PPMI Week In Review

March 2, 2012
“The following text is taken from Precious Metals International, LTD’s weekly memo titled “The Week in Review”.
The text is duplicated here as a courtesy to you, our customer, and is not intended as a solicitation to buy or sell. The
original memo can be viewed at pmilimited.com and a new one is released every Friday.

The Week in Review

1. What a week! It was a phenomenal week in precious metals right up until Wednesday when
it looked poised to explode. As Federal Reserve Chairman Ben Bernanke was addressing the
US Congress on Wednesday morning, a single, “not for profit” seller reportedly came in and
sold a massive amount of gold in a single trade. It looks like “Da Boyz” are getting desperate.
2. The initial jobless claims data looked like a street corner numbers game this week. The figure
was reported as “edging slightly lower” by 2000 jobs. Since last week’s figures were revised
upward by the same 2000 jobs, that means essentially there was a net change of exactly
0. February’s official employment report is not due out until March 9, delayed as a result of
the extra day this Leap Year.
3. US manufacturing growth dropped in February according to the Institute for Supply Management’s
index of national factory activity, ramping up fears that the recovery still has some
severe headwinds to get through. The Commerce Department reported that consumer spending
rose only by 0.2 percent in January, perhaps due to rising fuel prices and, surprisingly,
increasing rent costs. Fears that inflation may be higher than the government is actually reporting
may be driving consumers to cut back on spending once again.
4. In Europe, the same banks that took advantage of the latest LTRO from the European Central
Bank to borrow massive amounts of cheap euros, turned around and deposited much of the
money they borrowed right back with the ECB. The move shows just how distrustful the
European banks are of each other since they will only receive 0.25 percent on that money,
compared to close to 1% they could receive by lending it out for 3 months.
5. According to RealtyTrac, 24 percent of all home sales in the 4th quarter of 2011 were distressed.
According to CoreLogic, 22.8 percent of all residential properties with a mortgage
were in “negative equity” where more is owed on the mortgage than the property is worth
and another 2.5 million borrowers have less than 5 percent equity. All of this adds up to a
potentially abysmal spring in the real estate market as none of these “negative equity” homeowners
will be able to sell their home and “move up” to larger homes.
6. Crude oil continues to stay in the mid-$100 a barrel range. An unconfirmed Iranian report on
Thursday that a pipeline in Saudi Arabia had exploded sent prices soaring before the Saudi
government refuted the report, showing just how fast the tension over events in the Middle
East can drive prices higher.
7. The euro managed to climb higher for much of the week against the dollar basically on news
that Greek had not triggered Credit Default Swap payments…yet. The end of the week saw
the euro reverse course against the dollar however as news broke that Spain would lower its
deficit target beyond that originally agreed to. The yen continued its slide downward against
the dollar, diving sharply lower at the end of the week.
Friday to Friday Close
February 24th March 2nd Net Change
Gold $1776.00 $1709.00 (67.00) – 3.77%
Silver $ 35.35 $ 34.50 (0.85) – 2.40%
Platinum $1715.00 $1690.00 (25.00) – 1.46%
Palladium $ 710.00 $ 710.00 0.00 + 0.00%
Dow Jones 12982.95 12976.06* (6.89) – 0.05%
Month End to Month End Close
January 31st February 29th Net Change
Gold $1737.00 $1710.00 (27.00) – 1.55%
Silver $ 33.25 $ 34.55 1.30 + 3.91%
Platinum $1600.00 $1690.00 90.00 + 5.63%
Palladium $ 686.00 $ 705.00 19.00 + 2.77%
Dow Jones 12632.91 12952.07 319.16 + 2.53%

Previous year Comparisons
Mar. 3rd 2011 Mar. 2nd 2012 Net Change
Gold $1416.00 $1709.00 293.00 + 20.69%
Silver $ 34.33 $ 34.50 0.17 + 0.50%
Platinum $1830.00 $1690.00 (140.00) – 7.65%
Palladium $ 812.00 $ 710.00 (102.00) – 12.56%
Dow Jones 12,258.20 12976.06* 717.86 + 5.86%
* Current at time of writing
Here are your Short Term Support and Resistance Levels for the upcoming week.
Gold Silver
Support 1705/1690/1650 34.30/33.80/33.50
Resistance 1725/1750/1790 35.50/36.00/37.00
Platinum Palladium
Support 1675/1650/1620 700/660/640
Resistance 1720/1750/1800 725/750/780

Volatility should be expected to continue. Despite the blatant attempt on Wednesday to
force massive panic selling in gold and silver, the metals appear to have weathered the storm.
The media tried to spin Wednesday’s manipulation as being the result of what Ben Bernanke “did
not say” regarding more quantitative easing while he was in front of the US Congress. The media
was quick to jump on the “gold bubble has finally popped” bandwagon, but the cracks are
starting to show in that tired, old façade. Industry analysts and gold fund managers are all publicly
acknowledging that a single, “not for profit”, seller came into the market as Bernanke was
speaking and unloaded an unusually large amount of gold in a single trade designed to deliberately
smash down the price. The sheer stupidity of such a move, coming as gold was spiking
higher for the day, screams “MANIPULATION!” Once the initial panic wore off, savvy investors,
led by China as usual, recognized an opportunity to buy and prices began to stabilize again
as they scooped up the bargains. The fundamentals supporting higher precious metals prices remain
strong. The ECB printing presses are still running at full tilt, and the banks that are borrowing
their cheap money are apparently not even lending it out to each other. They chose instead
to park it right back with the ECB at a ridiculously low rate rather than lend the money out
themselves. Discrepancies are cropping up in the US jobs numbers which have been paraded as
a sign that the US economy is improving. To paraphrase Mr. Bernanke’s statements on Wednesday,
statistically the US economy has not been growing at a fast enough rate to lend support to
the current “official” unemployment data. In the Middle East, tensions remain high between Iran
and just about every other country in the region. Iran reported on Thursday that an explosion had
occurred at a Saudi Arabian oil pipeline. The Saudi regime was quick to refute that report, but
the immediate spike in oil prices that occurred on the headline shows just how trading on headlines
and emotion can massively increase the volatility in these uncertain times. In Europe, 25
EU states signed a pact that will supposedly help “prevent a repetition of the sovereign debt crisis”,
according to Herman Van Rompuy, President of the European Council. The political ploys
have already begun among the countries that signed the pact on how to modify it so that it is less
strict, and the UK and Czech Republic refused to sign altogether. In Spain, Prime Minister
Mariano Rajoy lowered Spain’s target deficit for 2012 below what was agreed to under the EU’s
push for austerity. Thomas Klau, head of the European Council on Foreign Relations, said “It’s
the first step for undermining the credibility of a system which has not even had time to accumulate
any credibility capital” apparently in reference to the recently signed pact. Mr. Rajoy said,
when asked whether he had discussed the announcement with other European Leaders, “I’m not
going to tell the other presidents or heads of state about the deficit figure that will be included in
our budget. I don’t have to. It’s a sovereign decision. I’ll tell the [European] Commission in
April.” Expect the extreme volatility to continue as the world global financial system continues
to flounder amid politics as usual. Look for buying opportunities, such as the one presented on
Wednesday, to take advantage of what may be seen as extremely cheap prices for precious metals
if analysts’ projections for this year are accurate. Remember that precious metals should be
viewed as a long-term investment and that the key to profitability through the ownership of
physical precious metals is to actually own the physical products and to hold them for the long
term. Never overextend your ability to maintain ownership of your precious metals over the long
term.
Trading Department – Precious Metals International, Ltd.

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