Daily Market Update 12/29/11

GOLD

What an extraordinary opportunity to purchase gold at the low end of the established long term trading range. On Sept 6th Gold reached a record high of $1,920.80, then corrected back to $1,535 on Sept. 26th, when major buying came in and took the Gold price back to $1,804 on Nov. 8th (just six weeks). In Asia last night gold hit $1,524 an ounce and then major buying came in to take gold back above the previous low of $1,535 per ounce.

The initial selling, which started on Tuesday, was caused by year-end stop loss and margin call selling. During the 11 year bull market in gold I have seen clean outs with a similar trading activity. Every time we have had a clean out (taking out the weak buyers) the market has rallied back sharply within weeks. I expect to see the Gold market rally back as buyers come back in early January.

Additionally, the XAU gold stock index and many of the gold and silver equities have moved higher today, indicating bottoming out action. At 11am PDT, Gold is trading at $1542.00 per ounce, down $23.50 on the day on very heavy volume for a holiday week.

SILVER

Wow, silver dropped to $26.15 per ounce this morning, before major buying came in. Silver is the only precious metal up today. It was definitely over-sold in the past two days. At 11am PDT, Silver is trading at $27.51, up $0.12 per ounce on very heavy trading activity.