Apmex Gold & Silver Market Report -- 8/1/2011

The following is a commentary from APMEX

APMEX Morning Gold & Silver Market Report -- 8/1/2011
(Ryan Schwimmer), APMEX - Commentaries
CONGRESS TO VOTE ON DEBT CEILING DEAL

President Barack Obama and congressional leaders came to an agreement on a deal to raise the U.S. debt ceiling over the weekend. The deal still has to pass the House of Representatives and the Senate to take effect, and a vote is expected later today. For now, attention is focused on whether the deal will be enough to avert a downgrade of the top-notch AAA credit rating the country holds.

The agreement raises the debt ceiling by a maximum of $2.4 trillion (in two stages), while also including spending cuts that top out at $2.4 trillion as well. Ratings agency Standard & Poor's had said previously that a reduction of spending of $4 trillion would likely maintain the AAA rating.

The Markets have reacted to the news with optimism, as U.S. stock futures are up (signaling gains when Wall Street opens) along with European and Asian stocks. Gold is trading lower on the news, coming off a record high as investors' risk appetite grew amid the optimism regarding the debt ceiling.

At 8:00 am (CT) the APMEX precious metals spot prices were:

Gold - $1,619.80 -- Down $10.40.
Silver - $39.36 -- Down $0.81.
Platinum - $1,800.50 -- Up $15.20.
Palladium - $848.10 -- Up $18.40.

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Mid-Day Gold & Silver Market Report -- 8/1/2011
(Timothy Oakes), APMEX - Commentaries
DEFAULT FEARS WANE, DOWNGRADE FEARS INTENSIFY

A Congressional vote is expected to take place later this afternoon over raising the debt ceiling and is expected to pass with strong bipartisan support. Most markets, global and national, are showing signs of relief by dodging the default concerns from the debt ceiling deadline of August 2.The default concern may be alleviated to some extent, but the fear of a credit downgrade is still ever-present as the 2.4 trillion dollar deficit reduction program has not fully met the conditions set forth by credit rating agencies Moody's and Standard and Poor's. Phil Streible, Senior Market Strategist with futures broker Lind-Waldock in Chicago, said, "We avoided the possibility of a default, but now concerns are turning to a possible downgrade."

The fear associated with not raising the debt ceiling is being tempered by the debt ceiling agreement. However, a report showed manufacturing is weaker than expected. Manufacturing output fell from an estimated 54.9 to a 50.9. This report, from the Institute for Supply Management, is a concern as the median score is 50. If the reading is above 50, it means expansion. If it is below 50, it would mean contraction. This is an important characteristic in economic growth and has tie-ins to our Gross Domestic Product. Economists are concerned, but some also point to disappointing data being tied to debt ceiling talks, as it put a number of government contract jobs in a wait-and-see status. According to Joseph LaVorgna, chief U.S. economist at Deutsche Bank, "It's definitely bad. On the badness scale, a 10 being an unmitigated disaster, I'd probably make this a six... The only thing not bad is it looks like the debt ceiling is front and center in this. There were concerns about government contracts. Are people getting paid?"

At 12:15 pm (CT) the APMEX precious metals spot prices were:

Gold - $1,625.60 -- Down $4.60.
Silver - $39.48 -- Down $0.69.
Platinum - $1,795.00 -- Up $9.70.
Palladium - $831.50 -- Up $1.80.

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Closing Gold & Silver Market Report -- 8/1/2011
(Craig C. Calvin), APMEX - Commentaries
DESPITE DEBT AGREEMENT, UNCERTAINTY RULES MARKET; GOLD IN A BULL MARKET?

Conventional wisdom was that, with all signs pointing to an agreement between Democrats and Republicans on raising the federal debt limit, the market would see a boost as business and investor confidence increased. However, today's reality was that after a brief rally this morning, stocks ended low in the face of uncertainty over whether the terms of the debt deal really do anything to address the country's deficit issues. Adding to this were fears centered around disappointing manufacturing data. Those terms, which include a $400 billion increase in the debt limit immediately, a $500 billion increase this fall, immediate spending cuts of $900 billion, and the creation of a Congressional commission to identify another $1.2 trillion in spending cuts, were described by former Under Secretary of Commerce Robert Shapiro as "a mindless way to run a government." J.J. Kinahan, managing director with TD Ameritrade, was quoted as saying, "Debt deal or no debt deal, we have some fundamental problems in the economy that we're not dealing with."

Around the world, signs are that investors are still looking to gold for safety in the midst of continuing economic turmoil. According to information acquired by Bloomberg, July 29 saw a record $113 billion in holdings of gold-backed exchange-traded products. Gold has seen a gain of 15% so far this year, outperforming Standard & Poor's GSCI gauge of 24 commodities' gain of 7.4%. Charles Morris of HSBC Global Asset Management has stated, "I would expect it to be a very popular asset at its peak, and I don't think we're anywhere near that. We think it's a bull market and we're on it."

At 4:15pm (CT), the APMEX precious metals spot prices were:

· Gold - $1,621.50 - Down $8.70

· Silver - $39.34 - Down $0.83

· Platinum - $1,794.70 -- Up $9.40

· Palladium - $831.00 - Up $1.30