Daily Market Report 06/01/12

GOLD
With the U.S. Stock Market (DJIA) down over 200 points and U.S. interest rates trading at historic lows, Gold has broken out above the $1,600 per ounce resistance level. Market Analysts are saying that today’s $60 increase in the price of Gold is due to the Labor Department’s disappointing report on May jobs, only adding 69,000 new jobs, while economists had expected over 165,000.  

I disagree; I believe something else has happened overnight. I speculate it could be an agreement with the Eurozone, maybe backing future bonds with Gold, or a decision on Basel III banking regulation about changing Gold to a Tier I asset from a Tier III asset. See this article for more details:  http://www.mintstategold.com/investor-education/Gold_capital_ratios/.

I’ll do some research over the weekend and try to find out why Gold was up $60 today on unusually high volume for a Friday, and provide more details in next Monday’s Weekly Market Report. At 11am PDT, Gold is up $59.30 per ounce, trading at $1,621.40 per ounce on very heavy demand.

The government reported Friday that the U.S. added just 69,000 jobs in May, the smallest increase in a year. Economists expected an increase of 165,000 jobs. The unemployment rate, meanwhile, rose to 8.2% from 8.1%, mainly because more people entered the labor force even as hiring slowed.

SILVER
Silver actually reached $27.17 per ounce this morning on light volume, until Gold started to rally. Silver mirrored Gold’s price increase and rallied over $1.30 per ounce. At 11am PDT, Silver is trading at $28.62 per ounce, up $0.81 per ounce on very heavy volume, particularly for a Friday.