Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slid 1.8% to its lowest level since May behind a poor U.S. joblessness report and growing pessimism that the EU summit in Brussels, currently underway, will yield workable no solutions to the eurozone debt crisis. Risk assets dopped across the board while the dollar and U.S. Treasurys rallied, with seven-year notes dropping to their lowest yield on record. Oil plummeted to nearly $78 per barrel and the other precious metals followed gold lower, with silver down 2.6%, platinum 1.7%, and palladium 2.7%.

At the close: August gold slid to $1,550.40; July silver dropped 70 cents to $26.25; July platinum lost $23.30 to $1,386.40; and September palladium retreated $15.85 to $563.90 an ounce.

Telegraphing the general sense of despair at the EU summit, German leaders are now talking openly about euro dissolution. While no one is advocating that course of action, its mere mention signals deep uncertainty about whether Germany will agree to throw its credit and resources behind debt-sharing with struggling eurozone members, which is widely seen as the way out of the crisis.

Eurozone economic confidence dropped this month to its lowest level since 2009 as the region slipped back into recession. Italy's economic crisis is deepening. The region's third-largest economy is now expected to contract by 2.4% this year. As Business Insider reports, the situation in Europe is eerily similar to the 1930s when France, in the position of Germany today, refused to use its relative economic strength to adopt expansionary policies or lend money to help its struggling neighbors. The result was the eventual collapse of the world financial system.

Compounding investor anxiety, U.S. jobless claims are stuck near their 2012 highs, indicating a serious slack of progress in this crucial dimension of the recovery. Knock-on effects of joblessness are decreased consumer spending and reduced GDP growth, which was revised down to 1.9% during the first quarter. Atlanta Fed President Dennis Lockhart identified three scenarios today in which another round of quantitative easing becomes necessary: if unemployment rises, if the economy is headed back into recession, or if deflation becomes a threat. Based on these criteria, QE3 is looking more likely.