Daily Market Update 5/19/11

GOLD
Gold closed today at $1,494.70, up $0.60 an ounce on light trading. The global demand for physical gold over paper backed gold continues to grow. Worldwide Investors abandoned gold exchange-traded funds in the first quarter in favor of coins and bars. This buying of physical gold investment products helped lift overall bullion demand by 11 percent.

The World Gold Council (WGC) reports that demand for paper-backed gold during the first three months of 2011 fell by 55.9 tonnes, while total coin and bar demand rose by 52 percent (or 125.5 tonnes) to 366.4 tonnes. Gold investment increased by 26 percent in tonnage terms, to 310.5 tonnes, helping raise total bullion demand from 881 to 981.3 tonnes. Additionally, the WGC stated that the Chinese have implemented a very liberal gold import structure, which according to the WGC could facilitate an expansion of Chinese demand for Gold.

SILVER
Silver was up 4 cents today, closing at $35.06 an ounce. The fact that Silver continues to stay above the important $35 per ounce barrier is very important to traders.

Investor demand for physical silver continues to grow. Premiums have moved higher and delivery on 1oz US .999 Silver eagles and 1st quality .999 Silver trade units is delayed up to 6 weeks.  The U.S. Mint is producing Silver eagles 24/7 and cannot keep up with demand.  The Silver futures market is in backwardation confirmation with heavy demand for physical silver.
(Backwardation, simplified, is when front month prices for a commodity go higher than those further out, reversing what is usually the case (contago), implying people/clients/whoever fear a near term shortage of that commodity. Backwardation is a very bullish sign that an explosive price break out is nearby. Normally, the longer the backwardation exists the better it is for the price to continue higher.)

My 24 page research study on Hyperinflation is completed and now available. After three months of research I am proud to share the information with clients and friends.  The title of the booklet is “U.S. Hyperinflation is Coming Soon, will Gold Confiscation or a Gold Standard be Far Behind?” 

For a free copy of the booklet just email [email protected]

Today’s Other Important News 

• The U.S. Labor Department said 29,000 fewer people filed for unemployment claims for the first time last week, showing improvement in US employment.
• Today President Obama announced a $1 billion in debt forgiveness for Egypt and $1 billion in loan guarantees to finance infrastructure. I’m not saying we shouldn’t help aspiring democracies in the middle east, but with a billion here and a billion there, we could be talking about real money someday.

For many of my clients and friends who are Gold & Silver addicts, I am now also posting additional market news and developments on Twitter.

Click here to follow me on Twitter @GOLDSILVERTODAY