Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.8%, closing at an eleven-month high above $1,794, after the ECB's Mario Draghi reaffirmed his plan to save the eurozone by buying the debt of its insolvent members. Naming the bond purchases Outright Monetary Transactions (OMTs), Draghi promised that the ECB "stands ready" to bail out troubled nations like Spain, waiting only for government requests. Draghi's reassurances stoked risk appetite, rallying the euro against the dollar and driving global equity markets higher. Commodities surged and oil reclaimed most of yesterday's 4% loss. Silver added 1% while sister metals platinum and palladium did even better, jumping 2.6% and 1.9%, respectively.

At the Comex close: December gold added $14.90 to $1,794.80; December silver gained 34 cents to $35.03; January platinum rose $30.01 to $1,725.20; and December palladium jumped $17.10 to $675 an ounce.

That Spain will ultimately need to request OMTs becomes more patent every day. Prime Minister Rajoy is resistant because the bailout comes with fiscal strings and austerity measures that may prove politically untenable. But the markets and the EU are applying a lot of pressure. Against a backdrop economic of contraction and record-high unemployment, Spanish securities are tumbling and bond yields rising. Today, the EU announced that Spain's budget projections for 2013 rely on overly-optimistic assumptions, putting Rajoy's back even closer to the wall. Once Spain finally accepts the stimulus-friendly OMTs, which are basically a form of monetary easing, expect a serious rally for gold and equities as investors at once breathe a sigh of relief and gird for ensuing currency debasement.