Daily Market Report 05/30/12

GOLD
The Gold price is reluctant to go lower. With the U.S. Dollar rallying to under $1.24 to the Euro, and the 10 year U.S. Treasury notes hitting a record low of 1.64%, plus equities and energy markets dropping, Gold still refuses to go lower. Gold did test the $1,530 price level, for the fifth time since September 2011, earlier this morning on the Bankia bank news (read below), but heavy buying appeared and the within two hours rallied back $35 per ounce, returning to the daily highs. At 11am PDT, Gold is trading at $1,568 per ounce, up $13.40 per ounce on heavy volume.

A Spanish plan to recapitalize Bankia, the troubled lender, by indirectly tapping the European Central Bank for cash, was bluntly rejected as unacceptable by the ECB. The ECB told Madrid that a proper capital injection was needed for Bankia and its plans were in danger of breaching an EU ban on “monetary financing,” or central bank funding of governments, according to two European officials.

A very bullish event for Gold and a possible major game changer is now becoming clearer. This could happen when the world’s banks change Gold to a Tier I asset from a Tier 3 asset according to the Basel Committee for Bank Supervision (or BCBS). The BCBS, as part of the BIS, is arguably the highest authority in banking supervision and it is their role to define capital requirements through the forthcoming Basel III rules. Click on the following link for more details http://www.mintstategold.com/investor-education/Gold_capital_ratios/

SILVER
Silver reached a low of $27.32 this morning and then rallied with Gold back above the $28 per ounce price level. Considering the general weakness in the equity, energy and commodity markets, Silver has shown excellent demand and trading volume. At 11am PDT, Silver is trading at $28.17, up $0.17 per ounce on excellent volume.