On Monday, gold (NYSEARCA:GLD) futures for December — the most active contract — jumped $15.20 to close at $1,325.10 per ounce, while silver (NYSEARCA:SLV) futures gained 63 cents to finish at $22.39. It was the first gain for the precious metals in three trading sessions. Major exchanged-traded funds, like the SPDR Gold Trust (NYSEARCA:GLD) and the iShares Silver Trust (NYSEARCA:SLV) also followed suit.
Gold and silver both found buying support as the U.S. Government remains in shutdown mode for the second consecutive week, and U.S. Treasury comes closer to not being able to pay all of its obligations.
Neither political party appears willing to budge on their current stances. John Boehner (R-Ohio) wants to negotiate on the deficit, while President Obama refuses to talk until to government reopens from its partial shutdown. However, the political bickering is expected to come to an end sometime this month, as Congress will need to raise the debt ceiling for the 80th time since 1960.
Treasury Secretary Jacob Lew estimates that the government will be in a tight cash crunch no later than October 17. “We estimate that, at that point, Treasury would have only approximately $30 billion to meet our country’s commitments,” explained Lew in a recent letter to Congress. “This amount would be far short of net expenditures on certain days, which can be as high as $60 billion. If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations for the first time in our history.”
By the end of the trading day, shares of the SPDR Gold Trust increased 1 percent, while the iShares Silver Trust jumped 2.9 percent. Gold miners (NYSEARCA:GDX) Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM) both gained 1.4 percent. Shares of Endeavour Silver (NYSE:EXK) surged 4.2 percent. However, the SPDR Gold Trust and iShares Silver Trust are still down more than 20 percent year-to-date.
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Disclosure: Long EXK, AG, HL, PHYS