Daily Market Report 05/18/12

GOLD
Gold keeps moving upward! After hitting $1,526.70 per ounce (a five month low) on Wednesday with 253,181 contracts being traded on the CME the buyers and volume have returned. At 11am PDT, Gold is up $15.40, trading at $1,588.20 per ounce on excellent volume. After all the negative news this week it appears that Gold will end the week higher.

The recent increase in the value of the U.S. Dollar versus the Euro and the decline in Gold was primarily caused by a run on banks in Greece and Spain. Let me explain, depositors in Greece and Spain are concerned about the solvency of their banks and the safety of their funds, combined with the possibility of their country leaving the euro-zone and defaulting on euro denominated debt. The respected sovereign credit rating company, Moody’s, Fitch, and Standard and Poor’s continue to downgrade the debt and credit ratings of Spanish and Greek government as well as many of the largest banks. Many of these banks have needed to sell their Gold reserves to meet the currency needs of their depositors.   

SILVER
On Wednesday, we saw Silver hit $26.73 per ounce (a five month low) on heavy volume of global trading. Silver is up $2.00 per ounce from this week’s low (7½%) virtually unchanged for the week. At 11am PDT, Silver is trading at $28.82 per ounce, up $0.80 on the day on average weekend volume