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    JM Bullion Gold and Silver Market Update (9/23/15)

    Gold Spot Price Open: $1,128

    Gold Spot Price Close: $1,132

    Change in Gold Spot Price: +$4

    Silver Spot Price Open: $14.85

    Silver Spot Price Close: $14.87

    Change in Silver Spot Price: +$0.02

    Precious metals bounced back on Wednesday after two consecutive days’ worth of losses to begin the week. When all was said and done, gold gained more than six dollars while silver’s gains were a more modest three cents. Platinum declined to a multi-year low on a Volkswagen scandal while palladium managed to gain more than 40 dollars.

    Platinum Falls on VW Scandal

    For a second consecutive day platinum hit a multi-year low on decreased demand and a scandal involving one of the world’s leading auto manufacturers. According to accusations, Volkswagen cheated in US emissions tests. The German company has now lost a good bit of its value and investors the world over have expressed doubts with regard to whether or not they can survive these allegations. According to David Govett, trader at Marex Spectron, “The fact that Volkswagen have done this little trick means that people are going to start saying ‘Actually, we shouldn’t have diesel cars, let’s head toward petrol or electric.’”

    In addition to platinum suffering as a result of this latest VW scandal, the metal is trending downwards due to less than stellar outlooks on Chinese consumption and overproduction of the metal in South Africa. If this diesel scandal spreads beyond VW, we may see platinum’s value take another nosedive. You may be wondering what diesel and platinum have to do with one another; the answer is that platinum is used in motor vehicle’s catalytic converters. It helps clean the emissions so that a diesel car’s output is not overly noxious or harmful to the environment. This is a relatively new development and also one we will keep a close eye on moving forward as it stands the chance of affecting the entire precious metals market and not just platinum.

    Gold Gains on Poor US Data

    Gold and silver were quick to capitalize on reports of further weakness stemming from the United States’ manufacturing sector. According to research firm Markit, the US September PMI estimate for the manufacturing sector remains unchanged from August’s reading of 53.0. Any reading above 50 suggests that the given sector of the economy is growing, but with the US manufacturing sector inching closer to that 50 threshold, fears of contraction are lingering.

    According to Chris Williamson, chief economist at Markit, “Manufacturing remained stuck in crawler gear in September, fighting an uphill battle against the stronger dollar, slumping demand in many export markets and reduced capital spending, especially by the energy sector. The survey is indicating the weakest manufacturing growth for almost two years, meaning the sector will have acted as a drag on the economy in the third quarter.”
    For gold and silver, the uncertainty that is beginning to overshadow the US manufacturing sector is helping boost spot values…at least for today. The momentary uplift in safe-haven demand was seen by the slight crawl forward on the part of gold and silver, but it will be interesting to see if these gains can be sustained through to the end of the week.

    Wrap-Up

    All in all, Wednesday was a somewhat slow day across the global marketplace. This Volkswagen scandal is likely to be big news moving forward, and it will be interesting to see how platinum continues to react. For gold and silver, today’s gains are mostly negligible, but we of course will be keeping a close eye on the marketplace in order to see how things move forward from here.

    Disclaimer: All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of JM Bullion Inc. and should not be construed as financial advice.

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