Daily Gold Update

Source: Dana Samuelson, American Gold Exchange

Austin, TX— In his much anticipated speech today at the annual Kansas City Fed�s Economic Symposium at Jackson Hole, Wyo. Fed Chairman Ben Bernanke defended past Fed monetary easing policies as beneficial to the U.S. economy and reiterated that additional monetary easing remained distinctly on the table if U.S. economic conditions warrant such action. Precious metals rallied sharply as a result, with gold setting a new five month high and silver setting new four month high. .

At the close of the New York session December gold closed at $1,687.30, up $30.20, or 1.8%. Gold set a new five month high of $1,691.80 in electronic trading after the close. December silver finished the session at $31.44, up $0.99, or 3.2% and like gold has set a new four month high of $31.59 in electronic after the close. October platinum closed at $1,536.750, up $32.80, or 2.2%. Platinum has traded as high as $1,541.40 in after session electronic trading. December palladium closed at $628.67, up $12.27, or 2.0%. The dollar briefly fell below major support of 81.00 to as low as 80.964 on the U.S. dollar index before rebounding back above 81.00.

According to Mr. Bernanke, U.S economic growth is being held back by major �headwinds� including weak housing activity which �remains at low levels and is contributing much less to the recovery than would normally be expected at this stage of the cycle.� Also, uncertainties about future U.S. fiscal policy, specifically the �the resolution of the so-called fiscal cliff and the lifting of the debt ceiling,� and the ongoing Euro crisis �a major source of financial strains has been uncertainty about developments in Europe�through global trade and financial linkages, the effects of the European situation on the U.S. economy are significant.� Most importantly Mr. Bernanke commented on the current U.S. unemployment situation. �The stagnation of the labor market in particular is a grave concern not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for many years.�

In his concluding remarks Mr. Bernanke justified prior Fed actions. �Now, with several years of experience with nontraditional policies both in the United States and in other advanced economies, we know more about how such policies work. It seems clear, based on this experience, that such policies can be effective, and that, in their absence, the 2007-09 recession would have been deeper and the current recovery would have been slower than has actually occurred.� Then he reiterated what the release of the FOMC minutes from the July 31st to August 1st monetary-policy meeting revealed. �The Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.� Clearly the Fed is keeping all the options it has in its fiscal tool kit on the table.