PPMI Week In Review

September 28, 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. It was a week of conflicting economic activity reports, particularly in the United States.
2. Weekly initial claims for state unemployment in the US dropped to their lowest levels in two
months. The final reading of the Thomson Reuters/University of Michigan’s consumer sentiment

hit its highest level in four months, but still came in under economist’s expectations.
It appears much of the increase was attributed to higher stock prices and a perceived improvement
in the US housing market. US consumer spending rose in August by the most in 6
months, but the news it not necessarily good. Much of the rise was due to higher gasoline
prices that consumers were forced to pay at the pump.
3. In Asia, economic slowdown continues to spread. Japanese factory output declined along
with South Korea’s. In China, a sizeable drop in industrial production shows the economy is
still slowing. As the Chinese government approaches a once-a-decade leadership transition,
it seems that the likelihood of additional monetary stimulus is becoming more certain. This
week the People’s Bank of China injected 365 billion yuan into money markets, the largest
such injection in history. The intent of the massive cash infusion was to prevent a potential
short-term “liquidity crunch” at commercial banks. Tensions continue to escalate between
China and Japan. In China this week there were reports that several Japanese owned businesses
had literally been destroyed.
4. Spain remains at the forefront of the news out of Europe. Thursday the Spanish government
announced its budget for 2013 which was well received by investors. The results of the
“stress test” on Spanish banks were due to be announced on Friday. The test was conducted
by an independent consultant and hopes are that the results will be accurate, unlike previous
stress tests in the past. The “stress test” results will help determine the how much of the
$100 billion euro bank bailout funds set aside for Spain will actually be required to recapitalize
the Spanish banking system. Many analysts feel that the results of the audit could
lead the way to Spain officially asking for a bailout, which it has thus far been reluctant to
5. If Spain does indeed ask for a bailout, allowing the European Central Bank to purchase Spanish
bonds and thereby lower its borrowing costs, Italy will most likely be pushed right back
to the forefront of the news if its own bond yields spike again, which many analysts expect
would occur. The Italian government has already announced this month that they expect
twice as much contraction in the economy as previously forecast. Economists are already
throwing the phrase “too big to bail out” around regarding Italy, which seems to consistently
be the first step toward receiving an EU bailout, of late.
6. In France, President Francois Hollande unveiled a 2013 budget containing a series of tax
rates on the business and the wealthy that were staggering. The budget contains a 75 percent
tax rate for earnings over 1 million euros.
7. Crude oil was under pressure this week and remains in the low $90 a barrel range on
Friday. The apparent continued slowdown in the Chinese economy may continue to drag the
price of crude lower.
8. The euro continued to move lower against the US dollar this week despite a temporary boost
after Spain’s budget announcement. The Japanese yen spent much of the week moving
higher against the dollar but is drifting lower on Friday.
Friday to Friday Close
September 21st September 28th Net Change
Gold $1778.00 $1774.00 (4.00) – 0.22%
Silver $ 34.60 $ 34.58 (0.02) – 0.06%
Platinum $1635.00 $1665.00 30.00 + 1.83%
Palladium $ 670.00 $ 638.00 (32.00) – 4.78%
Dow Jones 13579.47 13400.03* (207.65) – 1.53%
Month End to Month End Close
August 31st September 28th Net Change
Gold $1685.00 $1774.00 89.00 + 5.28%
Silver $ 31.40 $ 34.58 3.18 + 10.13%
Platinum $1535.00 $1665.00 130.00 + 8.47%
Palladium $ 625.00 $ 638.00 13.00 + 2.08%
Dow Jones 13090.84 13400.03* 309.19 + 2.36%

Previous yearComparisons

Sep 30th 2011 Sep 28th 2012 Net Change
Gold $1620.00 $1774.00 154.00 + 9.51%
Silver $ 30.10 $ 34.58 4.48 + 14.88%
Platinum $1520.00 $1665.00 145.00 + 9.54%
Palladium $ 612.00 $ 638.00 26.00 + 4.25%
Dow Jones 10913.38 13400.03* 2486.65 + 22.79%
*Current at time of writing
Here are your Short Term Support and Resistance Levels for the upcoming week.
Gold Silver
Support 1750/1725/1700 34.25/34.00/33.60
Resistance 1780/1800/1825 35.00/35.25/36.00
Platinum Palladium
Support 1650/1620/1600 620/600/580
Resistance 1700/1720/1750 650/670/700

Volatility should be expected to continue. The fundamentals supporting precious metals ownership
continue to grow stronger and stronger. A bailout for Spain appears to be a near certainty
now, and once that happens the focus and contagion will shift to Italy once again. If Italian bond
yields spike once more then the contagion will most likely continue to spread throughout Europe.
In South Africa, strikes have put a halt to close to 40% of the gold output at the nation’s mines.
AngloGold, the world’s third largest gold producer announced Wednesday that all of its South
African mines have stopped production. In Asia there is increasing evidence that slowdowns in
the economies across the region are accelerating. Factory outputs in China, South Korea and Japan
all decreased significantly last month. Amid all the turmoil, precious metals appear to be reentering
the spotlight as a focus for investors. James Turk, discussing the recent price movements
in gold and silver with King World News this week said “It’s a real battleground out there,
Eric. It started at the beginning of last week when gold was looking like it would break through
$1780 while silver was already climbing through $35. But then the shorts started throwing everything
they could at that price advance and stopped both precious metals. Hitting a wall like
that caused a reversal, but support quickly showed up in the $1750s and around $34. The same
thing happened twice last week, but the week ended for the precious metals in a stand-off. Then
today the battle started again when the shorts started pounding gold and silver here in Europe.
But just like last week, the buyers of physical metal showed up when gold dropped into the
$1750s…” Mr. Turk continued, saying “The bottom line is that despite the volatility, nothing has
really changed. The gold and silver charts look really good, and the fundamental factors driving
them higher remain bullish. The interrelated bank solvency and sovereign debt crises have not
been solved. Central banks haven’t stopped their money printing. Economic activity in most of
the world continues to slide. None of these factors offer a pretty picture, which explains why the
precious metals are in an uptrend and in my view are going to climb much higher as we head toward
the end of the year. Throughout this uptrend in precious metals that began over a decade
ago, we’ve seen a lot of battles like this, Eric. The important point though is that the uptrend
shows the physical buyers of gold and silver gaining the upper hand, while the shorts and central
planners are losing this war.” As the tide of fiat currencies being printed by central banks across
the world approaches flood stage, precious metals seem to once again be coming to be viewed as
the only “hard asset” that will retain a store of value as these currencies head towards a worth of
zero. Wise investors, recognizing the perils of just such an economic environment, have continued
to accumulate additional physical precious metals products every time a temporary price dip
in this now 13 year old bull market has presented them the opportunity to do so. The key to accumulating
precious metals is to never jeopardize your ability to maintain ownership of your
products by overextending yourself. Remember that precious metals should be viewed as a longterm
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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