By Barry Stuppler - MintStateGold.com
Late Sunday afternoon President Barack Obama and U.S. congressional leaders announced an agreement to cut an initial $1 Trillion from federal government deficit spending and more than $2 Trillion over the next 10 years, while allowing the U.S. debt ceiling to be raised by $2.4 Trillion, making the new ceiling $16.7 Trillion.
After the President’s announcement, as expected gold dropped, trading down to $1,607.10 in Asian trading. At that point we saw sizeable buying come in which drove the gold price back up to $1,615.00. When the U.S. markets opened this morning, the July manufacturing (ISM) numbers were released showing a very weak 4.4 point drop, the stock market dropped over 100 points, and gold rallied. At 11am PDT today gold is now trading at $1,621.30 per ounce, down only $5.10 from Friday.
Silver is trading at $39.35 at 11am PDT, down $0.59 on the day on heavy volume. July was a super month for Silver investors, with Silver up $6.40, an 18.97% appreciation for the month. With the debt Ceiling issue behind us, I am expecting another round of monetary easing to be announced by the Federal Reserve by month end. After the recent poor economic news, we need to stimulate the economy ASAP, as we have an election next year. I believe Silver will benefit more than Gold from another round of quantitative easing
For more information on my outlook for Silver and Gold, please see today's Weekly Market Report at www.mintstategold.com/investor-education/cat/markets/
Other Important news that affects precious metal prices:
- The Institute for Supply Management's (ISM) manufacturing gauge in July dropped 4.4 points to 50.9%, barely staying above the 50% no-change line and coming in below a Market Watch-compiled economist poll of 54.3%.
- 15,000 to 20,000 Gold mineworkers in South Africa are on strike. Despite a decades-long decline in mining production, South Africa is still the world's fourth-largest gold producer. As for South African gold mining, it has become harder and more expensive to mine deep shafts, a problem exacerbated by rising labor costs. Negotiators are trying to reach agreements with workers, but The National Union of Mineworkers and the United Association of SA have demanded a 14% wage increase, while Solidarity wants 12%.