Daily Market Update 5/9/11

GOLD
Gold, in very active trading closed at $1,505.80, up $20.80 on the day. Last week’s correction in gold was definitely an over-reaction to Silver’s 27% decline. The fundamentals for Gold’s continued bull market move higher are far better than the more volatile Silver market. This morning, Asian trading had major buying on heavy volume in their Gold markets.

The recent strength in the dollar has been a negative factor for gold moving higher. But, It’s not that the dollar is strong, it’s that the Euro has been very weak. The Eurozone has been an ongoing nightmare; whether it is Spain, Greece, Ireland, Italy, or Portugal (PIIGS) they continue to need a bailout from the IMF or Euro countries central banks. Continued austerity programs in these countries should lead to government worker demonstrations in the summer; and high interest rates on PIIGS government securities indicates the possibility of a sovereign government default. Today, Standard & Poor’s cut its long-term rating of Greece again. S&P lowered the debt rating two notches to B, even further away from investment grade status.

Heavy buying of Gold was seen at jewelry stores across India yesterday, as Indian expatriates celebrated Akshaya Tritiya festival. For many of the buyers, the latest drop in the price of gold, following a record increase, came as an incentive to buy for the festival. Hindus consider Akshaya Tritiya as one of the most auspicious days of the year to buy precious metals such as gold, as it is believed to bring them lasting prosperity throughout the year.

SILVER
Silver, was up $2.36 in the U.S. markets today, closing at $37.44. Trading was very active from the opening. After last week’s 27% decline in silver value, we are seeing some stability in the price. It appears the price has bottomed out at $33.05 and has shown support around $35.00. The professionals (hedge funds & commodity houses) are in control, with a large amount of retail speculation shaken out of the market with margin calls and stop loss selling. It was reported that during Friday’s Silver trading in Shanghai, 25 million ounces was purchased with the market at “limit down”. This morning, when the Shanghai market opened trading demand was even larger.

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.