In Spain, on Wednesday, the government announced it was taking a 45% controlling stake in Bankia, the country’s third largest bank and the largest real estate lender. Bond yields were spiking again in the beleaguered country as confidence in the banking sector was shaken yet again.
The US housing market continues to struggle with tightened credit conditions that are preventing buyers with otherwise good credit scores from acquiring a mortgage. New rules regarding risk retention in the mortgage lending business may well drive the fees and overall cost of obtaining a mortgage ever higher, even as interest rates continue to hit record lows.
The debate over the “fiscal cliff” is beginning to heat up with multiple Fed Presidents remarking on the subject at the Milken Institute Global Conference in Los Angeles, California last week. Chicago Fed President Charles Evans said “The cliff at the end of this year is just that writ large. Whether or not calmer heads will prevail and avoid this or do something useful, you know that’s about as big an uncertainty as I can imagine anybody facing.” Ben Bernanke, at his press conference two weeks ago, said the “fiscal cliff” is so large that “I think [there is] absolutely no chance that the Federal Reserve could or would have any ability whatsoever to offset that effect on the economy. So as I have said many times before, it’s imperative for Congress to give us a fiscal policy.”
China released trade data on Thursday that showed a marked, and drastic, slowdown in both imports and exports. Recessions across the Eurozone and a recovery in the US that just simply refuses to gain momentum are putting a serious dent in China’s exports. China is poised to experience its slowest year of economic growth in close to ten years.
Despite a decline in gasoline and distillate stockpiles, oil remained below $100 a barrel again this week. The crisis in Europe and the slowdown in China appear to have been the main contributing factors to the downward pressure there.
The euro plummeted against the US dollar this week, driven dramatically lower apparently mainly due to the continuing turmoil in Greece. The Japanese yen continued its climb higher against the US dollar.
Friday to Friday Close
| May 4th | May 11th | Net Change | |
|---|---|---|---|
| Gold | $1645.00 | $1584.00 | (61.00) – 3.71% |
| Silver | $30.40 | $28.85 | (1.55) – 5.10% |
| Platinum | $1525.00 | $1470.00 | (55.00) – 3.61% |
| Palladium | $652.00 | $600.00 | (52.00) – 7.98% |
| Dow Jones | 13038.27 | 12820.60* | (217.67) – 1.67% |
Previous year Comparisons
| May 13th, 2011 | May 11th, 2012 | Net Change | |
|---|---|---|---|
| Gold | $1493.00 | $1584.00 | 91.00 + 6.10% |
| Silver | $35.30 | $28.85 | (6.15) – 17.57% |
| Platinum | $1770.00 | $1470.00 | (300.00) – 16.95% |
| Palladium | $705.00 | $600.00 | (105.00) – 14.89% |
| Dow Jones | 12595.75 | 12820.60* | 224.85 + 1.79% |
* Current at time of writing
Here are your Short Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
|---|---|---|
| Support | 1570/1550/1520 | 28.40/28.00/27.50 |
| Resistance | 1600/1630/1650 | 29.20/30.00/30.50 |
| Platinum | Palladium | |
|---|---|---|
| Support | 1450/1400/1380 | 575/550/520 |
| Resistance | 1500/1530/1550 | 620/635/660 |
Volatility should be expected to continue and perhaps increase further. The fundamental reasons for owning precious metals continue to remain strong. Egon von Greyerz, founder and managing partner of Matterhorn Asset Management in Switzerland, told King World News this week “I don’t think people are focusing enough on the long-term consequences. The masses are just living day-to-day and hoping the current problems will go away, but they won’t. The same people who did not see the problem in 2007/2008 are now saying, ‘It’s over.’ Nothing is over.” Mr. von Greyerz continued, saying “The first consequence of the enormous deficits and massive credit bubbles is going to be hyperinflation. The hyperinflation will come as a result of governments printing unlimited amounts of money. During this hyperinflationary depression, people will see currencies falling in value against real money, gold. In a hyperinflation, nobody benefits from the money creation except the ones standing nearest to the printing press.” Mr. von Greyerz ended with “This is the first time in history that we will see hyperinflation occurring simultaneously in many countries. Previously, this type of event has been isolated to one country at any one time. Gold will be an extremely important means of survival and payment during this hyperinflationary period.” King World News also interviewed James Turk out of Europe this week. Mr. Turk had this to say regarding the state of things in the EU: “Have you seen the growing demonstrations here in Europe, Eric? So far, the protests have mainly been non-violent. They’re protesting in the streets for good reason. Eleven of the seventeen countries in the EU are in a recession. With unemployment growing to record levels in some countries, certain key European nations are definitely in a depression.” Mr. Turk continued in his interview: “Then there is the banking problem, particularly in Italy and Spain, where the banks loaded up with debt from their own government, which shows how their interests are aligned. It looks like these banks and their governments will go down together. The same applies to Japan, the UK, the US, and many other countries with zombie banks and over-leveraged governments. All of these factors make me recognize that holding physical gold is the right thing to do. Gold and silver are the only safe currencies in the world today.” Mr. Turk then closed the interview out in dramatic fashion, saying “So every month I continue to do what I have been recommending to KWN readers for years. Every month I buy some precious metals, and will continue to accumulate them as long as they remain undervalued. Of late I’ve been buying silver. It’s the better value. Note how gold has been holding support at $1650, but silver keeps slipping further below $32. The shorts and central planners are throwing everything they have at the precious metals, Eric, but they are having a hard time trying to beat up gold. Even their so-called ‘fat finger’ trade of 7500 contracts they put in on Monday didn’t break gold.” Poor economic data out of the US and fears over what shakeups the many European elections being held this weekend may result in helped push markets lower today. This may be presenting an excellent buying opportunity to pick up additional precious metals for your portfolio just as Mr. Turk has stated he continues to do. Remember that precious metals should be viewed as a long-term investment and that 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 overextend your ability to maintain ownership of your precious metals over the long term.
Trading Department – Precious Metals International, Ltd.
© 2013, Precious Metals International Ltd.
www.wwpmc.com
The Week in Review – May 11th, 2012
Posted by Worldwide Precious Metals on Monday, May 14, 2012
The Week in Review – May 4th, 2012
May 4, 2012
It was a week filled with important US economic data releases and the media spin has begun in earnest to try to minimize the damage of what turned out to be a rash of disappointments. This week’s manipulation event? During Monday’s market, expected to be quiet due to holidays in China, Japan and Europe, gold was knocked below $1,650 by a single massive trade of 750,000 troy ounces. As one trader put it, “No one who has the account size and the money to trade thousands of gold contracts would do it in one transaction – that’s just stupid.” The trade was shrugged off as a “fat finger” event and went virtually unreported in the media.
The April jobs report in the US came in worse than the March report did, with the economy adding only 115,000 jobs. The unemployment rate in the US was lowered to 8.1%, which was, of course, what the media outlets all began praising. Looking deeper at the numbers gives some cause for concern despite the decline in the unemployment rate. The labor participation rate fell to its lowest level since 1981 as many of the unemployed simply gave up trying to find a job and were therefore excluded from the calculations.
A slew of elections in Europe this weekend in Greece, France, Italy and Germany could have lasting impacts on the sovereign debt crisis that continues to plague the Eurozone. In France it appears that Francois Hollande is the front runner in the election with many already predicting he will be the victor. Mr. Hollande’s views on the effectiveness of the massive austerity measures taking place across the Eurozone may mean that the cooperation between France and Germany on economic policies for the Eurozone will be coming to an end. Elections in Greece this weekend may lead to similar attempts to renegotiate the terms of its bailout agreement, throwing additional bailout disbursements into question.
“Fiscal Cliff” is the new media buzzword being bandied about and its use can be expected to increase as US elections approach. The term is being used to describe when tax cuts and spending boosts, worth approximately half a trillion dollars, will expire at the end of the year. Many are describing the event as “Taxmageddon” and describe a scenario in which the failure to extend these programs pushes the US economy right back into official recession. It would not be surprising if, in what has become typical fashion, the US Congress takes the decision right down to the wire and comes up with a last minute plan to extend at least some of these programs.
The US housing market continues to struggle as many homeowners, burned by the housing crash when their home prices plummeted, are choosing to rent homes instead of purchasing again. Despite record low mortgage rates and rock-bottom home prices, individual home buyers appear to have become a rare creature indeed. The housing industry now seems to be pinning its recovery hopes on investors flocking in to buy distressed homes in the hopes of turning them into rental properties.
In Asia, Australia is swinging into the crosshairs for the next country to suffer economic turmoil. Albert Edwards, a strategist at Societe Generale, said “[In Australia] We see a credit bubble built on a commodity bull market based on a much bigger Chinese credit bubble. Of all the bubbles I have seen over the last 30 years in this industry, this one is even more obvious.” China is Australia’s largest export partner and a dramatic slowdown, or “hard landing” in China could drag Australia’s economy down along with it.
Crude oil dropped below $100 a barrel this week, driven down by indications that OPEC may raise production output in an attempt to bring prices down. Weak economic data out of the US also helped push prices lower.
The euro dropped sharply against the dollar again this week. The Japanese Yen moved higher against the dollar early in the week before leveling off as the week came to a close.
Friday to Friday Close
| April 27th | May 4th | Net Change | |
|---|---|---|---|
| Gold | $1664.00 | $1645.00 | (19.00) – 1.14% |
| Silver | $31.35 | $30.40 | (0.95) – 3.03% |
| Platinum | $1570.00 | $1525.00 | (45.00) – 2.87% |
| Palladium | $682.00 | $652.00 | (30.00) – 4.40% |
| Dow Jones | 13228.31 | 13046.33* | (181.98) – 1.38% |
Previous year Comparisons
| May 6th, 2011 | May 4th, 2012 | Net Change | |
|---|---|---|---|
| Gold | $1491.75 | $1645.00 | 153.25 + 10.27% |
| Silver | $35.30 | $30.40 | (4.90) – 13.88% |
| Platinum | $1786.40 | $1525.00 | (261.40) – 14.63% |
| Palladium | $716.30 | $652.00 | (64.30) – 8.98% |
| Dow Jones | 12638.74 | 13046.33* | 407.59 + 3.22% |
* Current at time of writing
Here are your Short Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
|---|---|---|
| Support | 1625/1600/1575 | 30.00/29.80/29.50 |
| Resistance | 1675/1700/1720 | 30.50/31.00/31.50 |
| Platinum | Palladium | |
|---|---|---|
| Support | 1520/1500/1450 | 650/625/600 |
| Resistance | 1550/1580/1600 | 670/700/720 |
Volatility should be expected to continue and perhaps increase further. The fundamental reasons for owning precious metals continue to remain strong. Egon von Greyerz, founder and managing partner of Matterhorn Asset Management in Switzerland, told King World News this week “I don’t think people are focusing enough on the long-term consequences. The masses are just living day-to-day and hoping the current problems will go away, but they won’t. The same people who did not see the problem in 2007/2008 are now saying, ‘It’s over.’ Nothing is over.” Mr. von Greyerz continued, saying “The first consequence of the enormous deficits and massive credit bubbles is going to be hyperinflation. The hyperinflation will come as a result of governments printing unlimited amounts of money. During this hyperinflationary depression, people will see currencies falling in value against real money, gold. In a hyperinflation, nobody benefits from the money creation except the ones standing nearest to the printing press.” Mr. von Greyerz ended with “This is the first time in history that we will see hyperinflation occurring simultaneously in many countries. Previously, this type of event has been isolated to one country at any one time. Gold will be an extremely important means of survival and payment during this hyperinflationary period.” King World News also interviewed James Turk out of Europe this week. Mr. Turk had this to say regarding the state of things in the EU: “Have you seen the growing demonstrations here in Europe, Eric? So far, the protests have mainly been non-violent. They’re protesting in the streets for good reason. Eleven of the seventeen countries in the EU are in a recession. With unemployment growing to record levels in some countries, certain key European nations are definitely in a depression.” Mr. Turk continued in his interview: “Then there is the banking problem, particularly in Italy and Spain, where the banks loaded up with debt from their own government, which shows how their interests are aligned. It looks like these banks and their governments will go down together. The same applies to Japan, the UK, the US, and many other countries with zombie banks and over-leveraged governments. All of these factors make me recognize that holding physical gold is the right thing to do. Gold and silver are the only safe currencies in the world today.” Mr. Turk then closed the interview out in dramatic fashion, saying “So every month I continue to do what I have been recommending to KWN readers for years. Every month I buy some precious metals, and will continue to accumulate them as long as they remain undervalued. Of late I’ve been buying silver. It’s the better value. Note how gold has been holding support at $1650, but silver keeps slipping further below $32. The shorts and central planners are throwing everything they have at the precious metals, Eric, but they are having a hard time trying to beat up gold. Even their so-called ‘fat finger’ trade of 7500 contracts they put in on Monday didn’t break gold.” Poor economic data out of the US and fears over what shakeups the many European elections being held this weekend may result in helped push markets lower today. This may be presenting an excellent buying opportunity to pick up additional precious metals for your portfolio just as Mr. Turk has stated he continues to do. Remember that precious metals should be viewed as a long-term investment and that 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 overextend your ability to maintain ownership of your precious metals over the long term.
Trading Department – Precious Metals International, Ltd.
© 2013, Precious Metals International Ltd.
www.wwpmc.com
The Week in Review – May 4th, 2012
Posted by Worldwide Precious Metals on Friday, May 4, 2012
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