Daily Market Update 12/12/11

GOLD

Today, the Euro debt crisis caused the U.S. Dollar to strengthen versus the Euro. Gold sold off on the news, reaching $1,660 in early trading, the low end of our recent trading range, and an excellent entry point for new purchases. At 11am PDT, Gold is trading at $1,666.20 per ounce, down $49.70 from Friday on very active volume. In the past two months gold has built an extraordinary base in the $1,660 to $1,800 price area. Gold has shown during its 11 year run that after a price correction and the building of a trading range, the price hits the low end of the range as a final clean out (causing small investors to receive margin calls), before it surpasses the previous high to set a new all-time record high.

SINGAPORE, Dec 12 (Reuters) - The amount of gold entering mainland China from Hong Kong in October jumped 51 percent on the month to a record 85.7 tonnes, said the Hong Kong Census and Statistics Department. Gold flow from Hong Kong to the mainland in the first 10 months of the year more than tripled from a year earlier to 286.8 tonnes. Buying interest for physical gold ran high in the first half of October around China’s weeklong National Day holiday, as prices languished near $1,600 an ounce. Prices strengthened later, but remained in a range between $1,600 and $1,700 throughout the month. "Anywhere below $1,700, people are interested in buying, "said a Singapore-based dealer. "If prices go lower, there’s further demand."

SILVER

Silver hit $30.78 this morning on concerns over possible European bank defaults or credit rating downgrades. At 11am PDT, silver is down $1.10 per ounce, on heavy trading activity. With the strength of the U.S. Dollar and renewed concerns over a global recession, silver is showing extraordinary support and demand.