Daily Market Update 12/28/11

GOLD

A very strong U.S. Dollar versus Global currencies, and concerns about a major credit crisis in Greece in January leading to a deflationary recession in Europe has caused a selloff in the World’s equity and precious metal markets. At 11am PDT, Gold is trading at $1,565.50, down $29.70 per ounce on light volume.

Today’s decline in gold can also be attributed to the negative sentiment resulting from the recent better than expected economic numbers emerging from the US. It should be noted that this is not slowing down physical gold purchases in the Europe, North America, Asia and the Middle East (India is the only exception due to a weak currency, see below).

Mumbai: Gold imports to India, the world’s largest consumer, may drop as much as 50 per cent in December. This, after a plunge in the nation’s currency to a record low drove up prices, according to the Bombay Bullion Association. Imports may total 35 to 40 metric tonnes this month, compared with 70 to 75 tonnes a year earlier. The rupee is Asia’s worst performer this year, reaching a record low of Rs54.305 a dollar on December 15, even as inflation remained above nine per cent for the 12th month in November.

SILVER

Silver led the decline in the precious metal family today, down 5% on light volume. Concerns about a global deflationary recession starting in Europe and spreading around the world have resulted in a lack of buyers. The Silver prices hit $27 per ounce earlier today. At 11am PDT, Silver is down $1.40, trading at $27.39 per ounce.The Silver to Gold ratio is 57 to 1, the highest ratio this year.