Apmex Gold & Silver Market Report -- 8/4/2011

The following is a commentary from APMEX

APMEX Morning Gold & Silver Market Report - 8/4/2011
(Ryan Schwimmer), APMEX - Commentaries

IS WALL STREET SIGNALING A NEW RECESSION?

Stock futures are down this morning, and have remained so after the jobless claims report was released. The report showed a drop in new claims, albeit a small drop, and the four-week moving average fell to its lowest level since April. Gold and silver are both holding on to gains, gold near a record high yet again. Analysts from Commerzbank Commodity Research said in a note, "Gold is still proving its character as a store of value in the current market environment, marked by equity markets tumbling sharply in part and continued high risk aversion."

Spain had a successful bond auction, though not without issue. The country's cost of borrowing is rising to levels near unsustainable -- around 6%. Some analysts say that if the level reaches 7%, it would force Spain to ask for a bailout, following in the footsteps of Portugal and Ireland.

The editor-in-chief of Marketwatch says that when looking at economic numbers, it appears as though stocks are "pricing in a new recession." He adds that the next few months could be a "wild ride" in a typically-volatile season.

At 8:02 am (CT) the APMEX precious metals spot prices were:

Gold - $1,676.80 -- Up $11.50.
Silver - $41.98 -- Up $0.17.
Platinum - $1,755.50 -- Down $29.50.
Palladium - $783.40 -- Down $13.80.

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Mid-Day Gold & Silver Market Report -- 8/4/2011
(Timothy Oakes), APMEX - Commentaries

MARGINAL IMPROVEMENT IN JOBS DATA FUELS RECESSION TALK

The main concern of economists regarding the jobless claims data is the proximity to the 400,000 range. There does not appear to be any good economic news that would lead them to think there would be a major drop in benefits claims. The downward trend is a step in the right direction, just not a big enough step in most analysts' eyes. According to Scott Brown, Chief Economist at Raymond James in St. Petersburg, FL, "I don't think there's anything magical about 400,000... The four-week average is suggesting lackluster to modest job growth. We'd love to see them moving below 350,000. You're starting to hear more announcements of layoffs, but they're still relatively concentrated in a handful of large companies. The real problem is the lack of new hiring, which is absolutely critical. We've seen some improvement with smaller firms hiring more people again."

The stock markets are viewing a recession as likely, as prices have continued to decline, hitting their lowest points in almost two years. The concern has driven a number of investors to Treasuries, which is causing inflation concerns with the Swiss Franc and Japanese Yen. Mike Ryan, Chief Investment Strategist at UBS Wealth Management Americas, said, "The mood right now is gloomy...The burden of proof is for better data that show the economy is not falling into recession. Tomorrow's payroll report is crucial. If we see another disappointment, the stock market will have significant downside from here."

The concerns hitting the marketplace are influencing gold prices as well. The news that central banks are offering more incentive to offset global debt crises helps gold's appeal as an asset that retains value in times of monetary depreciation. UBS released a statement to its investors that said, "The potential for additional safe-haven flows stemming from central bank interventions in FX (foreign exchange) markets adds a significant new dimension to our positive outlook for gold...Without doubt, it gives further weight to holding real hard assets over paper assets."

At 12:01 pm (CT) the APMEX precious metals spot prices were:

Gold - $1,656.30 -- Down $9.00.
Silver - $39.79 -- Down $2.03.
Platinum - $1,734.10 -- Down $50.90.
Palladium - $754.50 -- Down $42.60.

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Closing Gold & Silver Market Report -- 8/4/2011
(Craig C. Calvin), APMEX - Commentaries

STOCKS PLUMMET IN MASSIVE MARKET CORRECTION; RECESSION FEARS GROW

In what is being called a "full-fledged correction," stocks plummeted today as a stock market selloff the likes of which hasn't been seen since the recession in 2009 took place. Investor fears about both the possibility of an imminent recession and the ongoing debt crisis in Europe resulted in a 4.31% drop in the Dow, a 4.78% drop in the S&P 500, a NASDAQ drop of 5.08%. One market strategist with Lord Abbett Co. said about the selloff, "People are throwing in the towel because they can't find relief on any front."

Speaking of recession fears, economists at Bank of America Merrill Lynch are warning that the soon-to-come loss of unemployment benefits for approximately 3.71 million people in this country will add to the economy's slowdown and push the U.S. closer to a recession. According to the bank, the people known as the "99ers," who have exceeded normal unemployment benefits and are currently receiving benefits through an emergency 99-week extension, are unlikely to receive another extension in the current political climate. In a note to clients, economist Josh Dennerlein stated, "This will act as a hit to income, hurting consumption growth in the first half of the year."

In accordance with its role as a financial safe haven, the price of gold dipped today as investors hit by the drastic stock market tumble relied on selling the precious metal in order to cover their other market obligations. Trader Matt Zeman with Kingsview Financial said, "The selling got so hard in equities and other markets that people are being forced to cover positions and meet margin calls."

At 5:00 pm (CT), the APMEX precious metals spot prices were:

· Gold - $ 1,650.40 - Down $14.90

· Silver - $38.96 - Down $2.86

· Platinum - $1,724.90 - Down $60.10

· Palladium - $748.50 - Down $48.60