PPMI Week In Review


1. The extreme volatility in the market was never more evident than this week. Thursday’s selloff
appears to have been triggered purely by panic and fear over the situation in Europe. Today’s
turnaround following the EU Summit announcement shows exactly why it is so vital to
maintain ownership of your precious metals products in times of fear and uncertainty.

2. Initial claims for unemployment dropped 6,000 last week, but some of the drop was the result
of the previous week’s figures being revised higher once again. The fact that claims still remain
at levels comparable all the way back to April only serves to reinforce the idea that the
labor market continues to show fundamental weakness.

3. The final reading for June of the Thomson Reuters/University of Michigan index on consumer
sentiment saw the index hit its lowest level of the year. Much of the drop was attributed
to households with incomes over $75,000 which, it appears, have sharply curtailed their
buying plans as economic data has weakened.

4. In the early morning hours in Brussels, Belgium, following a long night of negotiations
European Union leaders announced Friday that they had agreed to take action to bring Spain
and Italy’s escalating borrowing costs down. The agreement allows the Eurozone rescue
funds known as the EFSF and ESM to be used in a more flexible fashion, without the extra
austerity measures that have been forced upon Greece, Ireland, and Portugal. The ESM in
particular will now be able to lend directly to recapitalize banks without adding to the receiving
country’s budget deficit.

5. In a move that should, at this point, surprise no one, yet another big bank was hit with market
manipulation charges this week. Barclays settled allegations that it manipulated the key
lending rate known as LIBOR. According to the settlement, Barclays bankers and traders,
including senior managers, regularly misreported what it cost the bank to borrow money and
did so in collusion with other banks to manipulate their lending rates as well. Barclays will
pay $200 million to the Commodity Futures Trading Commission, the largest such civil fine
the CFTC has levied in history, $160 million to settle US Department of Justice charges, and
$93 million to the UK Financial Services Authority. The manipulation of LIBOR has farreaching
effects and Barclays will certainly be facing a slew of class action suits in response
to the scheme. Other banks potentially involved in the scheme are Deutsche Bank, Credit
Suisse, RBS, Lloyds and UBS.

6. JP Morgan continues to try to unwind its failed “London Whale” series of trades. Reports
now place the losses that will be endured by the bank at between $4 billion and $9 billion
dollars. Despite the escalating figure, Jamie Dimon continues to say that any losses as a result
of the failed trades can easily be absorbed by the bank.

7. The outcome of the European Summit may once again spark further outrage in Greece as
they see further evidence that the bailout conditions that they were forced to agree to now
seem to no longer be required by their surrounding neighbors that are in similar trouble. As
the fragile Greek government tries to piece itself together after its recent elections, Friday’s
announcement is sure to increase the pressure for the new Greek government to renegotiate
its current bailout agreements.

8. Crude oil pushed its way back above the $80 mark following the announcement out of the
European Summit regarding a reconfigured relief plan, particularly tailored to come to the
aid of Spain and Italy.

9. The euro tumbled lower this week amid fear and concern over the situation in Europe. The
Japanese yen moved erratically this week, spiking higher, and then dropping amid Thursday’s
selloff only to reverse course again to move higher on Friday.

Friday to Friday Close
June 22nd June 29th Net Change
Gold $1567.20 $1604.00 37.00 + 2.36%
Silver $ 26.70 $ 27.60 0.90 + 3.37%
Platinum $1453.50 $1447.00 12.00 + 0.84%
Palladium $ 606.00 $ 582.00 (24.00) – 3.96%
Dow Jones 12640.78 12834.64* 193.86 + 1.53%
Month End to Month End Close
May 31st June 29th Net Change
Gold $1563.00 $1604.00 41.00 + 2.62%
Silver $ 27.80 $ 27.60 (0.20) – 0.72%
Platinum $1415.00 $1447.00 32.00 + 2.26%
Palladium $ 612.00 $ 582.00 (30.00) – 4.90%
Dow Jones 12393.45 12834.64 441.19 + 3.56%
Previous year Comparisons
Jul 1st 2011 Jun 29th 2012 Net Change
Gold $1483.00 $1604.00 121.00 + 4.40%
Silver $ 33.70 $ 27.60 (6.10) – 18.10%
Platinum $1715.00 $1447.00 (268.00) – 15.63%
Palladium $ 757.00 $ 582.00 (175.00) – 23.12%
Dow Jones 12582.77 12834.64* 251.87 + 2.00%
* Current at time of writing

Here are your Short Term Support and Resistance Levels for the upcoming week.
Gold Silver

Support 1590/1560/1530 27.20/27.00/26.50
Resistance 1610/1630/1650 28.00/28.50/29.00
Platinum Palladium
Support 1425/1400/1380 560/550/525
Resistance 1475/1500/1520 600/615/640

Volatility should be expected to continue as this week has dramatically shown. The outcome of
the European Summit announced on Friday seems to have set off a bout of euphoria that Europe
may finally be on the path to resolving its massive sovereign debt woes. Legendary investor Jim
Rogers disagreed, telling CNBC “Just because now you have a way to get them [the banks] to
borrow even more money, this is not solving the problem; this is making the problem worse.
People need to stop spending money they don’t have. The solution to too much debt is not more
debt. All this little agreement does is give them [banks] a chance to have even more debt for a
while longer.” Mediocre jobs numbers in the US point to continuing weakness in the jobs market
and that may yet lead to a need for additional monetary easing by the Federal Reserve.
Thursday’s announcement that the Supreme Court upheld president Obama’s healthcare law on
grounds that the “individual mandate” was a tax and not a penalty may also have the unintended
effect that small businesses may begin cutting costs or putting off hiring in order to pay for their
increased healthcare costs due to items mandated by the law. US Gross Domestic Product grew
at just 1.9 percent in the first quarter and the apparently weakening job market, a slowdown in
consumer spending and the ever churning Eurozone sovereign debt crisis may indicate that
growth won’t get any better in the second quarter. Next week, the European Central Bank holds
its next policy meeting and there is growing sentiment that Mario Draghi may be contemplating
cutting the deposit rate below its current 0.25%, a tactic rarely used by Central Banks. Cutting
the deposit rates to zero, or lower, could mean the ECB would start charging financial institutions
for the money they deposit with it overnight. The expectation is that such a move might
encourage banks to start lending their cash instead of parking it with the ECB, but many think
the opposite effect, in the form of additional credit contraction, might be the result instead. In a
powerful interview with King World News, Eric Sprott of Sprott Asset Management said, when
asked what he expected going forward, “Continuing contagion, maybe with some kicking of the
can down the road, which we’ve been doing for a long time now.
But the day is coming when
we’re all going to realize that the debts can’t be paid. You’ve got to shed paper assets and you’ve
got to own physical gold and physical silver. The system is imploding on itself, but the central
planners want everyone to think it’s fine. They just lie to us. ‘We have an agreement.’ No you
don’t have an agreement. ‘We have a Spanish bank bailout plan.’ No you don’t have a Spanish
bank bailout plan. You don’t have a plan, you just say you have a plan. There is no plan. Of
course, they are probably in buying the banks stocks, just to make it look like they really do have
a plan, but there is no plan, no formalized plan, no agreed to plan. It’s all just vaporware.” The
situation in Europe seems to be gaining an air of desperation and the euphoria over this latest
bailout plan may quickly fade. Taking advantage of buying opportunities, such as those presented
on Thursday, to purchase additional precious metals products for your portfolio may help
you weather the readily apparent, and steadily oncoming, financial storm. 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. Always remember that you should 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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