Daily Market Report 6/29/12

The Euro zone leadership is now having its 20th European summit in less than three years. They haven’t yet taken any concrete steps to solve the sovereign nation and banking debt problem. Initially expectations for this summit were very low. It was expected that the financial ministers would make some vague statement about how this is a serious situation and how there is unity among Euro zone members, and even if there’s not, and then they will talk about scheduling the next summit. However, a short term rescue agreement was reached after Italy and Spain forced leaders to remain at the summit overnight, blocking progress on all other agenda items before getting a deal on short-term rescue measures.

The agreement will result in EU €100bn bailout funds eventually being injected directly into teetering Spanish and Italian financial institutions. Currently there are 17 different bank supervisors for the Euro zone nations; this will be replaced by one regulator for all Euro zone banks. This is a very important step towards a so-called banking union that is arguably the most significant change for the Euro since it was created.

GOLD

After the Euro zone announcement, the world’s financial markets started to rally. World equities, energy and precious metals all had sharp increases, with Gold initially up $20 per ounce and it kept on going higher. Now, at 11am PDT, Gold is up $48.30, trading at $1601.30 per ounce on very heavy volume for a Friday. 

SILVER

With Gold up $48.30 per ounce today on the Euro zone agreement, Silver had a sharp rally also. At 11am PDT, Silver is trading at $27.63 per ounce, up an extraordinary $1.21 per ounce on excellent volume.