By Barry Stuppler – MintStateGold.com

GOLD

What a day we had today. Gold ran up to $1,683.30 per ounce. Then, as the Stock Market got hammered down over 350 points, we saw gold being sold.  The traders believe this was “hitting the Piggy Bank” type selling. When hedge funds and financial institutions are hit with margin calls on their stock holdings they look for liquidity and sell off some gold and silver positions.  The same thing happened during the financial crisis of  2008, and the gold dropped followed by a quick recovery to new highs.  At 11am PDT today gold is at $1,653.30 down $8.80 per ounce on very heavy trading.

What is driving the U.S. Stock Market lower?

A combination of loss of confidence (Debt Ceiling Crisis), a slowing U.S. economy, and uncertainty in European financial markets are leading many highly respected economists to believe that the chances for a double dip recession in the United States are about 50%.  More fuel for the quantitative easing argument.

What is a metric ton of gold worth?

A metric ton contains 32,150 troy ounces and at $1,660 per ounce is worth $53,369,000.

Therefore, at current market value the 8,133 ½ tonnes of gold held by the U.S. is only worth $434 Billion.

SILVER

Silver had substantially more volatility then Gold today.  Silver rallied up to $42.37 this morning and during the run to liquidity fell to $38.89 per ounce.   This is a whopping $3.48 range in one trading day.  At 11am PDT today we have silver down $2.40 per ounce, trading at $39.20 on very high volume.

QE3 Watch

The Federal Reserve has a Policy Meeting on August 9th – If the August 9th statement talks about a slowdown in the economy and unemployment remaining high, it is a good indicator that QE3 is coming.

Other Important news that affects precious metal prices:

  • U.S. mortgage rates for 30-year loans plunged to the lowest level in more than eight months as the nation’s economic recovery showed signs of faltering. The average rate for a 30-year fixed loan dropped to 4.39 percent in the week ended today from 4.55 percent, according to Freddie Mac
  • The Labor Department reported today that the number of Americans who asked for unemployment benefits edged down by 1,000 last week to 400,000.
 

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