Daily Market Update 4/15/11

GOLD
Gold was up $13.10, closing the week at $1,482.80, a new all-time record high. Crude Oil is up and the Dollar continues to decline, however, the news today that really moved Gold and Silver higher is all about China.

It was reported today that China’s consumer prices climbed 5.4% in March from a year earlier, the fastest pace since 2008. China’s first quarter GDP expanded 9.7 %, beating the 9.4 % median estimate in a separate survey.

Why is the news bullish for gold and Silver? There are tens of millions of Chinese evolving into the middle class. Many of these Chinese survived or have heard horror stories about the 1947 to 1950 period of 1,000% + hyperinflation and want inflation insurance. Fears about the overheating economy and inflation have driven millions of Chinese to own gold and silver. Today’s economic data should increase that demand dramatically.

China’s first quarterly trade deficit in seven years may ease pressure from the US and ECU demanding faster appreciation of the yuan. China’s $1.02 billion deficit in the first three months of the year shows a strong demand for imports compared with the surplus of $13.9 billion a year earlier. Imports jumped 32.6 percent to a quarterly record of $400.7 billion, helped by stronger domestic demand and higher global commodity prices. This is a Win/Win for China, they reduce foreign demand to lower the valuation of the Yuan and they get rid of their large holdings of the weak Dollar, while building up their holding of Gold and Silver. I expect to see this trend continue for the balance of the year.

SILVER
Silver closed at $42.68, up another $.90 and on its way to $45 an ounce. The inflationary news from China stated above, and a weaker dollar, continue to drive Silver higher.

Today’s Important News

The U.S. Labor Department reported wholesale prices rose a seasonally adjusted 0.7% in March, continuing an upward trajectory, according to the latest government data. Economists surveyed by Market Watch had predicted a 0.8 % increase in overall producer prices and a 0.2% rise in the core rate. Wholesale prices have risen 5.8% over the past year on unadjusted basis.
U.S. consumer prices rose 0.5% in March, with higher gas and food costs accounting for three-quarters of the increase, according to Labor Department data.

For many of my clients and friends who are Gold & Silver addicts, I am now posting on Twitter multiple times during the day and night.