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

The following is a commentary from APMEX

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

FRIDAY NIGHT'S NEWS ROCKS GLOBAL MARKETS

After nearly 4 months on CreditWatch Negative, the sovereign credit rating of the U.S. was downgraded by Standard and Poor's (S&P) late Friday night. Citing political bickering and an insufficient plan to stabilize the economy, the U.S. credit rating was changed to ‘AA+' from the top-notch ‘AAA' for the first time in history. S&P was the only one of the three major credit rating agencies to downgrade the U.S. so far, and Fitch Ratings said this morning that it will finish its review by the end of August and decide whether to downgrade at that point.

Since Asian markets opened last night, gold is sitting at a record high over $1,700/oz. Goldman Sachs has raised its forecast by 5% - 7.6% for gold prices, with its 12-month forecast showing $1,860/oz. Regarding silver, the bank released a note which said, "Over the long run, silver prices tend to track gold prices." The forecast for silver prices was raised correlating with the forecast for gold prices.

The downgrade, along with the ever-looming financial crisis in the eurozone, has stock futures pointing lower after last week's big selloff. This is all fuel for the fears of a double-dip recession and a crawling (at best) global economic recovery. While some analysts are saying that the downgrade will have only a modest impact on the markets, others disagree. Thomas Stoddard of Blackstone Group said, "I actually think it's going to end up having more of an impact that some of the news stories are suggesting. Not having the U.S. as triple-A is just going to pop up in more places and have more frictional costs than people might suspect."

At 8:15 am (CT) the APMEX precious metals spot prices were:

Gold - $1,702.20 -- Up $48.40.
Silver - $39.64 -- Up $1.32.
Platinum - $1,725.30 -- Up $6.20.
Palladium - $736.00 -- Down $7.70.

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Mid--Day Gold & Silver Market Report -- 8/8/2011
Peter LaTona), APMEX - Commentaries

GOLD CLEARS $1700 AS EQUITY MARKETS SINK

Gold prices are surging nearly 3%, as the U.S. Stock market heads the opposite direction. Gold prices continue to climb on the debt fears not only facing the U.S., but in the euro zone as well. The European Central Bank's (ECB) move to purchase Italian and Spanish bonds has not calmed the markets. "Investors are looking upon the ECB bond-buying as the first steps towards the same kind of quantitative easing program the Fed is doing. So, gold acts as the only currency that you can't print more of, and you are seeing a huge institutional demand for it," said James Rife at Haber Trilix Advisors.

Moody's credit rating service has not downgraded the U.S. debt from AAA, but they are keeping their eye on the situation and could downgrade the U.S., if they feel the U.S. plan to reduce debt at anytime losses credibility. Steven Hess of Moody's commented this morning that although they saw the plans to reduce debt as a positive step, it was not enough for them to classify the situation as stable. "If the process for further deficit reduction that is included in the budget control act produces results that are not really credible, that combined with the economic performance could potentially cause an early move on the rating," Hess told Reuters in an interview.

Meanwhile, Standard & Poor's has issued additional downgrades. The S&P has cut ratings outlook for Warren Buffet's Berkshire Hathaway, as well as a number of insurance companies and municipalities.

At 12:25 PM (CT) the APMEX precious metal prices were:

Gold price - $1,715.30 -- up $61.50
Silver price - $39.46 -- up $1.14
Platinum price - $1,724.00 -- up $4.90
Palladium price -- 728.90 -- down $14.80

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Closing Gold & Silver Market Report -- 8/8/11
(Peter LaTona), APMEX - Commentaries

DOW GIVES UP 634 POINTS -- GOLD PRICES SOAR

The U.S. stock market plunged today, fueling speculation that the Fed is going to be pressured to take action. This was the worst day since the credit crisis began last Monday and sent the Dow below 11,000. Few expect that the Fed would engage in another round of bond buying, (although it is an option), but they could choose to re-invest proceeds from maturing bonds into longer term treasuries, to put downward pressure on long-term borrowing costs. The expectation is that Tuesday's meeting will not generate a significant announcement, but pressure to act could continue to grow.

More reason to believe pressure will mount on the Fed to take action results from European Central Bank (ECB) purchasing Italian and Spanish government bonds. Please remember the ECB cannot print money like the Fed; they must use actual capital from their bank accounts. However there is the similar effect of pushing cash out into the marketplace, similar to a QE 1 & 2.

As politicians on both sides of the isle blast the Standard & Poor's decision to downgrade U.S. debt, PIMCO's co-CIO, Bill Gross applauds them for showing some "spine". "I think the S&P has demonstrated some spine: they finally got it right" Gross said in a Bloomberg television interview. He categorized the U.S. has having "enormous problems."

At 4:15 PM (CT) the APMEX precious metal prices were:

Gold price -- $1,721.80 - up $68.00
Silver price - $39.16 -- up 84 cents
Platinum price - $1,721.00 -- up $1.90
Palladium price - $720.10 -- down $23.60