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Morning Snapshot
Sep 29th, 2011 09:01 by News

29-Sep (USAGOLD) — Gold has rebounded from yesterday’s soft close below $1600. While the tone remains generally defensive in the wake of recent sharp losses, the market has been buoyed by passage of the EFSF expansion by the German parliament. I think even many of the conservative mavericks in the Bundestag looked over the precipice and realized that rejection of the proposal would have precipitated a disorderly Greek default, sending all of Europe — and possibly the world — into economic turmoil.

While politicians have acknowledged the graveness of the situation in Greece and the rest of the EU periphery, make no mistake, endless can-kicking does not solve the underlying problem. German taxpayers are on the hook for an additional €91 bln in guarantees; and even so, Greece is still likely to default. Nonetheless, risk appetite has been somewhat revived as at least the immediate crisis seems to have been averted by today’s “ja” vote.

• US NAR pending home sales index -1.2% to 88.6 in Aug, vs 89.7 in Jul; +7.7% y/y.
• US BLS preliminary benchmark revisions +192k total nonfarm, 140k of which were private sector jobs.
• US initial jobless claims -37k to 391k for the week ended 24-Sep, well below market expectations, vs upward revised 428k in previous week.
• Canada IPPI +0.4% in Aug, above market expectations of -0.2%; +5.2% y/y. Strong rises in motor vehicle and chemical product prices noted.
• UK GfK consumer confidence fell to -35 in Sep, below market expectations of -34, vs -31 in Aug.
• Germany unemployment change (sa) -26K in Sep, a bigger drop than the market expected. Unemployment rate ticks lower to 6.9%.
• Eurozone economic confidence fell to 95.0 in Sep, below market expectations of 95.8, vs 98.3 in Aug; industrial confidence falls to -5.9.
• Eurozone consumer confidence fell to -19.1 in Sep, below market expectations of -18.9, vs -18.9 previously.

Merkel Breathes Sigh of Relief: German Parliament Passes Euro Fund Expansion
Sep 29th, 2011 08:25 by News

29-Sep (Der Spiegel) — Chancellor Angela Merkel got the majority she needed on Thursday as German parliament passed the expansion of the euro backstop fund, the EFSF. With fewer conservative renegades than feared, Merkel can breathe a sigh of relief. But with more difficult decisions approaching, the respite may not last.
Info

German parliamentarians on Thursday approved the planned expansion of the European Financial Stability Facility (EFSF) with 523 voting in favor, 85 against and three abstentions.

The bill’s passage is a vital step in euro-zone efforts to increase the fund’s lending capacity from its current €250 billion ($338 billion) to €440 billion. Germany’s share of guarantees for the fund will rise from €120 billion to €211 billion, though several other euro-zone parliaments must still vote on the expansion.

[source]

Central Banks Add to Gold Holdings
Sep 29th, 2011 08:23 by News

28-Sep (The Wall Street Journal) — Emerging-market countries continued to top up their gold reserves in August, with Russia, Thailand and Bolivia among those to add to their holdings.

Central banks have bought gold as some seek to diversify foreign-exchange reserves that have grown along with emerging market export industries. The purchases have helped drive the price of gold higher, because they absorb supply and boost market sentiment.

This year, central-bank officials also began buying in earnest in reaction to the government debt woes affecting the U.S. dollar and the euro.

While central-bank officials are careful not to skew the market with huge purchases or disposals, metals consultancy GFMS Ltd. said “further large official-sector purchases should help sustain prices.”

[source]

US NAR pending home sales index -1.2% to 88.6 in Aug, vs 89.7 in Jul; +7.7% y/y.
Sep 29th, 2011 08:21 by News
Gold higher at 1615.00 (+26.40). Silver 30.033 (+0.85). Dollar easier. Euro better. Stocks called higher. Treasuries steady to higher.
Sep 29th, 2011 06:20 by News
Euro Crisis Makes Fed Lender of Only Resort as Banks Chase Dollar Funding
Sep 28th, 2011 15:28 by News

28-Sep (Bloomberg) — The Federal Reserve, chastised by Congress for lending money to foreign institutions including a Libyan-owned bank, is once again the lender of last resort for banks around the world it knows little about.

Three years after the collapse of Lehman Brothers Holdings Inc., money-market borrowing rates for dollars are rising, leading the Fed and European Central Bank to make the currency available to Europe’s institutions for as many as three months. U.S. prime money-market funds cut their exposure to euro-zone bank deposits and commercial paper, or short-term IOUs, to $214 billion in August from $391 billion at the end of last year, according to JPMorgan Chase & Co. data.

The failure of regulators worldwide to address European banks’ fragile dependence on short-term funding is “putting the Fed in a really awkward position,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics, a Washington regulatory research firm whose clients include the biggest U.S. banks. The swaps with Europe “are an extremely advantageous political football” for critics of the Fed, she said.

[source]

Merkel’s credibility at stake in German bailout vote
Sep 28th, 2011 10:36 by News

28-Sep (BBC) — The 620 members of Germany’s parliament, the Bundestag, will shoulder a great weight when they enter the chamber in the old Reichstag building in Berlin on Thursday morning.

They must decide whether to block the expansion of the rescue fund for Greece.

Were they to say “no”, the whole effort to keep the eurozone intact would bump up sharp against a block.

…All the arithmetic indicates that Chancellor Angela Merkel will get the overall majority she needs. The main opposition parties, the SPD and the Greens, have indicated that they will support the expansion of the fund.

But, if the majority is untidy, with the chancellor having to rely on the votes of opponents, that might be interpreted as political weakness at the top – and, moreover, at the top of one of the countries that really matters, as the world tries to avoid a return to recession.

[source]

“If you’re not in gold, now is the time to do it”
Sep 28th, 2011 10:12 by News

Sept 29 (Breakout) – Interview with Rob Lutts, president of Cabot Money Management

“I say two or three thousand very easy in the next two to four years. Most important thing to remember is that gold is in a bull market and its likely the conditions we just went through aren’t going to change. Investment demand is going to build, supply is going to be limited and we’re getting close to that love affair stage, and that’s the most exciting and interesting….”

The Daily Market Report
Sep 28th, 2011 09:20 by News

Markets Remain Tentative Amid Greek Uncertainty


28-Sep (USAGOLD) — Gold is higher this morning, but still in the lower-third of this month’s range, as ongoing uncertainty about the fate of Greece continues to have global markets on edge. The troika returns to Greece today to resume their audit. You may recall that the troika abruptly departed Athens early in the month over disagreements with the Greek government about their massive budget deficits and how best to make up for the funding shortfalls.

If they were disenchanted then, certainly they are going to be less than thrilled now. Due to the slow implementation of austerity measures and economic downturn — which is being largely driven by those very same austerity measures — Greece’s funding needs have continued to grow. The €109 bln bailout2.0 that was agreed to just 2-months ago simply isn’t going to suffice any more. According to the FT, “Athens’ funding needs over the next three years have grown beyond the €172bn forecast this summer.”

German Chancellor Angela Merkel has already hinted today that the terms of the July bailout may have to be renegotiated, saying, “We have to wait and see what the troika … finds and what it will tell us (whether) we will have to renegotiate or not.” Well, if she really wants to prevent an disorderly Greek default and contagion to other EU member states, she better plan on coming up with some more money (or authorize more leverage). Merkel faces a critical vote in the German parliament tomorrow, where she is hoping that expansion of the EFSF will be authorized.

Fragmentation within her own party makes such authorization anything but a sure thing, but markets seem to be holding out hope that German policymakers recognize how dire the situation really is. If the Bundestag blocks expansion of the EFSF, all-hell would likely break loose. Since the German constitutional court made it clear that parliament would have the final say about German participation in future bailouts several weeks ago, vested parties have been scrambling to put contingency plans in place in case of a possible “nein” from the Bundestag. The plans primarily would result in a massive flood of liquidity into the European banking system, but whether that would actually prevent broader contagion to other already vulnerable PIIGS is dubious at best.

The massive deleveraging seen across global markets in recent sessions is reflective of the markets unease at the realization that Europe may well be running out of time. While further delevereging can not be ruled out, if Europe leads the world back into financial crisis, gold is a critical hedge against the systemic risks that will result.

While the recent rise in growth risks and resulting worries of possible deflation may have contributed to the sell-off in metals, German CPI unexpectedly accelerated to 2.6% y/y in September, its highest level in 3-years. Meanwhile, German HICP inflation rose to 2.8%. The ECB gave themselves a little maneuvering room with some controversial rate hikes earlier in the year, but these data out of Germany may have effectively hamstrung the central bank.

The defining moment in German economic history is the nightmare hyperinflation of the Weimar Republic. German’s are understandably extremely sensitive to price risks. As the ECB is for all intents and purposes an extension of the German Bundesbank, one can expect monetary policy to be generally reflective of the best interest of Germany…particularly when it comes to inflation.

If a rate cut is off the table, that leaves more unconventional measures as the only real options. While such measures may also prove inflationary, the ECB has been somewhat successful in end-running any potential German objections (and perhaps the intent of their mandate) by executing quantitative easing in the secondary market. The Bundesbank has expressed displeasure at these bond purchases in the past and has vehemently objected to both broader ECB bond buying authority, as well as eurobonds; the two measures that many economists agree have the best chance of staving-off periphery defaults.

Greece to face inspectors, Merkel hints at bailout
Sep 28th, 2011 07:44 by News

28-Sep (Reuters) — Greece’s lenders are sending a team to Athens to inspect a government austerity plan they want implemented in exchange for aid, while Germany suggested a new bailout may have to be renegotiated.

Facing a wave of strikes and protests, Greece’s Socialist government is accelerating its debt strategy to meet the terms of an International Monetary Fund and European Union rescue deal so it can receive a new loan next month and avoid bankruptcy.

The “troika” team of inspectors, which had threatened to cut off aid if Athens did not move faster, will begin talks on Thursday on a plan demanded by lenders to deepen budget cuts and raise taxes, which has set off protests not seen since June when riot police fought running battles with activists.

[source]

US durable goods orders -0.1% in Aug, above market expectations of -0.5%, vs +4.1% Jul.
Sep 28th, 2011 06:39 by News
Gold 1650.05 (+6.50). Silver 31.39 (-0.353). Both dollar and euro better. Stocks called higher. Treasuries mixed.
Sep 28th, 2011 06:37 by News
Split opens over Greek bail-out terms
Sep 27th, 2011 15:37 by News

27-Sep (Financial Times) — A split has opened in the eurozone over the terms of Greece’s second €109bn bail-out with as many as seven of the bloc’s 17 members arguing for private creditors to swallow a bigger writedown on their Greek bond holdings, according to senior European officials.

The divisions have emerged amid mounting concerns that Athens’ funding needs are much bigger than estimated just two months ago. They threaten to unpick a painfully negotiated deal reached with private sector bond holders in July.

…Because of the recent economic downturn and Greece’s slow implementation of austerity measures, officials estimate Athens’ funding needs over the next three years have grown beyond the €172bn forecast this summer.

[source]

PG View: Missed numbers out of Greece? Say it isn’t so. How far beyond €172 bln are we talking here? Does any number they give have any meaning? The funding needs when the last deal was cut back 0n 21-Jul where €109 bln, since then Greece’s needs have exploded about 60%…or more! No sane investor would throw more money into this sinkhole of unknowns.

Europe’s High-Risk Gamble
Sep 27th, 2011 15:36 by News

by Martin Feldstein
27-Sep (ProSyn) — The Greek government needs to escape from an otherwise impossible situation. It has an unmanageable level of government debt (150% of GDP, rising this year by ten percentage points), a collapsing economy (with GDP down by more than 7% this year, pushing the unemployment rate up to 16%), a chronic balance-of-payments deficit (now at 8% of GDP), and insolvent banks that are rapidly losing deposits.

The only way out is for Greece to default on its sovereign debt. When it does, it must write down the principal value of that debt by at least 50%. The current plan to reduce the present value of privately held bonds by 20% is just a first small step toward this outcome.

[source]

SHILLER: House Prices Probably Won’t Hit Bottom For Years
Sep 27th, 2011 15:15 by News

27-Sep (BusinessInsider) — The July numbers for the most widely followed measure of house prices, the S&P/Case-Shiller Index, were released this morning.

The numbers weren’t terrible–on a seasonally adjusted basis, July was basically the same as June–but one of the creators of the index, Professor Robert Shiller of Yale University, isn’t taking much solace in them.

The economy has deteriorated significantly since July, Professor Shiller observes, and he suspects that the housing market has followed suit.

[source]

Roubini: U.S. in Throes of Economic Contraction
Sep 27th, 2011 14:22 by News

27-Sep (Bloomberg) — Most advanced economies are lapsing back into recession while the U.S. is already in the throes of an economic contraction, according to Nouriel Roubini, co- founder and chairman of Roubini Global Economics LLC.

“The way I see the global economy, I think we’re entering into a recession again in most advanced economies,” Roubini said in a panel discussion today at the Bloomberg Dealmakers Summit in New York. “I think we’re already into one in the U.S. based on the hard and soft data — same with most of the euro zone, same with the United Kingdom.”

[source]

Papandreou calls for German tolerance
Sep 27th, 2011 11:35 by News

27-Sep (Financial Times) — George Papandreou, the Greek prime minister, has called on German industrialists to stop sniping at Greece and recognise the “superhuman effort” being made by his country to impose drastic austerity measures in a deepening recession.

Against a background of growing speculation in financial markets that his government may be forced to default on its borrowing, in spite of rescue efforts of its eurozone partners, he said: “I can guarantee that Greece will live up to all its commitments.”

[source]

The Daily Market Report
Sep 27th, 2011 11:08 by News

Hope Springs Eternal


Global asset prices are on the mend on the latest expectations of a resolution to the Greek crisis. Greek Prime Minister George Papandreou took his show on the road to Berlin, hoping to convince policymakers in the heart of Europe that with just a little more money, Greece is ready to reform its profligate ways. Papandreou assured German business leaders that further bailout funds wouldn’t be an investment in the failures of the past, but in the future successes of Greece. Given the magnitude of those past failures, core-Europe remains understandably skeptical; worried they’d be throwing good money after bad.

The latest scheme calls for the €440 bln ESFS to be levered up to 8-times, to give the bailout fund more punch. This way, policymakers avoid having to ask EU member states to contribute more money outright to broadly unpopular bailouts of the periphery. Yet in employing leverage, they expose those member states to vastly greater risk. Leverage is very much a double-edged sword. Imagine the populist outrage if further bailouts — like the initial bailouts before them — fail to prevent an eventual default and the fiscal situations in core-Europe are decimated as a result. At that point, you have an even greater problem on your hands…or you gear-up to 32X and try again.

The German’s seem keenly aware of the risk with recent polls showing nearly 75% oppose pledging more money to debt ridden EU members. German Chancellor Merkel is walking the tight-rope in between her conviction that the euro must be saved and the political reality of the aforementioned polls.

Merkel said that Germany would provide “any support possible” to rebuild confidence in Greece, knowing full-well that there are indeed limits to what Germany is willing to do — or can do for that matter — as support within her own coalition continues to crumble. With a critical parliamentary vote slated for Thursday, there have already been reports from officials within Germany today that leveraging of the EFSF is off the table…if it was ever really on the table.

While the daily proclamation that “we have a plan” is growing tiresome, the charade has succeeded in buying time. Greece has yet to default even as CDS premiums have screamed for months that such an outcome is all-but assured. The troika will reportedly return to Greece tomorrow to resume their audit, but the market is getting increasingly impatient. In continuing to drag-out the Greek drama, the vested parties risk completely losing the confidence of the market, precipitating the very disorderly default that they are so desperately seeking to avoid.

Hedge funds seen sticking with gold despite sell-off
Sep 27th, 2011 09:27 by News

Sept 28 (Reuters) — The recent sell-off in gold may not be enough to make some hedge funds with long-term bull positions change their views that the metal is still one of the best bets for profit in a perilous global economy.

Gold has dropped around 11 percent since the start of last week as liquidity-strapped investors scrambled to convert gold into cash amid fears over Greece’s near-bankruptcy, likely hitting a number of hedge funds which have profited from its bull run in recent years.

However, the yellow metal is still around 7 percent above its level at the start of July, and is up 14 percent this year, leaving long-term holders comfortably in the black for now.

“I don’t think… people who hold it as another currency… are changing their view,” said Morten Spenner, chief executive of $2.8 billion fund of funds firm International Asset Management

[Source]

Premature euro rescue talk buoys markets
Sep 27th, 2011 08:24 by News

27-Sep (Reuters) — Talk of beefing up the euro zone’s bailout fund lifted stocks on Tuesday but complicated the debate in Germany where Angela Merkel is struggling to rally her coalition behind her in aiding Europe’s weak economies and banks.

European shares rallied for a second day and safe-haven German bonds fell on reports that European policymakers were preparing more decisive action to tackle the bloc’s sovereign debt crisis by leveraging up the 440 billion euro rescue pot.

[source]

Morning Snapshot
Sep 27th, 2011 08:17 by News

27-Sep (USAGOLD) — Gold has retraced nearly 38.2% of its recent correction, having found support yesterday right in front of the 200-day moving average. The broad rebound in assets is being largely attributed to the latest in a long string of plans to save Europe, which has resulted in a rise in risk appetite. The new scheme calls for the €440 bln EFSF rescue fund to be leveraged up to 8-times, with those funds being used to buy periphery sovereign debt, in the hopes of preventing contagion to core-Europe.

With little political or public resolve in core-Europe to increase the size of the bailout fund, policymakers are making an end-run around the will of the people: If you wont give us more money to bailout the PIIGS, we’ll just leverage up the money we have. Ah, but leverage is very much a double-edged sword…

• US consumer confidence edged higher in Sep to 45.4, below market expectations of 46.0, vs upward revised 45.2 in Aug.
• US S&P Case-Shiller home price index for 20-cities +0.9% in Jul to 142.8 (nsa); -4.1% y/y, not quite as bad as expectations.
• Eurozone M3 money supply growth unexpectedly accelerated to 2.8% y/y in Aug.
• Germany GfK consumer confidence unch at 5.2 in Oct, slightly better than market expectations.

Gold higher at 1659.22 (+40.20). Silver 32.648 (+2.353). Dollar slips. Euro better. Stocks called higher. Trsys mostly lower.
Sep 27th, 2011 06:26 by News
Euro zone crisis is “scaring the world”: Obama
Sep 26th, 2011 15:02 by News

26-Sep (Reuters) — President Barack Obama said on Monday the debt crisis in Europe was “scaring the world” and that leaders in the euro zone were not dealing with the issue quickly enough.

The recovery of the U.S. economy suffered setbacks this year due to problems around the world, Obama said, including the Arab Spring uprisings that drove up energy prices and worries about the financial health of European nations.

…”So they are going through a financial crisis that is scaring the world and they are trying to take responsible actions but those actions haven’t been quite as quick as they need to be.”

[source]

PG View: While we have our own massive debt problem here in America, and we’re on the verge of a government shut-down once again, there’s nothing “scary” going on here… It’s all Europe’s fault.

Currency Crisis: German Central Bank Opposed to Merkel’s Euro Course
Sep 26th, 2011 14:54 by News

26-Sep (Der Spiegel) — The new Bundesbank president, Jens Weidmann, used to be one of Merkel’s closest advisers. Now, he is one of her staunchest critics over the euro rescue. He is strictly opposed to the European Central Bank’s policy of buying up bonds from debt-stricken countries — and is winning a growing number of allies for his cause.

…Weidmann has criticized decisions related to the euro bailout as “inconsistent” and “highly risky.” He has called on politicians in Berlin to change their course, and he has been advocating “the Bundesbank’s principles regarding stability.” All of those things put him at odds with top officials at the European Central Bank (ECB).

Behind the glass facade of ECB headquarters in Frankfurt, a fierce battle over fundamental beliefs has been smoldering for months. ECB President Jean-Claude Trichet and the majority of his colleagues are willing to rush to the aid of embattled EU finance ministers and to make major purchases of the sovereign bonds of debt-ridden euro-zone countries, such as Greece, Portugal and Italy.

For his part, Weidmann is strictly opposed to these measures. He believes they amount to an unacceptable means of financing states through effectively printing money. In fact, he has come to assume the mantle of the last staunch defender of monetary stability.

[source]

Europe to Form Special Purpose Vehicle, Saving Europe, US Stocks: Report
Sep 26th, 2011 13:40 by News

26-Sep (The Wall Street Journal) — European officials are working on a scheme to build a special purpose vehicle that would lever up existing EFSF money 8 to 1 to buy up European sovereign debt and then issue bonds, CNBC is reporting.

Naturally, stocks are through the roof on this. Because what could possibly go wrong with an SPV? Or a CDO-squared, as Zero Hedge called it?

[source]

PG View: Gearing up bailout funds to buy junk sovereign debt? Seriously…what could possibly go wrong?

Fed’s Kocherlakota Says Central Banks Could Guarantee Debts
Sep 26th, 2011 13:29 by News

26-Sep (Bloomberg) — Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said a central bank seeking to control inflation needs to find a balance between supporting a government’s debt issuance and allowing for sovereign default.

“It may turn out to be optimal for central banks to guarantee fiscal authority debts in some situations,” Kocherlakota said today in a panel discussion in Chicago. If so, economists may need to consider control of inflation as “something that is done jointly by the fiscal authority and the central bank.” He didn’t back such guarantees, saying a central bank furthers its independence by avoiding “interventions.”

[source]

PG View: More junk in the balance sheets of central banks? They better be stocking up on paper and ink!

Morning Snapshot
Sep 26th, 2011 10:58 by News

26-Sep (USAGOLD) – Gold extended lower in overseas trading, touching levels not seen since early-July, as global deleveraging continued. The important 200-day moving average (1529.00) successfully contained the downside, and the yellow metal subsequently rebounded more than $100. More recently, a consolidative intraday tone has emerged around the $1600 level.

There was apparently some progress on Greece at the weekend IMF meeting. Seems like we’ve heard that before. Nonetheless, Greece is now racing to secure the necessary Parliamentary approval of further austerity measures. Seems like we’ve heard that before too. That vote is likely to occur tomorrow. More strikes and protests are already queued up for the coming weeks.

The troika is expected to return to Greece this week to resume their fiscal audit. Even with assurances of further austerity, it seems that providing the next tranche of bailout funds has little real hope of a preventing a default. It is this expectation of default, and expected haircuts for Greek bondholders that has been a major contributing factor to the broad deleveraging sell-off across a wide swath of asset classes.

Gold shows signs of bottoming
Sep 26th, 2011 10:14 by News

Gold continued its sell-off overnight, plunging over $100 from Friday’s close for the second straight day – but is now showing signs of bottoming. Over the past 10 years of this gold bull market, large scale corrections have frequently taken the price back to/or near the 200 day moving average. Only once has a correction breached the 200 day moving average – during the height of the financial crisis in 2008. Last night, gold reversed right at the 200 day moving average, touching it for only a moment, before rallying $50 in a few minutes, and is now trading almost $80+ over that level.

OPINION

With Europe on the brink of a full blown sovereign debt crisis, broad systemic failures are again front page news, with some talk of the Euro failing as a currency altogether. Those who participated in the gold market in late 2008 saw the price drop dramatically from $930 an ounce to $685 in two week’s time (a 35% drop). The drop in gold over the past two weeks is eerily similar in both pace and magnitude. The counter-intuitive nature of the drop in 2008 prompted massive physical shortages as investors flocked to the yellow metal as a safe haven. The price responded thereafter as well…nearly tripling in three years. Physical demand through this pullback has been just as vigorous. So while the latest move will test the conviction of even the most ardent believer, those who remain committed in their resolve may very well see this range as the best buying opportunity in the gold market since 2008.

Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. Centennial Precious Metals, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD – Centennial Precious Metals does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.

Global economy pushed to the brink
Sep 23rd, 2011 16:20 by News

23-Sep (Financial Times) — Time is running out to find a solution to the eurozone crisis and prevent another global recession, finance ministers warned on Friday, as they hinted that discussions were under way to boost the firepower of European rescue funds.

Financial markets experienced another day of intense volatility as investors struggled to interpret an emergency statement from the Group of 20 leading economies, which met on the sidelines of the International Monetary Fund and World Bank meetings in Washington.

…Gold continued to slide sharply and US oil prices traded below $80 a barrel, their lowest in more than a year. Shares rallied modestly in Europe and the US, accompanied by selling in government bonds and the dollar.

[http://www.ft.com/intl/cms/s/0/9bedaa82-e603-11e0-960c-00144feabdc0.html#axzz1YUm6X1iD]

CME raises margins for gold, silver, copper
Sep 23rd, 2011 15:45 by News

23-Sep (MarketWatch) — The CME Group CME +0.00% , the parent company of the New York Mercantile Exchange, on Friday raised margin requirements for some gold, silver and copper futures contracts. Margins are money investors must put up to be able to trade and hold futures contracts. Initial requirements for gold’s benchmark contract rose 21% to $11,475 per contract, from $9,450 and maintenance margins climbed to $8,500 from $7,000 per contract. Initial requirements for silver’s benchmark contract rose 16% to $24,975 per contract, from $21,600 and maintenance margins climbed to $18,500 from $16,000 per contract.

[source]

PG View: It is likely that expectations of this margin hike factored into today’s sell-off.


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