While the world didn’t end this morning for most people, the Republican House leadership have seen better days. A revolt among the conservative faction of the GOP compelled House Speaker Boehner to pull his “Plan B” budget proposal from the docket instead of submitting it to the House for a vote he couldn’t win.
Democratic Senate leaders had already indicated that they would not bring the bill to a vote in the upper chamber if it passed the House, and President Obama had threatened to veto it should it pass the Senate.
The implications of this event reverberated through global markets with all major indexes falling. The markets believe that if the GOP couldn’t muster enough votes to pass what was intended to provide political cover for their members, there is little chance to get them to vote for an agreement palatable to Obama and the Democrats.
Wall St. is looking to economic reports today for guidance, and got early good news when consumer spending for November was reported to have risen 0.6%, the biggest monthly jump in three years. Durable goods orders also rose more than expected in November.
This combination of fiscal cliff drama and upward economic indicators will likely influence gold and silver futures traders to keep to the sidelines, especially in light recent price-insensitive selloff seemingly engineered to trip sell stops. Jim Wyckoff of Kitco remarks that “Gold and silver traders are very skittish as the past few weeks have seen sudden price downdrafts.” UBS still sees support for gold going forward, in central banks’ loose fiscal policy. Regarding this week’s market action: “the selloff is now likely overdone, especially considering how light spec positioning is.”
As usual, it’s mostly the “paper gold” – futures contracts that are depressing precious metals, while many physical buyers step in to buy the dips. The 9:30am Gainesville Coins spot prices this morning are Gold at $1,649.81, Silver at $29.87, Platinum at $1,531.00, and Palladium at $673.00.