Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Pre-COVID US Economy Wasn’t All That Great Either - 4th Dec 20
Bitcoin Breath Taking Surge - Crypto Trading Event - 4th Dec 20
Platinum Begins A New Rally – Gold & Silver Will Follow - 4th Dec 20
Don't Let the Silver (and Gold) Bull Shake You Off! - 4th Dec 20
Stronger Risk Appetite Sends Gold below $1,800 - 4th Dec 20
A new “miracle compound” is set to take over the biotech market - 4th Dec 20
Eiro-group Review –The power of trading education - 4th Dec 20
Early Investors set to win big as FDA fast-tracks this ancient medicine - 3rd Dec 20
New PC System Switch On, Where's Windows 10 Licence Key? Overclockers UK OEM Review (5) - 3rd Dec 20
Poundland Budget Christmas Decorations Shopping 2020 to Beat the Corona Economic Depression - 3rd Dec 20
What is the right type of insurance for you, and how do you find it? - 3rd Dec 20
What Are the 3 Stocks That Will Benefit from Covid-19? - 3rd Dec 20
Gold & the USDX: Correlations - 2nd Dec 20
How An Ancient Medicine Is Taking On The $16 Trillion Pharmaceutical Industry - 2nd Dec 20
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold and Silver Remain Strong as Greece Debt Nears Deadline

Commodities / Gold and Silver 2012 Feb 07, 2012 - 12:41 PM GMT

By: Eric_McWhinnie

Commodities

Precious metals posted their worst daily performance of the year on Friday.  A stronger-than-expected, but highly criticized unemployment report added strength to the U.S. recovery story and the dollar.  Now, the U.S. dollar continues to climb higher as Greek politicians struggle to agree on an austerity plan that is needed in order to secure another bailout for the country.  Although the euro is giving a boost to the dollar, gold and silver continue to maintain key support levels.


After headlines read that Greece was hours away from a deal last week, the markets are still waiting on some type of a resolution.  International creditors are demanding more austerity measures from Greece, but failed to reach an agreement over the weekend.  The austerity measures are a precondition to Greece receiving another bailout.  On March 20, Greece has a 14.5 billion euro bond payment to make, and currently does not have the funds to do so.  However, another bailout does not solve the underlying problem of too much debt.  Brian Dolan, chief currency strategist at Forex.com explained, “If a deal is reached, we think it will likely be the high point in terms of good news in the euro-zone debt crisis.  Markets are likely to conclude that even with a deal, Greek debt levels are still unsustainable in the long run.”

Even though the U.S. has debt problems of its own, investors are quick to seek out safety in the U.S. dollar by purchasing Treasury instruments.  In fact, demand is so strong, the Treasury is considering permitting negative interest rate bids in auctions for Treasury bills.  In a closed meeting last week, dealers and Treasury officials discussed selling T-bills above par value.  Thus, when the T-bill matured, investors would receive par value, representing a negative interest rate.  The T-bills could gain value in the secondary market, but the willingness to initially buy bonds at negative interest rates, without even considering inflation, represents strong demand for the dollar as a safe-haven.

“As long as the United States maintains its modest growth and the EU continues to disappoint, you would expect the dollar would continue to strengthen, and that wouldn’t be positive for gold,” said Carl Firman, an analyst at VM Group.  On Monday, gold prices reached as low as $1,714 per ounce, while silver declined to $32.98.  However, both metals are holding key support levels.  As my premium subscribers know, gold has significant support at $1,680, while the $30 price point is an important level to watch for in silver.  Although both metals are subject to volatility, their long-term trend of being a true safe-haven remains in place.  The Treasury’s willingness to consider allowing negative rates at T-bill auctions also provides investors with another reason to choose gold over dollars.  Gold critics are often quick to point out that gold does not pay dividends or interest.  However, with negative T-bill interest rates at auction being discussed, the dollar could soon lose this interest rate advantage over gold.

For more analysis on our support levels and ranges for gold and silver, consider a free 14-day trial to our acclaimed Gold & Silver Investment Newsletter.

By Eric_McWhinnie

http://wallstcheatsheet.com

Wall St. Cheat Sheet : Only days after the S&P 500 crashed to the depths of hell at 666, the Hoffman brothers launched Wall St. Cheat Sheet: one of the fastest growing financial media sites on the web. Like a samurai, our mission is to cut through the bull and bear shit with extraordinary insights, a fresh voice, and razor-sharp wit. We provide the highest quality education and information for active investors, financial professionals, and entrepreneurs.

© 2012 Copyright Eric McWhinnie - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules