PPMI Week In Review

“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.

May 4, 2012

The Week in Review

1. It was a week filled with important US economic data releases and the media spin has begun
in earnest to try to minimize the damage of what turned out to be a rash of disappointments.
This week’s manipulation event? During Monday’s market, expected to be quiet due to holidays
in China, Japan and Europe, gold was knocked below $1,650 by a single massive trade
of 750,000 troy ounces. As one trader put it, “No one who has the account size and the
money to trade thousands of gold contracts would do it in one transaction – that’s just stupid.”
The trade was shrugged off as a “fat finger” event and went virtually unreported in the
media.

2. The April jobs report in the US came in worse than the March report did, with the economy
adding only 115,000 jobs. The unemployment rate in the US was lowered to 8.1%, which
was, of course, what the media outlets all began praising. Looking deeper at the numbers
gives some cause for concern despite the decline in the unemployment rate. The labor participation
rate fell to its lowest level since 1981 as many of the unemployed simply gave up
trying to find a job and were therefore excluded from the calculations.

3. A slew of elections in Europe this weekend in Greece, France, Italy and Germany could have
lasting impacts on the sovereign debt crisis that continues to plague the Eurozone. In France
it appears that Francois Hollande is the front runner in the election with many already pre-
dicting he will be the victor. Mr. Hollande’s views on the effectiveness of the massive austerity
measures taking place across the Eurozone may mean that the cooperation between
France and Germany on economic policies for the Eurozone will be coming to an end. Elections
in Greece this weekend may lead to similar attempts to renegotiate the terms of its bailout
agreement, throwing additional bailout disbursements into question.

4. “Fiscal Cliff” is the new media buzzword being bandied about and its use can be expected to
increase as US elections approach. The term is being used to describe when tax cuts and
spending boosts, worth approximately half a trillion dollars, will expire at the end of the year.
Many are describing the event as “Taxmageddon” and describe a scenario in which the failure
to extend these programs pushes the US economy right back into official recession. It
would not be surprising if, in what has become typical fashion, the US Congress takes the
decision right down to the wire and comes up with a last minute plan to extend at least some
of these programs.

5. The US housing market continues to struggle as many homeowners, burned by the housing
crash when their home prices plummeted, are choosing to rent homes instead of purchasing
again. Despite record low mortgage rates and rock-bottom home prices, individual home
buyers appear to have become a rare creature indeed. The housing industry now seems to be
pinning its recovery hopes on investors flocking in to buy distressed homes in the hopes of
turning them into rental properties.

6. In Asia, Australia is swinging into the crosshairs for the next country to suffer economic turmoil.
Albert Edwards, a strategist at Societe Generale, said “[In Australia] We see a credit
bubble built on a commodity bull market based on a much bigger Chinese credit bubble. Of
all the bubbles I have seen over the last 30 years in this industry, this one is even more obvious.”
China is Australia’s largest export partner and a dramatic slowdown, or “hard landing”
in China could drag Australia’s economy down along with it.

7. Crude oil dropped below $100 a barrel this week, driven down by indications that OPEC may
raise production output in an attempt to bring prices down. Weak economic data out of the
US also helped push prices lower.

8. The euro dropped sharply against the dollar again this week. The Japanese Yen moved
higher against the dollar early in the week before leveling off as the week came to a close.

Friday to Friday Close
April 27th May 4th Net Change
Gold $1664.00 $1645.00 (19.00) – 1.14%
Silver $ 31.35 $ 30.40 (0.95) – 3.03%
Platinum $1570.00 $1525.00 (45.00) – 2.87%
Palladium $ 682.00 $ 652.00 (30.00) – 4.40%

Dow Jones 13228.31 13046.33 (181.98) – 1.38%
Previous year Comparisons
May 6th 2011 May 4th 2012 Net Change
Gold $1491.75 $1645.00 153.25 + 10.27%
Silver $ 35.30 $ 30.40 (4.90) – 13.88%
Platinum $1786.40 $1525.00 (261.40) – 14.63%
Palladium $ 716.30 $ 652.00 (64.30) – 8.98%
Dow Jones 12638.74 13046.33 407.59 + 3.22%

Here are your Short Term Support and Resistance Levels for the upcoming week.
Gold Silver
Support 1625/1600/1575 30.00/29.80/29.50
Resistance 1675/1700/1720 30.50/31.00/31.50
Platinum Palladium
Support 1520/1500/1450 650/625/600
Resistance 1550/1580/1600 670/700/720

Volatility should be expected to continue and perhaps increase further. The fundamental reasons
for owning precious metals continue to remain strong. Egon von Greyerz, founder and managing
partner of Matterhorn Asset Management in Switzerland, told King World News this week “I
don’t think people are focusing enough on the long-term consequences. The masses are just living
day-to-day and hoping the current problems will go away, but they won’t. The same people
who did not see the problem in 2007/2008 are now saying, ‘It’s over.’ Nothing is over.” Mr. von
Greyerz continued, saying “The first consequence of the enormous deficits and massive credit
bubbles is going to be hyperinflation. The hyperinflation will come as a result of governments
printing unlimited amounts of money. During this hyperinflationary depression, people will see
currencies falling in value against real money, gold. In a hyperinflation, nobody benefits from
the money creation except the ones standing nearest to the printing press.” Mr. von Greyerz
ended with “This is the first time in history that we will see hyperinflation occurring simultaneously
in many countries. Previously, this type of event has been isolated to one country at any
one time. Gold will be an extremely important means of survival and payment during this hyperinflationary
period.” King World News also interviewed James Turk out of Europe this week.

Mr. Turk had this to say regarding the state of things in the EU: “Have you seen the growing
demonstrations here in Europe, Eric? So far, the protests have mainly been non-violent. They’re
protesting in the streets for good reason. Eleven of the seventeen countries in the EU are in a
recession. With unemployment growing to record levels in some countries, certain key European
nations are definitely in a depression.” Mr. Turk continued in his interview: “Then there is the
banking problem, particularly in Italy and Spain, where the banks loaded up with debt from their
own government, which shows how their interests are aligned. It looks like these banks and their
governments will go down together. The same applies to Japan, the UK, the US, and many other
countries with zombie banks and over-leveraged governments. All of these factors make me recognize
that holding physical gold is the right thing to do. Gold and silver are the only safe currencies
in the world today.” Mr. Turk then closed the interview out in dramatic fashion, saying
“So every month I continue to do what I have been recommending to KWN readers for years.

Every month I buy some precious metals, and will continue to accumulate them as long as they
remain undervalued. Of late I’ve been buying silver. It’s the better value. Note how gold has
been holding support at $1650, but silver keeps slipping further below $32. The shorts and central
planners are throwing everything they have at the precious metals, Eric, but they are having a
hard time trying to beat up gold. Even their so-called ‘fat finger’ trade of 7500 contracts they put
in on Monday didn’t break gold.” Poor economic data out of the US and fears over what shakeups
the many European elections being held this weekend may result in helped push markets
lower today. This may be presenting an excellent buying opportunity to pick up additional precious
metals for your portfolio just as Mr. Turk has stated he continues to do. 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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