Daily Market Update 2/25/11

GOLD
Gold closed today at $1,408, down $2.50, breaking the eight day streak of higher prices. Taking direction from Libyan news, volume was very healthy oversees and in New York trading. Bloomberg surveyed 20 Gold traders, investors and analysts. The survey found that 80 percent (16 out of 20) said the metal will rise next week, and 4 predicted lower prices. With gold trading near a record high, they believe it may climb as violence in Libya and concern that inflation will accelerate, boost demand for an alternative asset.

The World Gold Council just reported that in 2010 the World’s Central Banks became a net buyer of gold for the first time in 21 years, with an estimated purchase of 100 tonnes.  From 1989 to 2007 Central Banks sold from 300 to 600 tonnes of gold per year into the market, then in 2008, central bank sales dropped by almost one half, and then declined again to just 30 tonnes of gold in 2009.

My question to you is, since the World’s Central Banks have lost faith in paper money and want to hold Gold instead, why don’t you own more gold?  Based on this news and current developments I am notifying the many Financial Planners who work with me to increase their clients holding of Gold and Silver from 20% to 30%.
 
I recommend reading the World Gold Council’s 32 page Gold report for 2010 http://www.gold.org/download/pub_archive/pdf

SILVER
Silver closed up 30 cents today at $33.10 per ounce, with over $1 trading range. The gold / silver ratio closed today 42 ½ to one and continues to show Silver needs to be added to your gold holdings for diversification. Backwardation is still in place on the New York markets confirming physical Silver continues to be in short supply.   

PLATINUM & PALLADIUM
Platinum and Palladium both appear to have bottoed out after their recent correction. Platinum found strong demand at $1,800 per ounce and Palladium picked up a lot of buying in the $780 area.