Greek Fears Escalating, USD Strength Weighing on Gold and Silver

Posted On: Tuesday, March 6, 2012

Greece is again front and center as the question of whether enough private sector creditors will accept the second bailout offer of a 53% writedown. If less than 75% tender their bonds, collective action clauses would be triggered. The fear is that this would cause a "credit event" that would lead to payouts on credit default swaps. The implications of such an action are unclear, but there is fear that this could cause a finacial cascade throughout the global financial system.

Meanwhile, concerns over global growth remain elevated following today's news that Europe's fourth quarter GDP fell 0.3%, and yesterday's announcement that China is targetting GDP growth of 7.5%. The USD continues to power higher, and has had a steady rise from last Wednesday. The EUR-USD was down .77% at 1.31146. Precious metals continued to falter, with gold breaking below the $1,700 level and silver falling below $32 per troy ounce.

Spot gold prices were down $29.42 at $1,677.30 per troy ounce. Spot silver prices were down $0.99at $33.03 per troy ounce. The gold-silver ratio is again above 50, now at 50.83.

Equities had a bad day as well, with Dow losses topping 200 points. The S&P 500 was down just over 1.5%.

Other News

Portugal increasingly looks fragile, and could be the next weak link to require further bailout funds. Yields on Portuguese government debt continue to rise, with Bloomberg reporting that the 10-year borrowing cost rising 2% in the last two weeks to 13.83%.

The ECB's balance sheet now tops 3 trillion EUR. This follows last Wednesday's second LTRO which saw the ECB lend 529.5 billion EUR.

Qualcomm (QCOM) said it would buyback up to $4billion in shares. Shares of QCOM were dragged lower in today's downturn, off $0.55 at $61.56 per share.

Today is Super Tuesday for the Republican primaries. 10 states are up for grabs, including Ohio, Massachusetts, Virginia, Tennessee, and Vermont. Mitt Romney continues to fall short in his attempt to garner the lead spot among the remaining contenders.

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Disclaimer: Gainesville Coins "Market Updates and In the News Section" provide our readers with features and analysis of the financial markets, and some of the factors that may be affecting market direction. While the information is obtained from sources we believe to be reliable, we do not guarantee its accuracy or its completeness, and this information should not be considered investment advice. Gainesville Coins provides these articles for informational purposes only, and they do not constitute a recommendation by Gainesville Coins to hold, to purchase, or to sell any investment.