Daily Market Update 3/21/11

GOLD

Gold closed today at $1,427 per ounce, up $9 on the day. Gold prices resumed its major uptrend on Monday, on the escalating tension in the Middle East and North Africa. Heavy Allied Nations air and missile assault on Libyan strongman Moammar Gadhafi’s military, and continued unrest in Bahrain and Yemen, are supporting the precious metal uptrend.

Crude oil prices are trading up about $2, at $103.50 a barrel Monday, and the U.S. dollar index remains in a slump, further benefiting gold and silver prices.

Japanese investors are busy selling American assets to be able to increase their cash reserves. This selling is raising the value of the Japanese Yen against the U.S. Dollar. The deteriorating dollar has helped support precious metals prices. In the long run, this kind of inflationary policy by the Bank of Japan will result in sizeable increases in the gold price. Thus far this week, the bank has inserted 37 trillion yen ($460 Billion) into the banking system, with much more highly likely. The planet is sinking in paper cash, which will cause higher and higher commodity and food inflation, resulting in increased demand for gold and silver.

SILVER

Silver rallied sharply today, up $.90 to $35.92 per ounce. Trading was very active with excellent volume. The Labor Department’s newly created index that actually measures the US cost of living, hit a record high in February, according to data released Thursday, surpassing the old high in July 2008. Wholesale food prices jumped 3.9% in February alone, bringing the Producer Price Index for finished consumer foods 7.3% above last February. That was the largest year-over-year gain in that index since late 1974.

Today’s Important News

Sales of previously owned U.S. homes dropped more than forecast in February, and the median purchase price declined to the lowest since the same month in 2002. This indicates the housing market is struggling to recover. Purchases decreased 9.6 percent to a 4.88 million annual rate, less than the 5.13 million median forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. The median price declined 5.2 percent from a year earlier, and 39 percent of the sales were distressed properties.