Gold Spot Price Open: $1,187
Gold Spot Price Close: $1,182
Change in Gold Spot Price: -$5
Silver Spot Price Open: $16.10
Silver Spot Price Close: $15.84
Change in Silver Spot Price: -$0.26
Gold and silver spot values took decent hits today, mostly due to profit-taking after gains made over the weekend. When all was said and done, gold lost just around 5 dollars while silver accumulated larger losses of more than 25 cents. Platinum didn’t do much moving at all today, but palladium moved downward by more than ten dollars.
Greece Exit Looms, Still
When we headed into last weekend, there was a sense of optimism amongst global investors because a large portion of traders were under the impression that we might finally see Greece and its creditors see eye to eye regarding debt repayment restructuring. Unfortunately, that was not to be as past Saturday came and went without anything resembling a deal. Now, the marketplace opened the week up in a state of frenzy as investors finally begin to come to terms with the fact that a Greek exit from the Euro Zone is something we may see in the immediate future.
Further destabilizing the situation was a Greek government announcement made over the weekend calling for a referendum to be scheduled where citizens can vote on whether they favor an exit from the EU or not. Banks in Greece did not open on Monday and are reportedly going to remain closed until the 6th of July. For citizens looking to access their cash, they can do so via ATMs, though their daily withdrawal limits will be only 60 euros. A conflicting report maintained that Greek banks will open this Thursday as opposed to next Monday, but that much remains to be confirmed.
From the outside looking in it may seem like there is no avoiding a Greek exit from the European Union, but not everyone has been so quick to abandon hope. Luigi Speranza of BNB Paribas said in a note on made public very early Monday that, “The odds favor an eventual deal, but the probability of unintended consequences leading to a Greek euro exit has increased and is now at 20%, in our view. We expect a knee-jerk reaction from the markets when they open on Monday and expect them to price in a far larger chance of Greece leaving the euro.” The knee-jerk reaction was exactly what we saw as European equities suffered and the Euro currency fared poorly for much of the day. As the week moves forward I expect that we will maintain a focus on Greece but it is difficult to say what will come from all of this. On one hand I imagine that precious metals might receive some more safe-haven support as the week plays out, but on the other hand we may continue to see technical sellers dominate.
Puerto Rico Facing Situation Similar to Greece
A news story that broke recently holds that Puerto Rico is now fully incapable of paying back sovereign debts. According to the island’s governor Alejandro Garcia Padilla, the nation’s more than $70 billion worth of debt is not able to be repaid. He went on to describe Puerto Rico’s current financial situation as a “death spiral” that is likely to get far worse before it gets any better. With more municipal bond debt than any US state, Puerto Rico is in quite the debacle.
Though not much is expected to come from this situation right away, I expect that Puerto Rico will remain in the headlines as we venture further into the Summer doldrums; especially if fundamental, markets-moving data remains as light as it has been for the past few weeks.
Wrap-Up
Apart from continued focus on what is happening to Greece, I am of the belief that the duration of this week will be quiet and generally lackluster. With the 4th of July holiday in the United States taking place this Saturday, we will be seeing plenty of investors taking a majority of the week off to get a jump-start on vacations. At present, this much is looking like it will be of no benefit to gold nor silver.
