Wednesday Afternoon Silver and Gold Wrap Up for 9/26/12.....Peter R......Southern Trust Metals, Inc.

Good afternoon Andrew,

European social unrest and protests persisted; winning out today's tug of war against the metals' bullish quantitative easing environment...Metals lost ground.......Silver finished the New York trading day down 18 cents  at $33.77....Gold ended near the day's low at $1747.00 off $17.00 per ounce.....Palladium lost $20.00 to $624.00......Platinum slipped $8.00 to close at $1631.00......

The Spanish and Greek violent social unrest pressured the Euro lower by 40/100ths of cent against the U.S. Greenback....Last trade $1.2863.....

The worries also reflected in sharply lower Oil prices; despite today's larger than expected drop in the Weekly Oil Inventories....Supplies fell by 2.44 million barrels.....Besides Europe; traders also expressed disappointment over today's New Home Sales which came in flat at 373,000......Last on Oil $89.46 off $1.91 per barrel.....

In the stock market arena; European markets closed with losses of 1.5%, to as much as 4% in Spain....Wow!.....In New York the Dow Jones Industrial Average sits at 13,431, down by only 25 points....Much better than you might have expected given today's news and sentiment.....

When we return tomorrow the calendar moves into high gear with a flurry of reports including the Initial Weekly Jobless Claims, Durable Goods, the 3rd estimate for the 2nd Quarter GDP, and Pending Home Sales for August....Traders will be keeping a sharp eye on the GDP and Jobless Claims.....I'll have those estimates in the morning.....That's it....P.S. .....Thought you should see this

Why Europe is looking like a mess (again)

By Neil Irwin, Wednesday, September 26, 9:31 AM

Just a few days ago, Europe's long-simmering financial crisis seemed to have reached its permanent resolution, following demonstrations of resolve by all the players involved to deploy whatever means necessary to heal the deep fissures among the 17 nations using the euro currency.

Never mind.

Wednesday, the streets of Madrid were full of protesters for the second day, thousands of whom surrounded parliament, angry at the budget cutting by Prime Minister Mariano Rajoy's government; the leader of the economically powerful Catalonia region called for a referendum to consider leaving the country, showing that austerity threatened the very threads of the nation's unity. Spain's borrowing costs for 10 year bonds rose over 6 percent for the first time since early in the month.

Greece was shut down Wednesday by a general strike, with 50,000 people marching on the Greek parliament as Prime Minister Antonis Samaras attempted to navigate the demands of international lenders for more forceful austerity measures and the pleas of a populace already suffering under 24 percent unemployment.

And less dramatically, but perhaps more significantly, the financially stronger European countries met late Tuesday in Helskinki and bogged down over how and when a new Europe-wide fund could begin injecting money into the continent's troubled banks, particularly in Spain and Ireland.

What's happening here is as frustrating for Europe-watchers as it was inevitable. For the nearly three years that the euro zone crisis has been underway, a startlingly reliable pattern has set in. Whenever the European Central Bank steps up and deploys its bottomless ability to print euros to try to ease the panic on financial markets, everyone else steps down. The political leaders in financially troubled southern European nations see less urgency to the budget-cutting demanded of them by the European Central Bank, International Monetary Fund and other international creditors. The stronger northern European countries like Germany and Finland dig in their heels on what concessions they demand for aid.

Then, in the past anyway, the ECB has stepped back, let market forces threaten to get out of control again (specifically, by letting bond yields rise), and force the politicians to act in their common interest. Rinse and repeat.

Earlier this month, it seemed that the ECB had finally broken this pattern for good. With tacit approval from powerful German political leaders (though not Germany's central bank), ECB President Mario Draghi introduced a new program to buy European nations' debt on potentially unlimited scale, but with some major conditions; the most important at the moment is that the country must formally request the assistance, and in the process agree to financial conditions from the international lenders.

As Samaras and Greece can attest, it is no fun for a democratically-elected government to be forced into deep structural changes in its government and economy on orders from unelected bureaucrats from Washington, Frankfurt and Brussels. That is why Spain's Rajoy is resisting the prospect. But as Spanish borrowing costs rise, he may soon have no choice.

The Spanish prime minister seems to be coming to that conclusion himself.

Asked by the Wall Street Journal whether Spain would seek international assistance, Rajoy said, "At the moment, I cannot tell you." His government would need to determine whether conditions attached were "reasonable," he said, adding that if interest rates were "too high for too long . . . I can assure you 100 percent that I would ask for this bailout."

That is what journalists might call a non-confirmation confirmation that Spain is heading the way Ireland, Portugal and Greece went before it.

But while superficially the standoffs in Madrid, Athens and Helsinki this week create new dangers for the euro zone, there is an important difference from the brinksmanship of 2010. All three situations reflect a game of poker, with each side bluffing at least a little to try to ensure that others bear the cost of fixing Europe. But with the ECB's action earlier in the month, at least now everyone at the table understands the rules—exactly what will bring to bear the bottomless resources of the ECB, for example.

There is less chance of the negotiations going off the cliff and leading to some dark places when the contours of the situation are settled, and that is where Europe is now, something that could not be said even a few months ago.

That leaves the crisis in Europe as a more basic problem: Will the populations of Spain and Greece, already taking to the streets on mass scale, suffer the unpleasant results of slashed pensions and eliminated government jobs without voting in ways that rip at the very idea of Europe, whether by Catalan separatists in Spain or the communist Syriza party that nearly won office in Greece earlier in the year. And that question will take longer to answer.

Peter R.....Southern Trust Metals, Inc.
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