Daily Gold Update

Source: American Gold Exchange

Austin— Gold rose for the fourth time in five sessions to close at its highest level since early December as the dollar weakened against the euro. Lower than expected bond yields in Spain and Italy and a promising debt auction in Portugal bolstered the euro, while better than expected manufacturing data out of the UK, India and China helped to blunt the dollar's safe-haven appeal and shift monies to equities and commodities. The other precious metals outpaced gold's half-percent gain, with silver adding 1.6%, platinum 2.2%, and palladium 1.4%.

At the Comex close: April gold rose $9.10 to $1,749.50; March silver gained 55 cents to $33.81; April platinum surged $35.10 to $1,623.20; and March palladium added $10.35, to $696.70 an ounce.

Although gold and the dollar have been rising together in recent weeks, largely because of the eurozone's slow boil, continuing dollar weakness is a big driver behind gold's current rally. As we've been saying, the Fed's pledge of near-zero interest rates into late 2014 will support higher gold prices for years to come. Now, apparently, near-zero rates aren�t quite low enough�at least not for the Treasury Borrowing Advisory Committee (TBAC). This group of financial industry heavyweights from Goldman Sachs, JP Morgan, and other gigantic banks and investment houses, is now recommending bond auctions with negative interest rates! In a letter to Treasury Secretary Geitner today, the committee put it this way: "It was broadly agreed that flooring interest rates at zero, or capping issuance proceeds at par, was prohibiting proper market function. The Committee unanimously recommended that the Treasury Department allow for negative yield auction results as soon as logistically practical."

Wow. Negative yield auctions! As Zero Hedge points out, "soon savers will be literally paying to hold cash." Better yet, as bond legend Bill Gross wrote today on the Pimco website, look to gold and commodities as stores of value. In his words, "zero-bound money" (let alone the negative-bound money proposed by the TBAC) "may as well, induce inflationary distortions that give a rise to commodities and gold as store of value alternatives when there is little value left in paper." Hear, hear! Ironically, Pimco has a member on the TBAC�but clearly that person is not Bill Gross!