PPMI Week In Review

The Week in Review Via PMI LImited

1. “We can expect a rally from here that will take our breath away.” Those are the words of
James Turk, in an interview with King World News this week. Mr. Turk is of the opinion that
world events are coming to a head and that the “summer doldrums” that precious metals have
been experiencing will soon be coming to an end as a result.
2. Eurozone finance ministers approved a loan of up to 100 billion euros to Spain so that it can
recapitalize its banks on Friday. The exact size of the loan is to be determined at a later date,
most likely in September, after audits of the Spanish banking sector can be reviewed.
3. Initial claims for unemployment spiked higher this week and, just as we surmised might be
the case in our July 13 memo, the previous week’s data which showed a steep decline was
deemed erroneous due to the July 4th holiday falling mid-week. Mid-Atlantic region manufacturing
in the US also saw a decline for the third straight month, perhaps signifying further
weakening in consumer demand.
4. Drought across the Midwest in the US is causing food prices, particularly corn and soybeans,
to spike. The drought is drastically shrinking the size of this year’s corn crop, and as oil
prices rise over Middle East tensions, Ethanol prices are on the rise as well. The end result
may be a serious spike in the price of gasoline, especially if the Middle East erupts into further
violence. The drought, if it continues unabated, may also lead to an increase in meat
prices later in the year as farmers are being forced to sell animals to reduce the feed they require.
A report by the National Agricultural Statistics Service showed that the US now has
the smallest number of cattle in almost forty years and we all know a shortage of supply
means a serious increase in prices.
5. Federal Reserve Chairman Ben Bernanke was in front of Congress this week and much of
what he had to say was negative. In one particularly amusing exchange between Mr. Bernanke
and Senator Chuck Schumer, Senator Schumer told Mr. Bernanke that “Congress isn’t
going to do it”, in reference to addressing the coming “fiscal cliff” when Bush era tax cuts
expire. Senator Schumer amusingly told the Chairman “Get to work Mr. Chairman” suggesting
that Congress is looking for the Federal Reserve to initiate additional stimulus measures
since they, themselves, are apparently deadlocked and unable to act.
6. In Asia, fears are growing that the extreme drought taking place across the United States may
trigger a repeat of the 2007/2008 food shortages. If food prices across the globe begin to
spike as a result of droughts in important agricultural regions, then inflation may well become
entrenched in the global economy.
7. The European Central Bank announced on Friday it would stop accepting Greek sovereign
bonds, and other assets backed by the embattled country’s government, as collateral starting
July 25. The ECB said it would review the situation once the “troika” had completed its visit
to Athens and that Greek banks would still be able to get funding from the Greek national
central bank in the meantime.
8. In an ironic twist of fate, homeowner and condominium association groups are bringing several
of the “big banks” to court in foreclosure cases due to unpaid association fees. Attorney
Ben Solomon, representing Homestead Florida’s Keys Gate Community Association, said
“The association has both a statutory right under the Florida laws as well as rights under its
restrictive covenant in the community, and it pursues those rights just like any other owner.
In this legal scenario JP Morgan is no different than any other homeowner in the community
who has failed to pay.”
9. Crude oil pushed its way back over $90 a barrel this week as geopolitical tensions in the
Middle East, particularly in Syria, heightened fears that oil supply may be disrupted.
10. The euro struggled marginally higher against the dollar this week despite continued fear over
the stability of the Eurozone. Despite edging higher against the dollar, the euro was at fresh
two year lows against other currencies. The Japanese yen continued its climb higher against
the dollar this week.

Friday to Friday Close
July 13th July 20th Net Change
Gold $1592.20 $1583.00 (9.00) – 0.57%
Silver $ 27.35 $ 27.35 0.00 + 0.00%
Platinum $1430.00 $1415.00 (15.00) – 1.05%
Palladium $ 585.00 $ 576.00 (9.00) – 1.54%
Dow Jones 12777.09 12822.57* 142.32 + 1.12%

Previous year Comparisons
July 22nd 2011 July 20th 2012 Net Change
Gold $1601.00 $1583.00 (18.00) – 1.12%
Silver $ 40.10 $ 27.35 (12.75) – 31.80%
Platinum $1795.00 $1415.00 (380.00) – 21.17%
Palladium $ 806.00 $ 576.00 (230.00) – 28.54%
Dow Jones 12724.71 12822.57* 97.86 + 0.77%
* Current at time of writing

Here are your Short Term Support and Resistance Levels for the upcoming week.
Gold Silver
Support 1575/1550/1530 26.80/26.50/26.10
Resistance 1600/1620/1640 27.50/28.00/28.50
Platinum Palladium
Support 1400/1380/1350 560/525/500
Resistance 1425/1450/1500 590/605/625

Volatility should be expected to continue as the global economy continues to struggle and remains
mired in uncertainty. In uncertain times such as these, it is important to keep the longterm
nature of investing in precious metals foremost in your mind. Wise investors are maintaining
their ownership of their precious metals, and even accumulating more as temporary price
dips present them with opportunities to do so. At King World News this week, they interviewed
their “London Trader” regarding the recent price action in gold and silver. Their source said “It
is now beginning to be discussed, openly, that the unallocated gold is not at the banks. This is
definitely the case with many of the allocated accounts as well.” Their source continued, saying
“This tells me there is something major that is happening behind the scenes. It tells me that the
LBMA’s price fixing scheme is coming to an end.” He continues: “As this scandal is brought to
light, that the unallocated gold and silver are not there, and much of the allocated gold and silver
is not at these banks either, and as you see these naked short positions unwound, the world will
witness a massive price rise in both gold and silver. The move in gold and silver, at that point,
will literally frighten most people. They simply won’t understand what is happening.” Their
“London Trader” also had some striking things to say regarding demand out of China: “Gold is
the primary focus, but very recently, and on every dip, we are seeing significant purchases of silver
in size. So yes, demand from China, it’s unceasing. They want out of these debasing currencies.
I would add that they are buying anything that’s tangible, land, timber, mines, art, etc..”
Tensions in the Middle East are increasing. In Syria, a suicide bomber killed Syria’s Minister of

Defense and several other top officials. US Secretary of Defense Leon Panetta said that the
situation in Syria “is rapidly spinning out of control.” Secretary Panetta also added his voice to
those of other western leaders calling for Syrian President Assad to step down. Following Secretary
Panetta’s Pentagon news conference, the White House announced it was adding additional
financial sanctions on Syria’s current leaders. Israel accused Iran of responsibility for the bus
bombing in Bulgaria which killed Israeli tourists. Iran continues to threaten to block the Strait of
Hormuz and disrupt global oil supply. In Europe, additional debt woes are beginning to come to
light in Spain. Even as Eurozone finance ministers agreed to lend Spain 100 billion euros for
bank recapitalization, the Valencia region asked Madrid for financial assistance. The move
sparked fears that a full blown bailout may be required to resolve the Spanish debt problem, and
that the 100 billion euro loan agreed to might pale in comparison to the amount that is truly required
to resolve the issues. The US Congress appears to be deadlocked over addressing the
looming “fiscal cliff” which Fed Chairman Bernanke this week said poses a “serious threat” to
the US Economy if it remains unaddressed. All of these events are leading analysts to renew
their projections for gold to reach $2,000 an ounce soon. Maintaining ownership of your existing
precious metals products, and using any temporary price dips to acquire more for your portfolio,
may be looked back on as genius if precious metals prices skyrocket as fast and as furious
as King World News’ “London Trader” believes will happen in the near future. 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.

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