Daily Bullion Market Update 8/31/11
By Barry Stuppler – MintStateGold.com
We are seeing increasing support for Gold in the $1,810 price area. Demand has increased in Asia, Europe, and the U.S. in the physical and futures gold markets. This week’s volume is normal as we move into a holiday weekend. Right now at 11 am PDT Gold is firm at $1,830.80, up $6.50 per ounce. The World’s Central Banks continue to increase gold holdings in their reserves. The International Monetary Fund data released today shows that Russia, which is already the world’s eighth largest official holder of bullion, raised its reserves by 4.42 tonnes in July to 841 tonnes. Colombia added 2.3 tonnes to bring its reserves to 9.14 tonnes; the first increase for Colombia since March 1998.
ONE-in-THREE Americans think gold is the best long-term investment, according to the Gallup survey published by USA Today last week. But, the numbers would suggest that very few of them are actually invested in the yellow metal.
Silver has been showing more demand and price support than gold this past week. At 11 am PDT Silver is trading at $41.72 per ounce, up $0.35 in active trading. It appears that Silver has established a new trading range of $40.00 to $42.50, even though we traded above $44 last week. I believe Silver will break out of any established trading range when the next round of fiscal or monetary stimulus is announced by the White House or the Federal Reserve. That announcement should drive Gold to a new high (hopefully over $2,000) and take Silver much higher. The Silver price should be the greatest beneficiary of the next round of quantitative easing (QE3).
Why do I strongly believe there will be another round of quantitative easing? Well, we have a sluggish U.S. job market, a patch-work recovery in the housing sector, and now damage from Hurricane Irene. We continue to worry about Europe’s sovereign debt crisis and weakness in the American economy. The U.S. economy, as measured by the GDP is growing at just 1 percent in the second quarter, after a statistically insignificant 0.4 percent rate in the first quarter. What’s more, the economy hasn’t demonstrated that it can create the minimum 150,000 to 200,000 new jobs per month, just to lower the nation’s high unemployment rate, which is presently at 9.1 percent. And today we learned that Consumers’ confidence in August dropped almost 15 points to the lowest level since April 2009… need I say more!
Other Important news that affects precious metal prices:
- Orders for goods produced in U.S. factories rose 2.4% in July, the Commerce Department reported Wednesday. Economists surveyed expected orders to rise a seasonally adjusted 2.0%.
- The Chicago business barometer, which also is called Chicago PMI, slowed in August to a 56.5% reading from 58.8% in July, as managers in the region reported slowing production and new orders and a shrinking in order backlogs.v