How will the sequester affect the price of PM's?

PerryHall

Assuming the sequester happens, what effect will it have on the price of gold and silver?

ricko

There is no decisive answer to this question (IMO), however, IF it happens, I would 'guess' there could be a slight drop in gold/silver and an increase in the dollar - since it would indicate a move to cut spending etc.. Cheers, RickO

OPA

There is a 50% chance that it would either rise or fall.

derryb

Is the FED involved?

cohodk

Its only $85 billion in spending cuts, hence no effect.

Steve27

It already has affected prices; it's the main reason for the recent drop.

derryb

<< <i>It already has affected prices; it's the main reason for the recent drop. >>


Dollar index strength is the reason for the recent drop. Think that will last?

Keep in mind that dollar index strength is primarily the result of euro weakness (47% of the index which includes other currencies). The prettiest pig at the ugly pig contest is still ugly.

Impact of US Dollar Index on Gold and Silver Price

bronco2078

Its a good question, I am close to backing up the truck but maybe the sequester will drive prices down a little more

jmb

<< <i>Its only $85 billion in spending cuts, hence no effect. >>



The sequester is nothing but smoke and mirrors. In late 2011 Obama stated that he would veto any bill that did NOT allow the budget cuts of the sequester to go into effect. He has now done a complete 180 to his previous position. The smoke and mirrors part is that the sequester is based on base line budgeting. For example, if the overall budget for 2013 (remember, no budgets since Obama has been President) is $3 Trillion, next years budget would be $3.5 Trillion. So, the powers that be's logic is that if they only spend $3.25 Trillion they actually cut the budget by $.25 Trillion. There really are no cuts, it's all fear mongering. I loathe them ALL equally.

Steve27

<< <i>

<< <i>It already has affected prices; it's the main reason for the recent drop. >>


Dollar index strength is the reason for the recent drop. Think that will last?

Keep in mind that dollar index strength is primarily the result of euro weakness (47% of the index which includes other currencies). The prettiest pig at the ugly pig contest is still ugly.

Impact of US Dollar Index on Gold and Silver Price >>



Again, it's all related to the sequester.

bronco2078

keep the sequestors coming we need more of them

RedTiger

Little to no effect. Americans are about 8% of the world wide demand for gold. The sequester is a blip in the total budget, and of U.S. GDP. Some tiny percentage of 8% means next to nothing.

JimmyJoe

The stock, bond and precious metals markets will go haywire next week, I think.

Steve27

In addition to my original statement, I predict precious metals will rebound after the sequester actually hits this coming Friday, because the impact will not be as great as feared. There's an old saying "buy on the rumor sell on the news" which speaks to the initial over reaction when change occurs in any market.

Baley

<< <i>The stock, bond and precious metals markets will go haywire next week, I think. >>



you think haywire? I was going to say bonkers

jmski52

The sequester is nothing but smoke and mirrors. In late 2011 Obama stated that he would veto any bill that did NOT allow the budget cuts of the sequester to go into effect. He has now done a complete 180 to his previous position. The smoke and mirrors part is that the sequester is based on base line budgeting. For example, if the overall budget for 2013 (remember, no budgets since Obama has been President) is $3 Trillion, next years budget would be $3.5 Trillion. So, the powers that be's logic is that if they only spend $3.25 Trillion they actually cut the budget by $.25 Trillion. There really are no cuts, it's all fear mongering. I loathe them ALL equally.

I agree. At $85 billion a month, where do people think all of that money is actually going? With government spending us another $trillion/year into the hole, all this represents is more deficit spending for continuing operations.

PerryHall

A lot of good comments here. Do you guys think there will be a last minute deal or will this sequestration be a likely event? I'm not too optimistic that there will be any compromise leading to a deal but I tend to be pessimistic concerning these matters.

derryb

<< <i>A lot of good comments here. Do you guys think there will be a last minute deal or will this sequestration be a likely event? I'm not too optimistic that there will be any compromise leading to a deal but I tend to be pessimistic concerning these matters. >>


It's Washington, there's always a deal. It's what they do for a living.

Steve27

<< <i>A lot of good comments here. Do you guys think there will be a last minute deal or will this sequestration be a likely event? I'm not too optimistic that there will be any compromise leading to a deal but I tend to be pessimistic concerning these matters. >>



This is a done deal; the sequester will happen, and the markets from stocks to dollars to PMs have already been affected.

3stars

<< <i>The sequester is nothing but smoke and mirrors. >>



Guess those fed employee furloughs are as well...

derryb

<< <i>

<< <i>The sequester is nothing but smoke and mirrors. >>



Guess those fed employee furloughs are as well... >>


Just more smoke and mirrors. Washington could probably make up the difference in office supply cuts but by directing it at people they stimulate calls to congress members that say "do what ever it takes."

Threats and news reports of furloughs, lack of service, cuts in benefits are nothing more than and effort to stir up the crowd and get them to demand action. For gov. employee furloughs: If the gov. can get by without them, why did they hire them in the first place?

Do not forget - sequester is an effort to force gov. to cut spending. Because they are being forced to do it and even though it is a drop in the bucket do not be surprised to see them use the occasion to make as many people as possible feel or fear the pain. Doing so is in their best interest.

jmski52

I heard this the other day, and I think it would go quite a ways toward solving some problems - "Tax Campaign Contributions at 90%"

ricko

Looks like the deal is to let sequester happen.....could be a good thing. Cheers, RickO

PerryHall

<< <i>Looks like the deal is to let sequester happen.....could be a good thing. Cheers, RickO >>



And, it's all the fault of the Republicans.

derryb

cutting spending in Washington is always a good thing.

roadrunner

<< <i>cutting spending in Washington is always a good thing. >>



It is. Too bad Washington interprets spending cuts as meaning cutting the rate of increases.

jmb

<< <i>

<< <i>cutting spending in Washington is always a good thing. >>



It is. Too bad Washington interprets spending cuts as meaning cutting the rate of increases. >>



Exactly !

derryb

<< <i>

<< <i>Looks like the deal is to let sequester happen.....could be a good thing. Cheers, RickO >>



And, it's all the fault of the Republicans. >>


and a president who signed it into law.

Dolan

It all depends on how the world will interpret the sequester. If traders read it as the government finally discovering the meaning of "fiscal responsibility," then perhaps the price of gold will remain unchanged. If traders read it as the government unable to work together, I think the entire world will begin to draw a small bit of capital outside the US... thus raising that price of gold up pretty high.

derryb

can only be good for all fiat currency alternatives, primarily precious metals.

Baley

<< <i>can only be good for all fiat currency alternatives, primarily precious metals. >>

bronco2078

If the sequester cut 85 billion it would zero out one months QE

adding that much isn't helping the economy how could subtracting it hurt?

derryb

Famous last words: "Trust Me, This Time Is Different"

Steve27

Now you can post a thread " How will the Continuing Resolution affect the price of PMs?"

Tomohawk

Folks, I gotta say the "sequester" is about as much of a bait and switch con as I've ever heard.

My view is affected by the prism of joblessness in the US; I've had to take a position overseas (what another "great" term) just to pay the bills and meet the responsibilities of raising a family.What is it they are sequestering? Common sense? Fiscal responsibility? Our (we the People's) money? I see a once great country suckered into the ever-increasing downhill slide of the "what's in it for moi?" mantra. No one in power really cares about making correct decisions...they only want to meet their own responsibilities (or desires) by making sure they get re-elected, regardless of the outcome of their decisions/actions.

The bait and switch, as usual, focuses on the supposed short-term effects: "You're gonna hate going to the airport" or "Those poor government workers" (who, by the way, make up a significant portion of the voting public...makes ya think, eh?). What they don't tout or warn about is NOT cutting (sequestering?) many times the $85B from the public budget will do to ALL of us. Depending on their political bend, its either a disaster or a "finally" moment, but in reality it's about as effective as spitting in the wind or saying "No new taxes."

Where are the people in government who make decisions based on good, sound, sustainable fiscal policy? From my seat, I see lawyers and power brokers (meaning money grubbers) figuring out ways of making the gravy train perpetuate while folks like me are having to leave the country of his birth just to get a job.

I like the French link...or rather, I see that link as a predictor of what is to come for America. Our vaunted system is broken and unfair; a reckoning is coming. Either necessity will force a very painful change, or the weight of corruption will finally deplete the resources of the public trust(as history has shown) and a bloody revolt will blast away the system. I used to think my America was the America everyone wanted: A land of the Free (meaning a land full of those who reject tyranny in any form, including fiscal) and a home of the Brave (meaning people who do what is right, despite the cost). Today's America is a land of the too-big-to-fail and the home of the "I'm entitled" mentality.

We've lost our moral compass, and it is affecting every aspect of our lives. Our leaders are a microcosm of our society as a whole: they are the beasts our educational, religious and family systems are creating. We are not raising up leaders, we are creating followers.

No one in power seems to want to do anything other than make themselves look good, or spin negatives into positives ("Never waste a crisis" seems to apply to all aspects of political life). It is time for those of strong moral fiber to step forward; it is time to teach our children the value of a dollar, the satisfaction of a job well done, and doing what is right today so that tomorrow even has a chance of coming to pass.

Dunno why this is spilling out of my keyboard in this forum, but sheesh, I feel a bit better for it...

Baley

<< <i>Folks, I gotta say the "sequester" is about as much of a bait and switch con as I've ever heard.

My view is affected by the prism of joblessness in the US; I've had to take a position overseas (what another "great" term) just to pay the bills and meet the responsibilities of raising a family.What is it they are sequestering? Common sense? Fiscal responsibility? Our (we the People's) money? I see a once great country suckered into the ever-increasing downhill slide of the "what's in it for moi?" mantra. No one in power really cares about making correct decisions...they only want to meet their own responsibilities (or desires) by making sure they get re-elected, regardless of the outcome of their decisions/actions.

The bait and switch, as usual, focuses on the supposed short-term effects: "You're gonna hate going to the airport" or "Those poor government workers" (who, by the way, make up a significant portion of the voting public...makes ya think, eh?). What they don't tout or warn about is NOT cutting (sequestering?) many times the $85B from the public budget will do to ALL of us. Depending on their political bend, its either a disaster or a "finally" moment, but in reality it's about as effective as spitting in the wind or saying "No new taxes."

Where are the people in government who make decisions based on good, sound, sustainable fiscal policy? From my seat, I see lawyers and power brokers (meaning money grubbers) figuring out ways of making the gravy train perpetuate while folks like me are having to leave the country of his birth just to get a job.

I like the French link...or rather, I see that link as a predictor of what is to come for America. Our vaunted system is broken and unfair; a reckoning is coming. Either necessity will force a very painful change, or the weight of corruption will finally deplete the resources of the public trust(as history has shown) and a bloody revolt will blast away the system. I used to think my America was the America everyone wanted: A land of the Free (meaning a land full of those who reject tyranny in any form, including fiscal) and a home of the Brave (meaning people who do what is right, despite the cost). Today's America is a land of the too-big-to-fail and the home of the "I'm entitled" mentality.

We've lost our moral compass, and it is affecting every aspect of our lives. Our leaders are a microcosm of our society as a whole: they are the beasts our educational, religious and family systems are creating. We are not raising up leaders, we are creating followers.

No one in power seems to want to do anything other than make themselves look good, or spin negatives into positives ("Never waste a crisis" seems to apply to all aspects of political life). It is time for those of strong moral fiber to step forward; it is time to teach our children the value of a dollar, the satisfaction of a job well done, and doing what is right today so that tomorrow even has a chance of coming to pass.

Dunno why this is spilling out of my keyboard in this forum, but sheesh, I feel a bit better for it... >>



Good post tomohawk I know your perceptions are influenced by your personal experiences, but what is it you do for a living (generally)? I'm guessing it's not flipping burgers or cutting hair, which are very local occupations with jobs in America.... if you go offshore for a (presumably, good, high paying) job then you probably are a technical or business specialist of some kind.

Anyway, folks have teased me before on here for living in "Baleyville" where people are still free and brave, with family and community values of hard work, ethics, and hope. And I tease them back for being too cynical, and suggest, "you make your own reality" and hint that it's ironic that some folks who ridicule the "sheeple" seem to walk around with their arms out in front of them with spirals in their eyes chanting only trust metals... only metals matter like a bunch of paranoid midases. You know I likes me some metals, but I loves me some America, even with its problems, overall it's still the best country on Earth. Totally agree that politics and pop culture are embarassing, but more than made up for in science, technology, and industry.

Overdate

<< How will the sequester affect the price of PM's? >>

On the one hand:

Sequester ---> lower federal spending ---> lower defecit ---> good for dollar ---> bad for pm's.

On the other hand:

Sequester ---> higher unemployment ---> lower tax revenue ---> higher deficit ---> bad for dollar ---> good for pm's.

To some extent, these two consequences will cancel each other out. So the sequester may not make much difference in pm prices.

By the way, will this type of spending also be sequestered?