Apmex Gold & Silver Market Report -- 8/19/2011

The following is a commentary from APMEX

APMEX Morning Gold & Silver Market Report -- 8/19/2011
(Peter LaTona), APMEX - Commentaries

Gold Continues to Soar as Recession Fears Escalate - Gold, silver and platinum prices are all sharply higher in overnight trading. Gold prices and December gold futures all hit record highs. Overseas equity markets were battered again overnight and U.S. stock futures are poised for a negative opening. Yesterday was a day of more disappointing economic data in the U.S., so with today being a day of no new data, the markets look to Europe anticipating more bad news from the European banking system. Ed Groshans, Managing Director of Financials at Height Analytics said yesterday on "Closing Bell", "If we do have a major sovereign debt issue...these banks in Europe, they need to recognize the true value of the sovereign debt. We can't keep fooling ourselves that it's 100 cents on the dollar. There are some hits that have to be taken, and it has to come through capital, and until we do that, you have counterparty credit risk, and you won't know what it is until we take our medicine."

J.P. Morgan has once again cut its growth estimates for the U.S. economy. They also warned that the risk of recession is "clearly elevated." Their economists slashed fourth-quarter growth from 2.5% to 1% and their first-quarter 2012 from 1.5% to 0.5%.

Governments are becoming more and more pressed to find new ways to raise revenue, and as a result, they are turning to the mining industry. According to Grant Thornton International, government intervention could threaten global mining by any of these three measures: 1) increased taxation 2) nationalization 3) environmental legislation. With gold prices already going up on global economic concerns, any supply shortages would be viewed as additional upward pressure.

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

Gold price - $1,858.80 -- up $34.80
Silver price - $42.13 - up $1.34
Platinum price - $1,869.40 -- up $21.70
Palladium price - $753.50 -- down $5.50

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Mid-Day Gold & Silver Market Report -- 8/19/2011
(Timothy Oakes), APMEX - Commentaries

RECESSION, MAYBE -- MAYBE NOT

Gold and silver prices have remained relatively even during the trading day. For the day, gold is up $31.40 and silver is up $2.15. The rise is relative to the overall concern that stocks are pricing in a potential recession, which heightens the demand for safe havens.

However, according to Abby Joseph Cohen, a senior investment strategist with Goldman Sachs, the stock market may price in a recession, but a recession is not likely. She says, "Let's be very clear, there are some fundamental worries, but our feeling is the valuation of the U.S. stock market is already pricing in a rather ugly scenario. There are many different ways to look at the mathematics of valuation, but one of them is to say at these levels on the [Standard & Poor's 500] what's priced in is many years of no earnings growth. That does not seem to us to be the most likely scenario."

Middle East concerns are not subsiding despite a proclamation from the Syrian President Bashar al-Assad that a crackdown on protests was over, yet deaths continue to mount in the country. The fighting continues in Libya, as a serious counter-attack was launched by Muammar Gaddafi to help push back rebel advances.

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

Gold price - $1,857.60 -- up $33.60
Silver price - $42.52 - up $0.95
Platinum price - $1,877.10 -- up $29.40
Palladium price - $751.10 -- down $3.10

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Closing Gold & Silver Market Report -- 8/19/2011
(Craig C. Calvin), APMEX - Commentaries

VICE PRESIDENT BIDEN REASSURES CHINA; BELGIUM ADDS TO "EURO BOND" PRESSURE

It's another record for gold today as gold futures ended the day at $1,852.20, an increase of $30.20. With a number of macroeconomic reports indicating that the U.S. economy continues to be shaky, investors have continued to turn to gold as a safe haven, and some analysts have even predicted it could hit $2,000 by next week. Meanwhile, U.S. stock indexes ended the day by extending losses into a fourth week.

In a meeting with Chinese Premier Wen Jiabao on the second day of a nine-day visit to Asia, Vice President Joe Biden assured the Premier that China has "nothing to fear" over its U.S. Treasuries investments. Premier Wen also expressed confidence in the U.S.'s stability, stating that such stability is "...in the interest of the whole world." With China being the largest foreign creditor for the U.S., the issue of China's holdings in U.S. debt has been heavily discussed between Vice President Biden and Premier Wen. Vice President Biden also told the Chinese leader that U.S. Treasuries will be taken care of "...not merely because China owns 8 percent of them, but because the Americans own 85 percent."

Belgium is adding to the pressure already being felt by Germany and France over the euro zone debt crisis. Didier Reynders, Belgium's Finance Minister, joined those who are calling for the issuance of "euro bonds" as a way to reassure markets that are currently experiencing government bond and bank share selloffs from debtor countries. Resistance to the so-called euro bonds has been strong in Germany, and German Chancellor Angela Merkel has repeatedly criticized the proposal as a "slippery slope" that could leave euro zone countries worse off than they were before.

Now that Standard & Poor's has downgraded the U.S. credit rating to AA+, stocks of countries that currently hold AAA ratings (such as Germany, Canada, and Switzerland) are experiencing a rush from investors still fearful about the worldwide economy. In a statement from EPFR Global, managing director Brad Durham stated, "At least in the developed markets space, investors are heeding the old dictum that, in tough times, you invest in the creditor, not the debtor."

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

· Gold - $1,857.30 - Up $33.30

· Silver - $43.04 - Up $2.25

· Platinum - $1,880.10 - Up $32.40

· Palladium - $755.10 - Down $3.90