By Barry Stuppler – MintStateGold.com
I’m back from Europe just in time to see the precious metal markets bottom out. After trading as low as $1,535 per ounce in Asian trading Monday, it appears Gold has found support at $1,600 per ounce. The professionals are now back in control of the Gold market and the increase in margin requirements at the CME and Shanghai Commodity exchanges, along with the past weeks dramatic correction, has forced out most of the public. The fundamentals for much higher Gold prices by year end are still in place. At 11am PDT today, Gold is at $1,651.20, up $50.03 per ounce on heavy trading.
Over the past few months there was an opinion by market analysts that precious metal and equity markets must go in opposite directions. Recent market actions, based on fears of a world banking debt crisis, have changed that feeling. Massive European monetary easing and bank recapitalization programs should temporarily restore confidence in a PIIGS recovery while insuring future inflation.
Yes, Silver did bottom out at $26.15 per ounce in early Monday morning Asian trading on an amazing volume of 111,000 contracts. I believe we saw the selloff of the 18 million ounces of Silver that needed to be liquidated by SLV, the very popular ETF. The combination of disappointing news at last week’s Federal Reserve meeting and the inability of the 17 nation Eurozone to get their act together have taken their effect on the world’s equity and precious metal markets. The feeling is that the Fed’s $400 Billion “Operation Twist” was a minimal action to avoid a double dip recession and we needed a more aggressive monetary easing program. Watching the Silver markets trade last night, it appears that we are trying to set a new short term trading range of $30 to $33 per ounce. Establishing a new trading range for Silver would be very bullish considering the sizeable correction we just saw. Right now at 11am PDT, Silver is trading at $31.72, up $1.48 on active trading.
I learned a lot during last week’s trip to Paris and Rome about the Eurozone debt crisis and European gold coins trading from numerous conversations with European precious metal and rare coin professionals and bankers. I’ll put together my notes and email out a full report in my next Weekly Market Report.