Apmex Gold & Silver Market Report -- 8/25/2011

The following is a commentary from APMEX

APMEX Morning Gold & Silver Market Report -- 8/25/2011
(Peter LaTona), APMEX - Commentaries

Gold Prices Continue to Move Down Overnight, then Stabilize in Early Morning Trading

Gold price headed towards $1,700 in overnight trading, but is strengthening in early morning trading, now sitting above $1,730. Platinum prices were below $1,800, but have bounced back over $1,810. Silver and palladium have rallied from negative territory and currently sit positive. One year ago, as investors anxiously awaited Ben Bernanke's Jackson Hole speech, gold prices were at $950 per ounce. Many analysts had predicted a pullback in gold prices due to its rapid climb, but most categorize this as a correction because the same factors that drove investors to safe havens are still in play long term.

The weekly jobless claim just came out this morning and once again the economists are wrong. They had expected a decline of 3,000, but instead saw an increase of 5,000 to 417,000. This surprise is attributed to the strike by Verizon workers, but it begs the question didn't the economists realize Verizon workers were on strike? The Labor department does reassure us that this is still nowhere close to a level that would indicate a recession. Stock futures had been rising, but have pulled back on the jobless claims report.

The CME raised maintenance margins for trading COMEX 100 oz gold futures by 27%. Even though margin is going up 27%, here is how it breaks down: 30 days ago when gold was around $1,600 the margin represented 3.4% of contract value. Now, with gold in the $1,730 range, this represents 4% of contract value. There has been an increase, but perhaps not as significant as the 27% would indicate.

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

Gold price - $1,739.80 -- down $19.50
Silver price - $39.89 -- up 62 cents
Platinum price - $1,806.00 -- down $21.30
Palladium price - $747.20 -- up $2.10

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Mid-Day Gold & Silver Market Report -- 8/25/2011
(Ryan Schwimmer), APMEX - Commentaries

STOCKS SLUMP; GOLD IN THE BLACK AGAIN

Gold has turned the corner into positive territory after stocks tumbled thanks to the jobless claims report. Also, as expected, most investors are focused on Federal Reserve Chairman Ben Bernanke's speech tomorrow morning, and nervousness is returning to the markets. "Clearly there has been a liquidation of excessive long positions," says Bill O'Neill of Logic Advisors. He added that the mentality of the markets is "shoot first and ask questions later ... But if you really look at the fundamental factors driving uncertainty and fears, it's all still there. All it takes is some rumor, some little rumbling," and investors are flocking back to gold.

There is a lot of speculation as to what Bernanke will say at the annual Jackson Hole, Wyoming meeting tomorrow, specifically regarding a third round of quantitative easing. Regarding gold prices, some are speculating that regardless of whether QE3 is announced, it could be favorable. The stock market is looking for a boost from QE3, however more dollars in the economy means it may take more of those dollars to buy gold. If QE3 is shot down, the stock market could take a hit, and the asset with a high negative correlation to stocks (gold) could benefit.

The situation in Libya seems to be clearing up, as rebels are now on the hunt for the all-but-ousted president, Muammar Gaddafi. The rebels are in full control of Gaddafi's compound, and are seeking a way to end fighting without any more bloodshed, though they haven't been too successful at that to this point.

At 12:30 pm (CT) the APMEX precious metals spot prices were:

Gold - $1,762.60 -- Up $3.30.
Silver - $40.92 -- Up $1.65.
Platinum - $1,822.00 -- Down $5.30.
Palladium - $755.50 -- Up $10.30.

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Closing Gold & Silver Market Report -- 8/25/2011
(Timothy Oakes), APMEX - Commentaries

TO QE3 OR NOT QE3 THAT'S THE INVESTOR'S QUESTION

Since the Mid-Day Gold & Silver Market Report, gold has maintained its position with positive gains for the day. The previous losses of gold were attributed in large part to the CME Group raising the margins on gold futures by 27%, which is its largest hike in 2 ½ years and the second increase this month. "Gold's decline with such a dramatic magnitude in such a short period of time is driven by short-term momentum investors coming out, not long-term investors," said Stanley Crouch, chief investment officer at Aegis Capital, who oversees $2 billion in assets.

There is a growing feeling that the Federal Reserve may let down those stock investors who believed there would be a commitment to step up stimulus. Some investors feel there should be further action taken to help buoy the economy taken by Ben Bernanke. However, a number of investors feel disappointment is on the horizon. According to Rob Dugger, managing partner at Hanover Investment Group LLC and a regular participant at the Jackson Hole conference, "The stock market is going to be disappointed Friday morning...It's not going to get that kind of life-buoy thrown out over the water so that it can grab hold and swim safely to shore."

The United States has clearly tried to distance itself from attempts to locate Muammar Gaddafi. According to State Department spokeswoman, Victoria Nuland, "Neither the United States nor NATO is involved in this manhunt."

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

Gold - $1,775.80 -- Up $16.50.
Silver - $41.27 -- Up $2.00.
Platinum - $1,824.50 -- Down $2.80.
Palladium - $754.00 -- Up $8.90.