Apmex Gold & Silver Market Report - 8/15/2011

The following is a commentary from APMEX

APMEX Morning Gold & Silver Market Report -- 8/15/2011
(Peter LaTona), APMEX - Commentaries

40th Anniversary of Coming off the Gold Standard!

Forty years ago today, President Richard Nixon signed into a law a bill that would take the United States off the gold standard and signal to the rest of the world the end of the Bretton Woods agreement. The Bretton Woods agreement had fixed the price of the U.S. dollar to gold and the price of gold at $35 an ounce. The gold-fixed U.S. dollar had been the foundation of the global economy. Prior to 1971, there was an unspoken agreement amongst foreign treasuries not to ask for gold, which could produce a gold run. However in 1971, with the U.S. facing accelerating inflation and the expense of the Vietnam War, other countries began to lose faith in the U.S. dollar and began asking for payments in gold. Fearing a run on gold would deplete their reserves along with a deficit trade imbalance with Japan; the Nixon administration went off the gold standard in order to devalue the U.S. dollar, thus improving on the trade imbalance. In the time since this agreement was signed, gold prices have climbed 5000%, while the purchasing power of the U.S. dollar has continually eroded.

U.S. stock futures were up in early morning hours, but have retreated on the report that New York manufacturing contracted for a third month in a row. The "Empire State" general business conditions index fell to negative 7.72 from a negative 3.76 the previous month. Economists had expected a rise to zero, so this represents a ten point swing off expectations.

The big event this week is tomorrow's meeting between the leaders Germany and France. They are expected to come up with new plans to solve the euro zone debt crisis. One idea that has been floated is the creation of a euro bond. Many analysts see this as a positive development, but Germany has indicated that in their view, this is not an option.

At 8AM (CT) the APMEX precious metal prices were:

Gold price - $1,741.70 -- down $2.90
Silver price - $39.31 -- up 9 cents
Platinum price - $1,797.00 -- up 30 cents
Palladium price - $753.50 -- up $3.30

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Mid-Day Gold & Silver Market Report -- 8/15/2011
(Timothy Oakes), APMEX - Commentaries

ECB BUYS BONDS

The European Central Bank announced that last week it began buying Italian and Spanish securities. According to Christoph Rieger, head of fixed-income strategy at Commerzbank AG in Frankfurt, "The market optimists will interpret this number as good news as it underscores the ECB's resolve...Equally, the pessimists will point out that it is bad news as it shows how much money the ECB had to commit for the yield compression seen." This came about primarily due to a failure of politicians to convince investors that the debt crisis could be contained.

In world news, Libyan rebels have announced they have basically cut off Muammar Gaddafi's two main supply routes. This is the rebels' boldest advance since the uprising began. Rebels lack the manpower for an assault on Tripoli but are hopeful their news will inspire an uprising or a total surrender of power. Also, Pakistan gave China access to the "stealth" helicopter during the Osama Bin Laden raid, even though they were told implicitly to not allow that to happen. Pakistan is an ally in the region to the United States, but they are upset over the raid and view China a bit more favorably.

At 1:15 PM (CT) the APMEX precious metal prices were:

Gold price - $1,769.00 -- up $24.40.
Silver price - $39.69 -- up $0.47.
Platinum price - $1,800.40 -- up $3.70.
Palladium price - $749.70 -- down $0.50.

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Closing Gold & Silver Market Report -- 8/15/2011
(Craig C. Calvin), APMEX - Commentaries

US STOCKS RALLY TODAY; GERMAN CHANCELLOR RESISTS SO-CALLED "EUROBONDS"

Since the Mid-Day Gold & Silver Market Report posted by APMEX at 1:15 PM, the spot price of gold has risen from $1,769.00 to $1,770.50 (up $25.90 overall for the day) and the spot price of silver has risen from $39.69 to $40.04 (up $0.82 for the day).

Reversing the massive drop seen last week, U.S. stocks rallied today amid news of some major mergers and acquisitions, including a plan by Google to purchase Motorola Mobility and Time Warner Cable's intention to acquire Insight Communications from the Carlyle Group. The Dow rose 213.88 points and the S&P gained 25.68 points in response, although both indexes are still lower than usual for this time of year and August looks like it could end as the worst month for the indexes since May of 2010. Art Cashin with UBS Financial Services indicated that today's rally might also be the result of investors with misplaced optimism about Tuesday's meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy about the euro zone debt crisis, saying, "...they might have their hopes too high [as] they're hoping something can be worked out." Cashin also offered a warning, stating, "What we're seeing right now is a rebound, but if you go back to the ‘87 crash, we rebounded 6 percent the next day and 10 percent the day after that, but by December, we were headed back for another low. So you want to be very careful."

Speaking of the euro zone debt crisis, German Chancellor Merkel is feeling the pressure from some business groups in Germany to push for an issuance of what some are referring to as "Eurobonds," which would be bonds issued jointly by euro zone countries. Many experts are saying that such a common bond issuance would allow euro zone members to borrow at affordable rates, thereby solving the current debt crisis. However, the German government is strongly against the idea of issuing "Eurobonds," fearing that such a move would increase borrowing costs for Germany while also reducing the incentive for troubled euro zone countries (such as Greece) to make necessary economic reforms. A spokesman for the German government insisted that there would be no discussion of such jointly issued bonds during the meeting between Chancellor Merkel and President Sarkozy tomorrow.

At 4:43 pm (CT), the APMEX precious metals spot prices were:

· Gold - $1,770.50 - Up $25.90

· Silver - $40.04 - Up $0.82

· Platinum - $1,811.50 - Up $14.80

· Palladium - $751.60 - Up $1.40