PPMI Week In Review

 
October 26, 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 an extremely volatile week in the stock markets as many companies continued to turn
in disappointing earnings results. Multi-national companies appear to be responsible for the
majority of the lackluster earnings reports, most likely as a result of Europe’s continued troubles
and the ongoing economic slow-down in China.
2. Data on initial claims for unemployment in the US continues to be volatile. Claims dropped
23,000, but once again, due to an upward revision in the previous week’s number the decline
sounds better than the deeper data actually suggests. US Consumer sentiment hit a 5 year
high in October according to the Thomson Reuters/University of Michigan survey. The upcoming
“fiscal cliff” may soon put the brakes on the rebounding US consumer however.
Survey director Richard Curtin said “Unless the legislation is carefully managed by whoever
wins, the debate could produce the same depressing effect on consumer confidence as last
year’s debt ceiling fiasco.”
3. With only 11 days to go until the election in the US, Governor Romney and incumbent president
Obama are both ramping up their last minute pitches to the populace in an attempt to
win their vote. Most polls now show that the race will be extremely tight, leading to great
uncertainty over the outcome. Many companies have been holding back on their spending
plans due to the uncertainty over the election and the upcoming, and as yet unaddressed, “fiscal
cliff”. Chief Executive Officers of more than 80 US corporations added their names to a
statement that was issued to the US Congress calling on them to “Fix the Debt” this week.
4. Spanish unemployment hit a record high of 25% in the third quarter and more layoffs are expected
as the country begins to implement its austerity programs to meet the demands placed
upon them by Brussels. Silvio Peruzzo, an economist at Nomura in London, said “There is a
debate over the optimistic growth outlook for next year by the government, which is given
little credibility. Weaker growth than expected, coupled with austerity, could easily see unemployment
hit 26 percent next year.” Current estimates are that the number of jobless in
Spain now stands at 5.8 million.
5. On Thursday the International Monetary Fund warned that Portugal’s bailout plan now faces
increased risks due to lower than projected tax revenues, resistance to implementing necessary
austerity measures, and a likelihood that Portugal will remain in recession next year.
Unemployment in Portugal is also at record highs. In a staff report the IMF also stated that
Portugal’s national debt “will now peak at a higher level (124 pct of GDP in 2014) and –
should outturns again prove worse than expected – the room for further accommodation of
shortfalls would be limited.”
6. A preliminary report by the International Monetary Fund states that Greek debt will be above
120 percent of GDP in 2020 and that Athens will need additional reforms before any additional
bailout payments can be made. One anonymous Eurozone official said “It is clear that
Greece is off track and there is no chance they will cut the debt to 120 percent of GDP in
2020 as envisaged. It will be rather 136 percent, and this would be under a positive scenario
of a primary budget surplus, a return to economic growth, and privatization. New prior actions
will be needed, on top of the existing 89 [reforms required as a condition of the bailout]”.
Athens has been pushing for a two year extension on their debt repayments and reports
are beginning to appear that the extension may be granted to them.
7. In Asia, fears are growing in Japan that a recession may be imminent. Falling exports, slowing
growth in China as a result of the ongoing dispute between the two nations, and the ongoing
debt crisis in Europe are all acting to slow Japan’s economy.
8. Crude oil took a beating this week, dropping well below the $90 a barrel mark into the mid
$80’s despite threats from Iran to cut oil exports if sanctions continue.
9. The euro saw a volatile week, but on an overall basis it continued to drop against the dollar.
The Japanese yen dropped against the dollar for much of the week but turned around by Friday
and was trending upward.
Friday to Friday Close
October 19th October 26th Net Change
Gold $1724.00 $1712.00 (12.00) – 0.70%
Silver $ 32.10 $ 32.07 (0.03) – 0.09%
Platinum $1613.00 $1540.00 (73.00) – 4.53%
Palladium $ 623.00 $ 595.00 (28.00) – 4.49%
Dow Jones 13343.51 13096.86* (246.65) – 1.85%

Previous year Comparisons
Oct 28th 2011 Oct 26th 2012 Net Change
Gold $1746.00 $1712.00 (34.00) – 1.95%
Silver $ 35.25 $ 32.07 (3.18) – 9.02%
Platinum $1650.00 $1540.00 (110.00) – 6.67%
Palladium $ 665.00 $ 595.00 (70.00) – 10.53%
Dow Jones 12231.11 13096.86* 865.75 + 7.08%
*Current at time of writing
Here are your Short Term Support and Resistance Levels for the upcoming week.
Gold Silver
Support 1700/1680/1650 31.70/31.50/31.00
Resistance 1725/1750/1780 32.30/32.50/33.00
Platinum Palladium
Support 1525/1500/1480 580/560/550
Resistance 1560/1580/1600 600/625/640
Volatility should be expected to continue. On Thursday Peter Schiff, head of Euro Pacific Capital,
gave an interview on CNBC in which he said “Gold’s got only one direction to go, and that’s
higher.” When asked whether a much higher price would prevent people from buying the metal,
Schiff said cheap money policies from major central banks would eventually trigger hyperinflation
leading to the collapse of the US dollar and people would have no choice but to buy gold.
Mr. Schiff said “I think gold is going to go up against all currencies… central banks around the
world are being too loose. The dollar index is going to be cut in half at a minimum. If we don’t
change our policies, the dollar index could go much lower.” Mr. Schiff went on to say “One day
we’re going to look back at $1,700 with nostalgia. People are going to be shocked at how inexpensive
gold was when it could be snapped up for such a bargain price.” Germany’s Audit Court
has demanded that the Bundesbank audit its foreign held gold reserves. In a letter to the German
parliament’s budget committee the Bundesbank said “We have been in discussions with the Federal
Reserve Bank of New York about the Bundesbank’s holdings of gold. The discussions have
been fruitful and the Federal Reserve has expressed a commitment to work with the Bundesbank
to explore ways to address the audit observations, consistent with its own security and control
processes and logistical constraints.” As part of the Bundesbank’s agreement with the Audit
Courts, some of Germany’s gold reserves will be repatriated back to Germany, including some of
what is held at the New York Federal Reserve. It seems the Netherlands is also uneasy about its
own gold reserves. Nearly 300 “concerned Netherlands citizens” have demanded “full openness
on the quantity and storage location of the Netherlands’ physical gold, and on the extent and nature
of the gold claims.” Tom Lassing, one of the petition signers, said “The last years have seen
a loss of trust in the financial system and we have been fooled a lot, so I say: Just let the central
banks like DNB [De Nederlandse Bank in Amsterdam] show the gold is really there.” Brazil increased
its gold reserves by 1.7 tons last month for the first time since December 2008. Turkey
and Ukraine also both added to their own gold reserves. Dan Smith, a commodities analyst at
Standard Chartered Plc in London said “We expect strong buying by central banks to continue.
They will be encouraged by lower prices and continued worries about inflation and currency
risks.” According to the World Gold Council, Nations around the world have bought 254.2 tons
of gold in the first half of 2012 and expectations are that they may add close to 500 tons for the
year. As Europe’s sovereign debt crisis continues to unfold, and central banks across the planet
continue to run their fiat currency printing presses at full speed, precious metals are obviously
looking more and more attractive to these same central banks. As fiat currencies devalue amid
the printing spree, more and more investors seem to be following the central banks lead by adding
additional physical precious metals to their own portfolios. After all, if central banks are
adding to their own holdings on each price dip, it only makes sense that they must believe prices
should be heading higher from their current levels. 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.
This is not a solicitation to purchase or sell. © 2012, Precious Metals International, Ltd.

PHYSICAL PRECIOUS METALS INCORPORATED “SECURING LEGACIES”

 

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