Daily Bullion Market Update 6/02/11

Gold closed today at $1,532.10, down $14.70 an ounce on very active trading. The Gold price ranged today from a low of $1,518 to a high of $1,544. Gold initially sold off when Crude Oil prices dropped on reports of higher than expected inventories of Crude Oil and Gasoline. This, combined with the concerns of Greek debt default being postponed, took the gold price lower on the day.

The Eurozone debt problem may have received a temporary reprieve; however, Greece’s local and foreign currency bond ratings were cut from B1 to Caa1 by Moody’s Investors Service, which cited a growing risk that the country will default on its debt. Moody’s said the outlook on Greek debt is negative, meaning that the rating could be reduced even further. The rating is four steps below investment grade and puts Greece below Montenegro as the lowest-ranked European nation.

As QE2 ends this month there is a lot of talk about the possibility of another round of Quantitative Easing (QE3) starting after the summer. I will be providing an analysis on this issue in the Weekly Precious Metal and Coin Market Report emailed out on Monday June 6th. If you are not receiving the Weekly Market Report, please contact us.

Silver, down $1.64 on the day, closed at $36.38 on heavy volume in very active trading. The price ranged from $35.45 on the low to high of over $38.00 in the past 24 hours. The recent negative news on the U.S. economy takes some of the concern away from higher inflation numbers, which is a bullish factor for higher silver prices.

Extraordinary demand for physical silver is confirmed by U.S. Mint reports of selling 3.65 million ounces of American Silver Eagle coins last month. That’s up 30% from April, taking the 2011 year-to-date total up to 18.9 million ounces; a record year for Silver Eagle production.

Today’s Other Important News:

Factory orders fell 1.2% in April to $440.4 billion after an upwardly revised 3.8% gain in March, the Commerce Department said Thursday. Factory orders were forecast to drop 0.8%, according to a Market Watch poll of economists.

Chinese banks have been told to adequately warn silver forward investors of trading risks after recent price swings, local media reported on Wednesday, citing a notice from the Shanghai Bureau of the China Banking Regulatory Commission. The Shanghai Gold Exchange (SGE) adjusted silver forward contract margins six times last month as prices fluctuated widely, tracking the roller coaster ride in global spot prices. Margins were raised to as high as 20% on May 6th. The Shanghai Daily said the banking regulator asked banks in Shanghai to notify clients through text messages or phone calls whenever the SGE raises margins or adjusts the daily trading limit for its silver forward contract, to ensure investors are informed of their exposure and can cut positions if necessary.

My 24 page research study on Hyperinflation is completed and now available. After three months of research I am proud to share the information with clients and friends. The title of the booklet is “U.S. Hyperinflation is Coming Soon, will Gold Confiscation or a Gold Standard be Far Behind?”

For a free copy of the booklet just email [email protected]

For many of my clients and friends who are Gold & Silver addicts, I am now also posting additional market news and developments on Twitter.

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