Daily Bullion Market Update 12/05/11

By Barry Stuppler – MintStateGold.com


As the news from Eurozone leadership, gold is trading in a narrow $18 range. At 11am PDT, gold is trading at $1,734.50, down $14.40 on light Monday volume. December has always been an excellent month for gold demand and price increases. I look for a little consolidation in the $1,720 to $1,760 price range, followed by major rally in Gold between now and the year-end based on an Eurozone nations agreement, seasonal demand from Asia, and as a hedge against declining returns and risks of sovereign and banking debt default.

Bank of America Merrill Lynch’s top currency trades for 2012 said that investors should buy gold versus the Euro as the ECB engages in quantitative easing to contain debt turmoil. David Woo, global head of rates and currencies in New York at the Bank of America Corp. unit, told clients in research note that “the ECB will be buying more government debt and doing QE, so buy gold against the Euro.” Mr. Woo added, “The second major theme is U.S. fiscal tightening is about to come and the U.S. economy will slow, and this will be very good for the U.S. Dollar. The general theme for the year ahead is pretty negative for the risk environment”.

My overview of what is happening by actions taken by the Central Banks of Europe, Asia and the United States is that they are adopting a loose money policy by lowering global interest rates, and providing quantitative easing (QE) to deal with the massive debt crisis. It’s becoming clear that Angela Merkel of Germany, Nicolas Sarkozy of France, the ECB and the IMF are working to create a legally enforceable “fiscal compact” to restore confidence in the eurozone. This “fiscal compact” would allow them to monitor the PIIGS countries budgetary disciplines and austerity programs, while providing enforceable penalties. Many market analysts are speculating that during this week, at the Eurozone Heads of State December 9th meeting in Brussels, they will formalize any agreement.


At 11am PDT Silver is trading at $32.22, down at $0.38 on normal Monday trading volume. As we approach year end we continue to see excellent demand domestically and in Asia. When the final numbers for 2011 are disclosed it should be an extraordinary record breaking demand year for Silver.

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