Iraq, FOMC Keep Markets Jittery: Morning Market Update June 18

June 18th, 2014 by

Markets are jittery ahead of the conclusion to the Federal Reserve Open Market Committee meeting this afternoon, and the scheduled press conference by Fed Chair Janet Yellen afterwards.

Gold and silver are steady this morning in New York, while the PGMs are up moderately after riding a spike upwards on the London Open.

gold-investigationThe World Gold Council is holding a conference next month to brainstorm ways to improve the 96 year-old London Gold Fix, before financial regulators impose their own solutions. Ongoing investigations into precious metal and currency manipulation in the UK, Germany, Switzerland, and by the EU are turning up the heat.

As the labor negotiations in South Africa’s platinum mining sector crawl towards a conclusion, rumors are swirling that Anglo American Platinum (Amplats) has had enough, as far as dealing with its legacy hard-rock platinum mines in the Rustenburg district. It’s looking to unload the three mines, which have a value of $1.4 billion, and focus on its newer, open-pit platinum mines, which are much less expensive to run.

gold-elephantIn India, gold and silver demand is increasing, even though the new national government has not reduced import tariffs or eased the 80/20 rule that requires 20% of all gold to be re-exported as jewelry. Tensions over Iraq (India has to import literally all its oil), a devaluing rupee, and domestic inflation that just hit a five-month high of 6%, all have Indians turning their eyes to their ancestral store of weath — gold.


Fed Chair Janet Yellen

Fed Chair Janet Yellen

It’s a volatile days for stocks world-wide, as expected. Even though there’s a 99% chance of the Fed holding a steady course this month, traders and analysts will be falling all over each other to scrutinize every word of the FOMC statement at 2pm today, for a hint towards future Fed plans. Expect Yellen’s speech at 2:30 to cause some gyrations, as she has proven to have difficulty in clearly expressing her intentions.

Oil is holding steady near multi-month highs over the civil war in Iraq. Gasoline prices are already rising in the US, despite the fact that it will be two months before oil purchased at these higher prices will reach US refineries.

yuan-vs-dollarThe dollar is slightly lower against most major currencies this morning. China and the UK begin direct conversion between the pound sterling and the yuan tomorrow, with clearing houses in Shanghai and London. This will allow Chinese and British companies to lower transaction costs, by not needing to buy and sell dollars as an intermediary step in making contracts.

The pound joins the Australian dollar, New Zealand dollar, Japanese yen, and the US dollar as currencies that can be directly converted to yuan and vice versa. Analysts call this a major step in the yuan’s journey to be the next global currency.

The president of Ukraine has offered a unilateral cease-fire to pro-Russian separatists, in an effort to dial down the violence along the nation’s border with Russia. Russia has cut off off natural gas pipelines to Ukraine for non-payment of debts, saying that further shipments will be COD. Some experts estimate that Ukraine will totally run out of energy supplies in December (brr).

In Iraq, fighting between Sunni extremists looking to conquer the country and the national army has reached the suburbs of Baghdad. US special forces have been dispatched to guard the American embassy, and Iran has sent special forces into Iraq to protect Shiite holy sites in the south of the country.


by Steven Cochran

Gainesville Coins Portfolio Tracker and Financial News