PPMI Weekly 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.

 

The Week in Review
1. US Initial claims for unemployment benefits came in at a four year low this week, falling in
line with last Friday’s surprisingly upbeat August Payroll’s report. Dow Jones reported that
“A labor Department economist said one large state didn’t report additional quarterly figures
as expected, accounting for a substantial part of the decrease.” Conspiracy theorists are having
a field day with accusations of manipulation of the jobs data for political purposes. A
dramatic improvement in the jobs data would be a serious boost to the Obama campaign’s
bid for re-election.
2. The Thomson Reuters/University of Michigan’s initial reading on US Consumer sentiment is
at its highest level in five years, coming in well above the initial forecasts by economists.
The boost appears to have come from the latest jobs data which showed a drop in the unemployment
rate and a more positive outlook on the jobs market.
3. Producer prices in the US rose more than expected in September, driven by higher energy
prices. It is expected that the price increase will not be passed on to customers which means
inflation should remain under the US Federal Reserve’s 2% target for the time being, adding
support for the continuation of the latest round of Quantitative Easing. If the cost increases
continue unabated, producers may have no choice but to pass them on to consumers.
4. The US Congress continues to do nothing about the approaching “fiscal cliff” and is now being
chastised by the International Monetary Fund’s deputy managing director, Zhu Min. Mr.
Min said “It’s very clear that if the whole tax package moves off the table it will immediately
bring the U.S. into a recession, which will have a huge negative impact on the whole world.”

5. On Wednesday, Standard & Poor’s cut Spain’s credit rating to BBB-minus, just one notch
above junk status, with a negative outlook. In their statement, S&P said “In our view, the
capacity of Spain’s political institutions (both domestic and multilateral) to deal with the severe
challenges posed by the current economic and financial crisis is declining.” S&P is
forecasting a recession of 1.5% in 2013 for Spain and said that “growth prospects look fairly
dim.” Analysts seized on the ratings cut as a potential factor that may finally push Spain to
make a formal request for a bailout to the EU.
6. Geopolitical tensions between Syria and Turkey continue to escalate, with Turkey intercepting
a Syrian Air passenger plane and forcing it to land in Turkey this week. Turkey’s Prime
Minister Recep Tayyyip Erdogan said the plane was carrying munitions and equipment that
was bound for the Syrian forces loyal to Syrian President Bashar Assad. The plane originated
its flight in Russia, and the incident has increased the friction between Turkey and Russia
as a result. Turkish officials removed some of the plane’s cargo and then allowed it to
continue to Damascus after several hours with all passengers and crew aboard.
7. The International Monetary Fund cut its growth forecast for China and India this week and
predicted “less buoyant” growth in the near to medium term for Asia as a whole, citing concerns
that the Eurozone debt crisis might continue to expand and that the looming “fiscal
cliff” issue in the US going unresolved as the main risks to growth in Asia.
8. On Tuesday, the US government filed a civil mortgage fraud lawsuit against Wells Fargo.
The suit alleges more than 10 years of misconduct related to government insured Federal
Housing Administration loans, saying the FHA paid hundreds of millions of dollars in insurance
claims for thousands of defaulted mortgages due to false certifications by the bank.
9. Escalating tensions between Syria and Turkey continue to push Crude oil prices higher. The
incident with a Russian flight to Syria appears to have increased fears over a additional destabilization
in the Middle East. Continued tensions between Iran and Israel are also among
the factors pushing prices higher.
10. The euro spent much of the week declining against the US dollar, but reversed direction on
Thursday and gained back much of the week’s initial losses. The Japanese yen appears to be
ending the week slightly higher against the US dollar.
Friday to Friday Close
October 5th October 12th Net Change
Gold $1780.00 $1759.00 (21.00) – 1.18%
Silver $ 34.55 $ 33.66 (0.89) – 2.58%
Platinum $1705.00 $1655.00 (50.00) – 2.93%
Palladium $ 660.00 $ 639.00 (21.00) – 3.18%
Dow Jones 13610.15 13314.98* (295.17) – 2.17%

Previous year Comparisons
Oct 14th 2011 Oct 12th 2012 Net Change
Gold $1682.00 $1759.00 77.00 + 4.58%
Silver $ 32.15 $ 33.66 1.51 + 4.70%
Platinum $1550.00 $1655.00 105.00 + 6.77%
Palladium $ 620.00 $ 639.00 19.00 + 3.06%
Dow Jones 11644.49 13314.98* 1670.49 + 14.35%
*Current at time of writing
Here are your Short Term Support and Resistance Levels for the upcoming week.
Gold Silver
Support 1750/1720/1700 33.50/33.00/32.80
Resistance 1775/1790/1800 34.20/34.50/35.00
Platinum Palladium
Support 1650/1620/1600 630/620/600
Resistance 1670/1700/1725 660/680/700
Volatility should be expected to continue. The state of the global financial system continues to
appear worse and worse. The International Monetary Fund has cut its growth forecast for Asia
and India and is now publicly acknowledging that a failure to act by the US Congress to address
the “fiscal cliff” will have far-reaching and devastating effects on the global marketplace. The
fundamentals supporting higher precious metals prices continue to appear strong. In an interview
with King World News this week, John Embry, of Sprott Asset Management, said “We are
literally witnessing a war between the physical buyers (Eastern central banks), and the paper manipulators
(commercials or bullion banks), and that is why there is such a fierce battle being
waged in gold between $1,735 and $1,800.” Embry continued, saying “This is one of those moments
in the gold market where there is a distinct possibility that we will see a commercial signal
failure. A commercial signal failure is an extremely rare event, but we could well be setting up
for just such an occurrence right now. The commercials are massively short gold at the moment,
and each time they attempt to drive the price of gold lower, there is a solid wall of physical buying
they are running into. I just don’t think they anticipated this. Meanwhile, the Eastern buyers,
such as China, are delighted the commercials keep trying to push gold lower.” James Turk,
one of our favorite analysts, in a separate King World News interview agreed, saying “This is a
battle between the sellers of paper gold and the buyers of physical gold. We could soon be seeing
a massive short squeeze in gold and silver.” Mr. Turk went into further detail, saying “Gold
and silver are getting very close to an all-important upside breakout, Eric. When gold breaks
above $1780 and silver hurdles over $35, both metals will rocket higher. I think we are getting
very close to that moment, and I expect that the jump in precious metal prices will be something
spectacular. This will be a move which probably scares the dickens out of the central planners.
It’s no wonder they are doing everything they can to keep the precious metals under these critical
resistance levels. But the metals keep bouncing back, which is a key observation to make here.”
Mr. Turk continued, saying “We know the paper sellers are there because Comex open interest
has exploded over the past several weeks. This has occurred because the manipulators are attempting
to contain all of the buying by the specs and hedge funds. But we also know that the
physical buyers are there too because each time the shorts trigger a raid to try forcing prices
lower, the physical buying picks up. The upshot of all this is that the shorts are caught, at least
so far. They have not been able to engineer the lower prices they are looking for to buy back
their short positions and walk away with their profits like they have done so many times in the
past. So the question becomes, what if they can’t get the price for gold and silver any lower?
The shorts will need to buy back at whatever price they can to limit their losses. It is this panic
buying that will launch the precious metals like a rocket when $1,800 and $35 are finally hurdled.”
Wise investors have been using these engineered temporary price pullbacks in precious
metals to add more physical precious metals to their portfolio looking for protection from the
massive money printing now taking place, devaluing fiat currencies across the globe. 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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