Daily Bullion Market Update 8/17/11

By Barry Stuppler – MintStateGold.com

GOLD

Gold continued its move back to $1,800 per ounce today. At 11am PDT gold was selling for $1,792.00, up $10.70 per ounce on active trading. Yesterday’s statements from the meeting between the heads of France and Germany failed to quell Wall Street’s fears about euro zone leaders’ ability to contain the region’s sovereign debt woes. As a result, gold prices were driven higher.

The Bubble Question is Back

I mentioned in Monday’s Weekly Market Report that one of the reasons I believe gold is going higher is we are hearing investment analysts talk about Gold being a bubble. Not only has Wells Fargo Private bank deputy chief investment officer Erik Davidson said it’s a bubble, but he thinks the reason gold is going up is because of inflationary fears. This is a part of the report to clients.
“As with all bubbles, we know that we run the risk that our view may turn out to be wrong (’early’ would be our preferred euphemism) in the short run; however, we believe that we will be proven right in the long run,” “With very little warning, the bottom can drop out on gold prices very quickly. For example, during six short months in 2008, gold lost more than 30 percent of its value. In the 1980s, in a little more than two years, the price of gold dropped approximately 65 percent. When fear subsides, inflation doesn’t skyrocket, and everything begins to return to ‘normal,’ demand for gold can fade away quickly”.
I’ll check my files to confirm, but I seem to recall Wells Fargo said something similar in 2008 or 2009 when gold was under $1,000.

Fitch maintains US’s triple A rating

The US still deserves a triple A credit rating with a stable outlook, Fitch Ratings said on Tuesday, highlighting the different tacks that leading agencies have taken on US creditworthiness. Fitch’s decision to reaffirm the pristine credit of the US came after Standard & Poor’s shocked markets with a downgrade to double A plus, and Moody’s took the middle road, keeping a top notch rating but cutting its outlook to negative.

Venezuela wants to transfer $6 billion in cash and gold reserves held in U.S. and European banks, to financial institutions. Opposition lawmaker Julio Montoya said today on the Globovision network, from the National Assembly, that Venezuela’s Finance Ministry wants to transfer more than $6 billion of cash reserves to countries including China, Russia and Brazil. My question is why?

SILVER

The upside is winning the battle in Silver. While trading in the $39.35 to $40.50 range demand is picking up. At 11am PDT silver was trading at $40.22, up 44 cents per ounce. I would like to see silver stay above $40 for five days in a row, and I would probable get bullish. Demand continues for U.S. silver with the U.S. mint selling 24,813,500 Silver Eagles as of July 31st 2011, a extraordinary report Pace.

Posted in: Bullion & Metals

About the Author:

Barry Stuppler & Co. offers a great selection of gold and silver, rare and investment quality coins to our valued clients. As the current elected president of the 30,000 member American Numismatic Association (ANA) and the president of the California Coin and Bullion Merchants Association (CCBMA), Barry Stuppler brings expertise and integrity to the numismatic trade.

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