Assets across the financial landscape surged on Thursday

Assets across the financial landscape surged on Thursday following Fed Chairman Ben Bernanke’s announcement of actions the central bank will take to boost the sluggish economy. The precious metals complex experienced significant gains with gold having spiked 2% and silver settling the day nearly 4.5% higher by the end of the trading session. Platinum and palladium experienced sharp gains as well but continue to be largely supported by the labor dispute that’s playing out in South Africa. At the conclusion of the two-day FOMC meeting the Fed announce the heavily anticipated third round of quantitative easing saying that, beginning today, the Fed will purchase $40 billion worth of Mortgage Backed Securities per month. The Fed also announced they will look to keep key interest rates near zero until at least 2015 while also continuing Operation Twist aimed at helping to lower mortgage rates to stimulate the housing market. While the long and short-term effects of the Fed’s decision will no doubt be debated between both sides of the isle, especially heading into the election, the only thing that seems to be suffering is the U.S. dollar. The euro is already up .91% on the day and is trading at $1.31. In South Africa, mine workers at Lonmin’s Marikana mine rejected the company’s wage offer and labled it an “insult”. Marikana is the site of last month’s deadly confrontation between police and protesters. AS tensions mount, Platinum has broken through the $1700 level having reached $1714.5 before falling to $1694…still up nearly 1% from yesterday’s close. The metals could see some profit taking heading into the weekend which is not totally unexpected given the recent sharp gains. On the domestic economic front we have August retail sales data, August inflation numbers, August industrial production and some consumer sentiment data on tap. Have a great day!

If employment data is the litmus test by which the Federal Reserve

If employment data is the litmus test by which the Federal Reserve will determine further stimulus measures then it would seem that last week’s poor jobs numbers would make the decision a no-brainer.  However, markets remain relatively cautious ahead of the Fed’s announcement despite this morning’s report on initial jobless claims (up 15,000 to 382,000). Gold has seen some profit taking but that is to be expected following a ~$40 surge since Friday’s jobs report. The yellow metal corrected a bit on Wednesday but has found good support around $1736 ahead of the Fed’s 12:30 pm EST policy statement.  The PGM complex continues to see the bulk of its recent support coming from the ongoing wage disputes in South Africa’ mining sector. Anglo American Platinum, the world’s #1 platinum producer, was forced to suspend operations at its Rustenburg mine as workers there are being threatened and blocked from going to work. Platinum has added more than .5% in early trading currently trading at $1653 after touching as high as $1660.50.  Palladium has added more than .5% as well and currently trades just shy of its high at $683.50. The precious metals complex should trade in tight ranges until the Fed’s announcement and while there is a chance Mr. Bernanke could avoid pushing the QE3 button, it doesn’t seem likely and there is still more room to the upside. Buckle your seatbelts and hold on to your hats…today could get quite interesting. Have a great day!

 

Markets are finding support following the German Constitutional Courts decision

Markets are finding support following the German Constitutional Courts decision to allow the European Stability Mechanism to move forward. The decision has paved the way for the heavily anticipated program to take effect in an attempt to stabilize the peripheral economies. The euro surged to a high of $1.2936 on word of the decision and remains up .33% on the day at $1.2894. The next boost for the global economic picture, as well as the U.S. economic picture, could be the FOMC meeting that begins today which many are starting to believe will result in a third round of quantitative easing when the meeting concludes on Thursday. The precious metals complex is in the green early on in today’s trading session. Gold reached a high of $1749.50 and is now trading at $1738 (up .20%) while silver reached as high as $34.145 and is now trading at $33.60. More tension in South Africa has platinum up more than 2% at $1641.50 and reaching as high as $1659. It has been reported that Anglo American Platinum’s Rustenburg operation is shut down as the mines workers have been blocked from going to work by “unidentified individuals”. Anglo American Platinum (Amplats), the world’s number one platinum producer, is the latest South African mining company to be disrupted by ongoing labor unrest. A violent confrontation between police and protestors at Lonmin’s Marikana  mine last month left 34 dead and scores wounded.

Markets have been relatively subdued but could see some choppy trading today

Markets have been relatively subdued but could see some choppy trading today as investors position themselves ahead of a number of key economic events both here at home and abroad. On Wednesday, Germany’s Constitutional Court will deliver its ruling on the European Stability Mechanism which could have a major impact on the ECB’s ability to right the ship. “Headline Risk” in the region has grown to include Dutch elections which could bring to power a less than willing participant in the bailout arena. Here in the U.S. investors are awaiting the start of the FOMC meeting which will conclude on Thursday. Expectations of a third round of quantitative easing are high as recent indications from Fed Chairman Bernanke and a weak jobs report last Friday give many reason to believe that the Fed can’t hold out any longer. Tensions in South Africa, between mining companies and the mining unions, persist and continue to support the PGM complex as platinum is now trading above $1600 while palladium is trading slightly higher than yesterday’s close at $674. Have a great day!

 

Precious metals complex looks to be cooling off a bit following Friday’s surge

The precious metals complex looks to be cooling off a bit following Friday’s surge on the back of less-than-encouraging non-farm payroll data and weak import data out of China. The U.S. economy added just 96,000 jobs in the month of August…falling well short of the 120,000 that were expected. The short-fall prompted further speculation that the Federal Reserve’s hand could be forced with regard to more economic stimulus (QE3). The Fed begins their two-day meeting on Wednesday. Chinese imports fell 2.6% in the month of July and while knee-jerk reactions pressured Asian stocks lower, they were buoyed by hopes of further stimulus by China’s central bank.  Meanwhile, investors will be focusing on Europe to start the week as a decision by the German Constitutional Court, on the legality of the European Stability Mechanism (ESM), will be Wednesday’s main event. Not surprisingly, the precious metals have seen some selling as profit-taking creeps into the market. However, the anticipation of Fed action on Thursday should provide some support for the metals. There are no economic reports on tap for the day. Have a great day!

U.S. Jobs data was released earlier this morning and showed only 96,000 were created

U.S. Jobs data was released earlier this morning and showed only 96,000 were created in the month of August. That’s well off the anticipated mark of 120,000 jobs and, though the unemployment rate fell to 8.1% from 8.3%, the labor force participation rate – the percentage of working-age persons in an economy who are employed or unemployed but looking for work – fell to its worst level in over 30 years. My arithmetic tells me that, with employment being cited as a key factor in the Federal Reserve’s decision to inject the economy with more stimulus, it’s becoming harder to make the case that the economic brain trust of this country won’t hit the QE3 button. There are no other economic reports on tap for today and frankly, if there were, it wouldn’t matter because assets across the financial landscape are surging already. The precious metals complex is well in the green early in the trading session as many begin to position themselves ahead of next week’s FOMC meeting that concludes on Thursday. Gold is up nearly 1.5% at $1730 with silver up 2.25% at 33.41. With platinum already being supported by the ongoing tensions in South Africa the white metal has been pushed even higher. Platinum flirted with the $1600 mark and is now trading at $1596. Palladium is only modestly higher at $648. Have a great weekend!

Strong support on the back of ECB President Mario Draghi’s outline of an aggressive measure to stem financial collapse

Markets across the financial landscape are seeing strong support on the back of ECB President Mario Draghi’s outline of an aggressive measure to stem financial collapse in the euro region’s peripheral economies. The bond-buying program has a new moniker, “Monetary Outright Transactions”, and will focus on short-term borrowing costs of countries like Spain and Italy which, like their benchmark 10-year borrowing costs, have soared to unsustainable levels in recent months. There are no limits on the amount of bond buying that will take place but Mr. Draghi did say the bond buying will end when objectives are met or countries fail to comply with certain requirements. The announcement caps off a little more than a month of anticipation following comments from the ECB President that he would “do whatever it takes” to save the euro. With that behind us, investors will now focus on employment figures ahead of next week’s FOMC meeting. Employment is a key factor in the QE3 equation as the Fed cited unemployment rates as a cause for concern. Earlier this morning, ADP announced private sector job growth had risen by more than 200,000 and jobless claims were reported to have fallen by 12,000….both better than expected. The U.S. government jobs data will be released tomorrow. Gold pushed above the $1700 level as the Euro strengthened on the back of the ECB announcement. The yellow metal is now trading at $1706 while silver trades around the $32.70 marks. Platinum continues to be supported as conditions in South Africa, regarding wage disputes, persist and threaten to get worse. The white metal is now trading at ~$1588. Have a great day!

 

Nearly 1.3 million new cars and trucks were purchased in the month of Augus

The PGM complex received some support following yesterday’s report of strong auto sales figures. Nearly 1.3 million new cars and trucks were purchased in the month of August, up 20% from the same time last year. GM, Ford and Chrysler all posted increases of more than 10%. However, ISM data showed manufacturing activity slumping yet again. The index slipped to 49.6 from the previous months 49.8. Markets across the financial landscape ended mixed on Tuesday as investors await a key event in Europe and the all-important government jobs data on Friday. The precious metals complex is trading slightly lower than yesterday’s close but should remain in a tight range as there are no more economic reports on tap for today. On Thursday, ECB President Mario Draghi takes center stage in a heavily anticipated meeting of Eurozone central bankers. He is expected to outline his plan for bringing borrowing costs under control. Have a great day!

While Friday’s Jackson Hole symposium, highlighted by Chairman Bernanke’s speech

Good Morning,

 

While Friday’s Jackson Hole symposium, highlighted by Chairman Bernanke’s speech, didn’t result in any definitive stimulus action by the Fed, Mr. Bernanke’s rhetoric did give investors reason to believe that QE3 is on the horizon. This promptly pushed the precious metals complex higher and with the light volume heading into the Labor Day weekend gold quickly tested the $1700 level while silver breached $32. Platinum is now above the $1550 mark and palladium was able to pare losses from earlier in the week and is now trading above $635. No longer is a crumbling economic foundation the parameter by which the Fed will decide on further monetary easing but a merely stagnant economy seems like it will be enough to tip the scales in favor of QE come the next FOMC meeting on September 12^t– 13^th. Chairman Bernanke cited unemployment, currently at 8.3%, as a cause for concern and, come Friday’s government jobs data, could further support the case for an economic booster shot. In the broader global economy, China’s government manufacturing index showed a decline to 49.2 from 50.1 indicating that factory activity is contracting. However, hopes of progress on the European front seem to have counter-balanced the concern, for now, ahead of the ECB’s highly anticipated meeting on Thursday. ECB President Mario Draghi is expected to release details of a bond buying program in the region aimed at thwarting fiscal collapse in peripheral economies and hopefully kick-starting a rally out of the current economic rut. The U.S. Markets will take in the ISM Manufacturing Index at 10:00 am EST followed by July construction spending figures. Auto Sales will come out throughout the day. Have a great day!

Gold & Silver spot prices at 6:33AM.

 

	Bid	Ask	+/-	LDN	High	Low	Close
Gold	1691.06	1691.31	0.30	06:33	1697.35	1689.53	1690.88
Silver	31.98	32.03	0.00	06:33	32.33	31.92	32.01