Daily Bullion Market Update 8/3/11
With the Dollar getting hammered, and the Worlds Equity Markets down sharply, including the DJIA down nine days in a row, we are seeing a run to safety. Gold is the ultimate safe haven investment. So it is not surprising to see gold trading at another new All-Time high of $1,662.10 per ounce at 11am PDT, up another $20.40 for the day. The International Monetary Fund’s August 2011 monthly report on central bank reserves showed that Thailand, Russia, and Kazakhstan, in addition to South Korea and Mexico, all added to their holdings of gold within the past two months. The trend in the official Central Banks putting more of their reserves into bullion rather than hard currencies is increasing.
It’s about time we see Silver out perform Gold on the upside. Silver is trading at $41.60 at 11am PDT, up $1.50 per ounce on a high volume of trades. It’s very telling to see Silver and Gold sharply higher, while Platinum, Palladium, Copper and other metals are trading lower. I believe the markets are saying that we have a high probability of a recession. On Friday we are going to see the July employment number. If that report is disappointing, the odds go up substantially for a Federal Reserve QE3 announcement this month.
I just read an informative article on hyper-inflation from a good friend. The following link is to an article by Pat Heller on the effects of the recent debt ceiling crisis on the coming hyper-inflation period.
WHAT ARE CREDIT RATING AGENCIES AND PIMCO SAYING ABOUT U.S. DEBT?
So far two ratings agencies, Moody’s and Fitch, have said they will maintain the AAA rating, albeit with a negative outlook, but the most influential agency, Standard and Poor’s, is reserving judgment.
The credit rating agency has said that there is a 50:50 chance – or more – that it could reduce America’s rating. A Standard and Poor’s spokesman said they wanted to see four trillion dollars of spending cuts and a commitment to stabilizing the debt as a share of gross domestic product (GDP), but the eventual deal fell short of that.
Chinese credit-rating agency Dagong Global Credit Rating Co. on Wednesday again downgraded U.S. sovereign debt and warned of further such moves, the state-run Xinhua news agency reported, though the action was unlikely to affect markets. Dagong cut U.S. Treasurys to A from A+, with a negative outlook, saying growth in U.S. debt is still outpacing revenue growth. Washington’s debt-ceiling deal may have made things worse for the U.S. economy, says Mohamed El-Erian, PMICO co-CIO, adding that his firm has revised down its outlook on growth, citing the continued malaise in the U.S. and Europe. Dagong downgraded U.S. debt from AA to A+ last November, citing the launch of the Federal Reserve’s second round of quantitative easing.