PPMI Precious Metals Week In Review

PMI: The Week in Review

1. Another week, another manipulation event it seems. The Federal Open Market Committee
released its minutes from their latest meeting this week. The minutes were virtually a
photocopy of the last set of minutes, and once again, precious metals plummeted during their
release. The damage was quickly undone, especially after Ben Bernanke began his press
conference, with metals reversing their direction to begin climbing higher off their lows as he
once again reiterated that further Quantitative Easing remains on the table as an option.

2. Initial claims for state unemployment once again did not live up to economists’ expectations
last week. The Labor Department revised the previous week’s figures upward which led to a
net decline in applications of only 1,000, well below economists forecast for a decline of
11,000. The four week moving average of new unemployment claims, considered a better
gauge than the weekly reports, rose to its highest level since early January.

3. In France, Francois Hollande appears to be in the lead over Nicolas Sarkozy for the French
Presidency after last weekend’s first round of voting. Mr. Hollande announced on
Wednesday that if he was elected he would seek to renegotiate the fiscal treaty agreed to last
month between 25 of the Eurozone member countries. German Chancellor Angela Merkel
said on Friday “The fiscal pact has been negotiated; it was signed by 25 government heads
and is already ratified by Portugal and Greece. Parliaments all over Europe are about to
adopt it. Ireland has a referendum on it at the end of May. It is not renegotiable.” Further
pressuring Mr. Sarkozy’s chance for re-election is the fact that France’s unemployment rate
jumped to its highest level since the late 1990’s.

4. Late on Thursday, Standard & Poor’s downgraded, for the second time this year, Spanish
sovereign debt by two notches and put the country on negative outlook. On Friday S&P
denied that it had not taken the recent reforms announced by Spain into account prior to
announcing the downgrade with Moritz Kraemer, Managing Director for European
Sovereign Ratings, saying “The downturn will be longer and deeper than previously
assumed. We think that there is considerable risk in the banking system in Spain, that it
might need additional resources. Given that it is quite difficult for Spanish banks to fund
themselves in the interbank market, you might wonder where those resources will come from
and whether private investors…would be willing to provide additional capital.” Spain’s long
term debt was downgraded to BBB+ and its short term rating was lowered to A-2.

5. In a double blow to Spain, the overall unemployment rate hit 24 percent in the first quarter,
one of the worst jobless levels on the planet, and the highest for the troubled country since
early in the 1990’s. Unemployment among Spanish youth is edging up on 50%. Foreign
Minister Jose Manuel Garcia-Margallo said, in a radio interview, “The figures are terrible for
everyone and terrible for the government…Spain is in a crisis of huge proportions.”

6. According to the US Commerce Department, the US Gross Domestic Product grew at only a 2.2% annual rate during the 1st quarter of 2012, down from the 4th
quarter 2011 rate of 3 percent and below analyst’s expectations of 2.5%.
7. Governments throughout Europe seem to be toppling right and left. In the Netherlands, the
Dutch Prime Minister resigned; in Romania, the EU’s second poorest member, the fledgling
2 month old government lost a confidence vote on Friday and must now be replaced causing
the IMF to halt a review of Romania’s 5 billion euro aid package; France is just a week away
from its second round of voting and it appears that Nicolas Sarkozy is trailing his opponent.
8. Crude oil continued to hold its ground in the mid-$100 a barrel range this week despite a
larger than expected increase in crude inventories.
9. Oddly, the euro pushed higher for most of the week against the dollar, but looks to be
reversing that trend on news of the Spanish downgrade and rising Italian bond yields. The
yen pushed higher against the dollar this week as well, with an announcement of further
easing by the Bank of Japan on Friday seemingly having no weakening effect.

Friday to Friday Close
April 20th
April 27th

Net Change
Gold $1642.00 $1664.00 22.00 + 1.34%
Silver $ 31.65 $ 31.35 (0.30) – 0.95%
Platinum $1580.00 $1570.00 (10.00) – 0.63%
Palladium $ 675.00 $ 682.00 7.00 + 1.04%
Dow Jones 13029.26 13235.54* 206.28 + 1.58%
Previous year Comparisons
Apr. 29th
2011 Apr. 27th
2012 Net Change
Gold $1556.00 $1664.00 108.00 + 6.94%
Silver $ 48.58 $ 31.35 (17.23) – 35.47%
Platinum $1865.00 $1570.00 (295.00) – 15.82%
Palladium $ 792.00 $ 682.00 (110.00) – 13.89%
Dow Jones 12810.54 13235.54* 425.00 + 3.32%

* Current at time of writing
Here are your Short Term Support and Resistance Levels for the upcoming week.
Gold Silver
Support 1650/1620/1600 30.80/30.00/29.50
Resistance 1670/1700/1725 31.50/32.00/32.60
Platinum Palladium
Support 1550/1520/1500 660/630/610
Resistance 1600/1625/1650 690/710/730
Volatility should be expected to continue and perhaps increase further. The manipulation
attempts against gold and silver have become so blatantly obvious that it borders on ridiculous.
As John Embry said in an interview with King World News on Wednesday, “I would dare say
that the manipulation [of gold] today is perhaps more blatant and there is more of it than I’ve
ever seen. They [the manipulators] don’t care anymore. You see these 3 o’clock in the morning
precipitous drops. You see drops when the COMEX opens and when the London PM fix is in.
There are always these times they attack, and no market that wasn’t being manipulated would
trade with that regularity. I am of the mind that the paper guys have overplayed their hand and
they have pushed the price too low. The people in the East, in particular, the Russians, the
Chinese, etc., know perfectly well the situation. They are using this as a wonderful opportunity
to take on more and more physical at what I would consider to be bargain prices.” Mexico added
16.8 metric tons of gold to its reserves, Russia: 16.5 tons, Turkey: 11.5 tons, Kazakhstan: 4.3
tons, Ukraine: 1.2 tons, Tajikistan: 0.4 ton and Belarus: 0.1 ton in March according to date from
the IMF. Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland,
said “We expect that the recent trend of the official sector being a net buyer will continue in the
medium and long term. Gold will continue to be a preferred central bank reserve asset. It is
currency protection and stabilization.” Once again gold and silver were manipulated downward
at the release of the Federal Open Market Committee minutes, and this time apparently wise
investors were ready to take advantage of the buying opportunity. Even before Ben Bernanke
began speaking at his press conference, both metals had already overcome the manipulative
pressure and begun moving higher. The FOMC minutes were a virtual duplicate of the previous
ones, and Bernanke made a point to reiterate at his press conference following the release of the
minutes that further easing measures continue to remain on the table as tools to use in the event
that the US economic recovery stumbles. On Thursday the unemployment data was worse than
expected; on Friday the US GDP figures came in worse than expected; foreclosure activity is on
the rise once again now that the “robo-signing” scandal is over and done with. All of these
sound like stumbling blocks to us. The situation, not only in Spain, but apparently throughout
the entire Eurozone, is rapidly deteriorating and the bickering between the different member
countries appears to be escalating. It is becoming apparent that the austerity measures the debt
laden member countries are being forced to implement are doing more harm than good, crippling
their economies and sending them deeper into recession rather than doing anything to alleviate
their budget deficits. Analysts such as James Turk, John Embry, Ted Butler and more continue
to compare the current state of the precious metals market to a coiled spring that is reaching its
release point. Their expectations are that when that coiled spring does turn loose; it will do so
suddenly, violently, and in the upward direction. Wise investors appear to be following Russia
and China’s example, adding physical precious metals to their portfolio as each buying
opportunity is presented. 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.
This is not a solicitation to purchase or sell.
© 2012, Precious Metals International, Ltd.

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