PPMI Week In Review

October 5, 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. In the United States, all the excitement centered on the debate between president Obama and
his challenger in the upcoming election, Mitt Romney. The general consensus is that Mr.
Romney easily defeated president Obama in their first debate, appearing to be better prepared
for the event. The incumbent president immediately launched a PR campaign to try to minimize
the damage.

2. Initial claims for unemployment benefits rose by 4,000 again last week and the previous
week’s data was revised upwards by 4,000 claims. Friday saw the release of the September
jobs data report, which showed the economy creating only 114,000 net new jobs. Despite the
paltry gain in new jobs, the unemployment rate was lowered to 7.8 percent. The shrinking
labor participation rate appears to still be the driving factor behind the lower unemployment
rate: people have simply given up looking for work and thus no longer “count” as unemployed.

3. Spain continued to create confusion in Europe as Spanish Prime Minister Mariano Rajoy denied
reports that he would seek a full bailout for Spain by this weekend. Spanish finance
minister Luis de Guindos, speaking at the London School of Economics on Thursday evening,
said “Spain doesn’t need a bailout at all”. The comment triggered laughter and giggles
throughout the room apparently. Spain appears to be fighting a losing battle with its economy.
Wildly unpopular austerity measures have led to massive protests, sometimes turning
violent, and a skyrocketing unemployment rate, particularly among the youth.

4. Greek leader Antonis Samaras told German business daily “Handelsblatt” that Greece is effectively
running out of cash. Mr. Samaras said “The key is liquidity. That is why the next
credit tranche is so important for us.” When asked how long Greece could manage without
additional funds, Mr. Samaras said “Until the end of November. Then the cash box is
empty.” Mr. Samaras also said at a press conference on Thursday that he is still hoping that
the European Central Bank would agree to give Greece more time to repay its debt. ECB
president Mario Draghi reiterated on Thursday that the ECB has no plans to extend the time
for Greece to repay its debt.

5. Tensions flared in the Middle East again this week as mortars from Syria fell on a Turkish
border town, killing several Turkish citizens. In retaliation, Turkish military sent guided artillery
into a neighboring Syrian town, killing some Syrian soldiers. The Turkish parliament
approved a bill that would allow cross-border operations into Syria. In the resolution authorizing
the troop deployment, Turkish officials said events have “reached a point that constitutes
serious threat and risk to our national security. Therefore, it has become necessary to be
able to respond to further risks and threats in a timely and immediate manner.”

6. In Asia, the Bank of Japan held rates at current levels and decided not to ease monetary policy
further despite the fact that the BOJ lowered its assessment of the economy due to weakening
exports and a drop in production. A week-long holiday in China, and holidays in Japan
and South Korea meant other news out of those areas was relatively sparse.

7. Bond giant PIMCO placed a “Viewpoints” article titled “GOLD – The Simple Facts” on their
web site this week. The article begins with three bullet points which layout the fundamentals
for owning gold, but the second and third points easily make the case for silver as well. In
short, the article makes the case for why current gold prices should be considered “cheap”
and lays out reasons why investors should own gold and other precious metals as part of a
wise investment strategy. The article is a must read and can be found by clicking this link:
PIMCO Article

8. Crude oil, which had dropped below $90 a barrel this week was sent back into the $90’s following
the border clash between Syria and Turkey. A refinery fire at an Exxon Mobile facility
in Texas also helped push prices higher as fears of a supply disruption took hold of the
market.

9. The Japanese yen moved lower against the dollar this week. The euro climbed higher against
the dollar this week, appearing to be driven by hopes that Spain would be asking for a full
bailout by the weekend. Emerging details regarding the ECB’s bond-buying policy for troubled
peripheral Eurozone countries also helped boost the beleaguered currency.

Friday to Friday Close
September 28th October 5th Net Change
Gold $1774.00 $1780.00 6.00 + 0.34%
Silver $ 34.58 $ 34.55 (0.03) – 0.09%
Platinum $1665.00 $1705.00 40.00 + 2.40%
Palladium $ 638.00 $ 660.00 22.00 + 3.45%
Dow Jones 13437.13 13617.22* 180.09 + 1.34%

Previous year Comparisons
Oct 7th 2011 Oct 5th 2012 Net Change
Gold $1634.00 $1780.00 146.00 + 8.94%
Silver $ 30.98 $ 34.55 3.57 + 11.52%
Platinum $1485.00 $1705.00 220.00 + 14.81%
Palladium $ 585.00 $ 660.00 75.00 + 12.82%
Dow Jones 11103.12 13617.22* 2514.10 + 22.64%
*Current at time of writing

Here are your Short Term Support and Resistance Levels for the upcoming week.
Gold Silver
Support 1760/1730/1700 34.25/34.00/33.50
Resistance 1800/1825/1850 35.20/35.50/36.00
Platinum Palladium
Support 1650/1620/1600 650/620/600
Resistance 1730/1750/1775 675/700/720

Volatility should be expected to continue. Global events still support the fundamentals for owning
physical precious metals. Europe continues to be mired in its sovereign debt crisis, currently
centered on Spain. Spain continues to balk at officially requesting a full bailout from the European
Union, which is the first step required for the ECB to initiate their bond-buying program.
The fact that Spanish finance minister Luis de Guindos’ comment that Spain did not require a
bailout elicited laughter and giggles at the London School of Economics shows exactly what
people believe about whether they require a full bailout or not. While Spain continues to consider
its own bailout options Greece, the original “bailout nation”, is once again running out of
money and time. German Chancellor Angela Merkel is supposed to make her first visit next
week to the debt laden region since the financial crisis began in 2009 in what many are assuming
is a tacit show of support for the current Greek government’s efforts to stick to the reform measures
agreed to as a condition of the bailout funding Greece received. In response to news of her
visit, Greek labor unions have called for work stoppages and a protest rally outside of Parliament
during her visit. The Independent Greeks, a right-wing anti-bailout party, plans to demonstrate at
the German embassy “to express in front of Chancellor Angela Merkel our opposition to Greece
becoming a German protectorate.” In the US, the September Jobs Report was mediocre at best.
Many openly speculated that the drop in the unemployment rate was due to sheer manipulation
of the numbers and was not due to any real improvement in the labor market. As the election
season goes into high gear this month, we expect accusations of economic data manipulation to
be thrown about on an ongoing basis. It has even been suggested that the Republican controlled
US Congress, which has still done nothing to address “the fiscal cliff” that nearly every analyst
agrees will drag the country into full blown recession once again, is deliberately trying to slow
the US economy down as the election looms. Food and energy costs are climbing, in some areas
of the United States, gasoline prices jumped by as much as 20 cents per gallon overnight on
Thursday. Refinery problems in the US are expected to keep gasoline costs high even if the price
of Crude oil declines. In the Middle East, fears are growing that the skirmish between Syria and
Turkey, set off when Syrian mortars fell on a Turkish border town this week, may escalate and
ignite violence across the whole region. Central banks across the globe continue to print money
in one fashion or another in what is being called the “race to debase”. The result is that the fiat
currencies of these central banks would now seem to be traveling a path to a worth of zero. In
this environment, investment demand for physical precious metals is increasing rapidly. Given
that gold and silver are finite in their above ground supplies, a drastic increase in demand, driven
by investors, central banks, and the start of festival and wedding season in India, may lead to rapidly
skyrocketing prices. 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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