Daily Bullion Market Update 7/27/11
By Barry Stuppler – MintStateGold.com
Gold is trading very actively today with a $21 range, hitting a new all-time high of $1,629.50 earlier this morning. At 11am PDT gold is trading at $1,615.30, down 90 cents an ounce.
The Debt Ceiling Crisis in Washington DC is the primary focus of the precious metal markets.
Repeating the same concerns that happened after the 2008 financial crisis, our markets, state governments and financial institutions are now focusing on liquidity concerns. The Dow Jones Industrial Average is down 275 points in the last three days; while the value of U.S. securities have been dropping as uncertainty increases.
At 11am PDT, Silver is trading at $40.57 per ounce, down $0.19 on active trading. Silver did reach $41.55 earlier today as the market rallied as Congressional rhetoric intensified. Investor demand has been picking up as the media focuses on the dysfunction and mixed messages coming out of the Congress. Investors realize that regardless of what happens with the Debt Ceiling Crisis, it is safe to own gold and silver.
Update on Debt Ceiling Crisis, How is it unfolding..
Concerns about the potential downgrade of Treasury securities, and liquidity, are driving US Money Market Funds, Banks, and States to stockpiling cash in case Congress fails to raise the debt ceiling, thus distorting the short-term market for US Government Securities and raising borrowing costs for banks and other financial institutions.
Congress has begun gearing up for its first critical vote on the US debt limit as Republican leaders in the House of Representatives grapple with a possible conservative mutiny threatening their hopes of avoiding a US default through a two-step increase in borrowing authority.
Treasury head Geithner may be moving the goalposts: The U.S. Treasury Says August 10th might be the Drop Dead Date for lifting the debt ceiling, not August 2nd. With increased revenues to the U.S. Treasury the date could be pushed out as late as August 10th..
What does Federal Reserve Chairman, Ben Bernanke, have to say about the Debt Ceiling crisis. “I want to eliminate any expectation that the Fed, through any mechanism, could offset the impact of a default on the government debt,” Bernanke said at a congressional hearing this month.
There are four distinct political factions in this Debt Ceiling Crisis:
1st Mainstream Republicans who like the current deal on the table and want the crisis to end.
2nd Right Wing Republicans (Tea Party Caucus) that will not agree to any Debt Ceiling Increase.
3rd Mainstream Democrats who are willing to accept the deal as proposed by the President.
4th Conservative Democrats that believe the tax cuts proposed have gone too far.
Other Important news that effects precious metal prices:
Orders for U.S.-made durable goods fell 2.1% in June on weaker demand for autos and airplanes, the Commerce Department reported Wednesday.