Gold, Silver, Metal Prices Commentary – April 21, 2010

by Jon Nadler, Kitco Metals Inc. on April 21, 2010 · 0 comments

Bullion update ... Autoworld Burns Rubber

Good Morning,

For the nth time this morning, the news feeds became swollen with news about Greece and the putative resolution to its months-long in-limbo financial situation. The very latest (but do not hold your breath over this one just yet) is that the country might ask for the ‘activation’ of the EU/IMF rescue package even prior to the conclusion of meetings intended to talk about…the package in Athens.

However, Finance Minister Papaconstantinou added that "I’m not saying that the government will ask for it [the aid package]." Clear enough? Well, euro speculators certainly did not warm up to those denials and rapidly pushed the common currency lower for a fifth day this morning, extending one of the longest periods of its losses in value. The euro was last seen at 1.338 against the US dollar, and the latter continued its safe-haven demand-driven rise, reaching the 81.30 mark on the trade-weighted index./p>

The greenback’s gains were effectively offset by continued fund buying of gold as the Kitco Gold Index showed this morning. Thus, the yellow metal showed little in the way of change but continued to hover near the $1140 level as participants await fresh developments on the Greece/Goldman/US economic fronts. For the moment, this value zone appears to be the one that bullion specs find comfortable.

Spot dealings opened the midweek session with a minor loss in gold. The metal turned higher later in the session, helped by mighty positive news on the earnings front from several US firms. Recovery=risk appetite=let’s buy more commodities. At this time, S&P opines that is envisions growth in the US economy even as the stimulus period draws to a close.

Of course, not every sector is equally happy when one takes a closer look. Airlines have reported losing nearly $2 billion to the six-day long ash cloud flight chaos that has affected a third of global air traffic, and the eruption is far from over –it’s just that there is a flight window open for the moment.

The gold spot bid price fell 60 cents to start at $1139.80 per ounce, while silver dropped 7 cents to the $17.75 spot bid level. Resistance remains in place for gold up around the $1150 level, while support might be found near the lower $1130s. No stopping platinum and palladium however; it might even be argued that they are helping gold by osmosis. They both gained massively this morning. The former climbed $23 to reach the $1738.00 figure, while the latter rose $17 to touch the $567.00 per troy ounce number. Rhodium marked time unchanged at $2900.00 this morning.

Clearly, fund money flows (esp. into Pt/Pd ETFs) remain a huge influence in the noble metals complex. However, ebullient news from the automotive world is not hurting, either. Over in Europe, Peugeot/Citroen announced a 28% rise in Q1 sales, while Daimler revised its profit projections upward. VW’s Q1 profits experienced a 95% gain. The wheels of recovery keep on rollin’…Meawhile, Marc Faber, famous investment guru, goes on Bloomberg TV and declares that he sees "danger signals’ in the Chinese economy. Yes, indeed. They were there a year ago, too…

Closer to home, the once-near-dead GM paid back all of the nearly $6 billion in loans in received back when things looked dire. Close that chapter. At any rate, institutional noble metals buyers have now come to compete with automakers (who may not have all that much in terms of inventory of these vital metals on hand) for available supplies of them. Some analysts envision $1900 platinum within a month’s time.

A second Wall Street powerhouse reported better-than-anticipated profits this morning. Morgan Stanley’s (largely fixed-income-based) trading revenues more than doubled from the levels it reported a year ago. Meanwhile, Goldman Sachs appears to have found a way to distance itself from culpability in the charges being leveled against it by the SEC by resorting to…finger pointing.

In a classic case of the "GG/BG" routine, the firm said the entire case rests on the actions/words of one (now on paid leave) employee. Thus, while Goldman went on to do "God’s work" there apparently was at least one disciple from the leadership on the ‘Other Side’ in its midst, allegedly trying to seduce innocent investors about the pleasures of mortgage-linked investments.

Paulson & Co., on the other hand, went into full-frontal offensive mode over the past couple of days, and albeit it has not been charged with anything as yet, the firm chose to assuage clients and investors via phone teleconferences, letters, and e-mails. No word yet on whether the firm has received any redemption requests from clients in the wake of the SEC charges and the mention of the Paulson & Co. name at about the same time…This is getting interesting…Speaking of temptation, Apple’s profits rose 90% vis-a-vis one year ago. Keep snapping up those glossy iPads, folks. It all helps. Back in the 80’s they used to call it yuppie porn. Now, it’s "essential personal gadgetry."

On a final note, Zale Corp, the struggling US jewellery firm, will reportedly sell a minority ownership stake to Golden Gate Capital Corp. — a little chunk worth about $100-$150 million. Hefty declines in sales (the economy+soaring metals prices = no sale at the local counter) may have prompted the plans for such a move.

Computer problems have been on the menu this morning, thus we have to cut this one short.

Watch the euro/dollar/Dow/oil dance and keep an eye on various Wall Street firms’ legal posturing. Hope the ash clouds steer clear of Europe for some time…

Happy Trading.

Jon Nadler
Senior Analyst

Kitco Metals Inc.
North America 

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In addition to bullion 2010 American Silver Eagles that are already available, the United States Mint this year will also issue the bullion America the Beautiful Silver Coins. Click on the link to visit a sister CoinNews’ site and learn about the coin and the new bullion series.

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