By Barry Stuppler - MintStateGold.com
At 11am PDT gold is trading at $1,823.40 up $13.20 per ounce on active trading in a narrow $24 range. Gold tested the $1,800 support level Monday, and today it held, then rallied back to $1,830. Last night the euro rallied against the USD because of a successful Italian bond auction and China investing €7bn in long-term Italian bonds. That news caused gold to sell off overnight to hit the $1,800 levels. Yesterday, we saw the price of gold down 50 U.S. dollars, while European investors pushed the gold price to a record high of €1375 this morning, before settling back to €1350. The problems in Europe continue to drive investors to the safety of gold for protection.
As gold/silver mining stocks and funds continue to under-perform the physical metal, Morgan Stanley released a 79-page report on Gold equities. Basically, they are saying that these mining stocks are valuing the below ground gold reserves at only $1,500 per ounce and with gold at $1,850 they are undervalued. I hate to disagree with such a prestigious financial institution, but I do. As I have previously stated numerous times, I believe the problem with mining shares and funds not tracking the increases in Gold and Silver are problems unique to mining companies with properties in third world countries; increasing local taxes and royalties
In late trading yesterday, silver broke below $40 for about 30 minutes, and then quickly bounced back. Silver is trading at $41.02 at 11am PDT up $0.87 per ounce. The volume of Silver trading picks up dramatically as it approaches the low end of the price range. I continue to believe that Silver will stay in the $40 to $42.75 trading range for a while, which I believe is bullish for the long term upside.