Gold & Silver Prices Surged On Banking Problems
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Stuppler & Company is proud to provide our clients this Weekly Market Report (WMR). The report gives you my overview of the prior week’s precious metal and rare coin market activity and news. In each WMR, I share the current status of Gold and Silver along with their support and resistance levels. |
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This Week's Headlines: |
Last week was the best week Gold has had in over 3 years, up $106.30, closing at $1,972 per ounce. Gold opened higher on Monday and kept on moving higher all week, reaching a high of
$1,993 before seeing some short-term profit taking.
What is causing this record rally in the Gold market?
Many of the largest countries in the world are carefully looking at the liquidity of their largest banking institutions. Concerns about a major bank having liquidity problems has taken priority.
After the failure of three banks in the U.S. (Silvergate Corporation, Silicon Valley Bank, and Signature Bank) caused the Fed to take serious action last week. Through the Federal Deposit Insurance Corporation (FDIC), regulators paid off all depositors in these banks, regardless of the amount. The FDIC only insures bank accounts for $250,000, however the seriousness of the problem, caused them to completely pay off all account holders at these banks. If the FDIC hadn’t paid all depositors completely, it’s a good bet that we would have seen a movement of large bank accounts from regional and local banks to the big 10 banking institutions.
Other banks in the U.S. (First Republic) and in Europe (Credit Suisse) are having liquidity issues. The U.S. Fed will be forced to inject $2 Trillion into the financial markets to provide many local and regional banks with a backstop program.
Credit Suisse, founded in 1856, has been a pillar of the Swiss financial sector ever since Credit Suisse's shares went into free fall last Friday. Even a statement of confidence from the Swiss National Bank and an offer of $50bn (£41bn) in financial support, couldn't stabilize the situation. So, over the weekend Switzerland’s biggest bank, UBS, has agreed to buy its ailing rival Credit Suisse in an emergency rescue deal aimed at stemming financial market panic unleashed by the failure of American banks earlier this month.
Today: Gold reached a high this morning of $2,011 per ounce in early European trading before seeing some short-term profit taking. The Fed and other global central banks jointly announced on Sunday that they were working together to make dollar liquidity more readily available to keep the U.S. currency flowing through the world’s banking system. Investor concerned about the global banking crisis are eyeing the Federal Reserve’s monetary policy decision this coming Wednesday.
Silver moved higher with Gold last week, reaching a high of $22.70 per ounce before slowing down. Silver closed at $22.40 per ounce last Friday, up $1.84 for the week, an extraordinary 9% increase. Physical demand for many of the popular Silver investment coins soared higher last week, as premiums jumped. The Silver-to-Gold ratio dropped on Friday to 88-to 1.
Today: As Gold moved higher in Europe, Silver rallied to a high of $22.76 before seeing selling. It would be healthy for the short and long term Silver price, for Silver to stay above the $22 level for the balance of this week.
