By Gainesville Coins - Monday, November 19, 2012 ....
Gold and silver posted strong gains as risk sentiment surged on waning fears over the fiscal cliff. However, while Friday's talks between President Obama and Congressional leaders may have been construed as constructive, Congress is in recess for Thanksgiving until November 26th. The clock is ticking and very little time remains to get anything done. The fiscal cliff represents $607 billion in automatic tax increases and spending cuts that are forecast to drive the U.S. into recession unless averted by Washington.
Stocks surged on the same fiscal cliff hopes. Since President Obama's election, stocks had dropped nearly 5% on a combination of fiscal cliff fears, renewed concern over Greece and Spain, and the possibility of military action by Israel in Gaza. EU leaders are scheduled to meet tomorrow to again discuss the situation in Greece. Spain is again making unwelcome headlines with total bad loans reaching 182 billion EUR in September, or 10.7% of total Spanish loans.
Spot gold prices jumped above the $1,730 level, adding $18.48 to $1,732.53 per troy ounce. Spot silver prices added $0.87 to $33.20. The gold-silver ratio edged higher to 53.04 from 52.77. Platinum prices were up $19.00 at $1,582.00 per ounce. Palladium prices added $10.00 at $645.50.
Commodities outside precious metals were broadly higher. WTI crude futures continue to be supported by the escalating Middle East tensions. WTI crude futures were up $2.33 to $89.25. Copper futures were sharply higher, adding $0.0745 to $3.536 per pound.
Treasuries were mildly lower as stocks advanced. The yield on the benchmark 10-year Treasury yield edged higher to 1.61% from 1.58%. The EUR-USD showed modest strength, up 0.24% to 1.2778.
A better than expected earnings report from Lowe's (LOW) is aiding the market's advance. Lowe's posted earnings of $0.35 versus $0.18 in the year ago period. Excluding items, the company posted earnings per share of $0.40, better than the $0.35 that had been expected. The company did warn that its full year profit would be $1.64, below the consensus forecast of $1.66. Shares of LOW were up $1.98 at $33.96.
Existing home sales for October rose to a 4.79 million annual rate, abve the consensus forecast of a 4.7 million annual rate, and down from the prior month's 4.75 million annual rate.
The National Association of Home Builders (NAHB) housing market index for November rose to 46, better than the consensus forecast of 42, and following the prior month's 41.
The IMF, the EU, and the ECB continue to debate on how to deal with Greece's massive debt load. There is still no firm time table for the release of the next 31 billion EUR tranche. IMF's Lagarde says reducing Greece's debt should be "rooted in reality and not wishful thinking." Full Reuters article.
Israel ready to invade Gaza if cease fire efforts fail. Full Bloomberg article.
Shares of Apple (AAPL) are surging as investors extend the bounce back that began on Friday when shares of the tech giant fell to just under $510.00. Shares of AAPL are up $38.05 at $565.73.