Daily Gold Update

Source: American Gold Exchange

Austin— Gold dipped slightly today, finishing flat for the week as U.S. investors took profits before the long Presidents Day weekend. Although jitters remain over the Greek bailout impasse, rising expectations of an agreement on Monday lifted the euro against the dollar and rallied the Global Dow. Gold was mildly supported by reports that CPI core inflation is up 2.3% over the past year � the largest gain since September 2008. For the week, silver dropped 1.1%, platinum 1.6%, and palladium 1.2%.

At the close: April gold dropped $2.50 to $1,725.90; March silver lost 15 cents to $33.22; April platinum gained $7.80 to $1,633.90; and March palladium lost $8.50 to $688.10 an ounce.

Despite assurances that a Greek debt deal will be finalized on Monday, ministers of the solvent eurozone nations (Netherlands, Germany, Finland) are suddenly saying the EU can withstand a default by Greece. Alexander Stubb, Finland�s Europe minister, told the Financial Times: �I am not advocating a Greek default, hard or soft, but I�m not excluding the possibility of it if the Greeks don�t get their acts together. Europe is prepared." Whether this statement is whistling in the dark or a concession that default is inevitable is difficult to say. The world's biggest banks are not so sanguine about the ramifications of default, however. As Zero Hedge reported today, the twenty-one Primary Dealers for U.S. government securities have been quietly buying up U.S. Treasurys at a rate not seen since early 2009, when the world financial system was in freefall. Last week alone they bought $37 billion, bringing their total to an all-time high $102 billion. In other words, the big boys are positioning themselves for maximal protection and liquidity in the event of systemic financial contagion.

Gold dealers are increasingly bullish, according to a Bloomberg survey released today, with more than 80% expecting prices to rise next week. Demand is up worldwide. As we reported yesterday, the World Gold Council released data showing that global demand for gold in 2011 rose to 4,067.1 tonnes, worth an estimated $205.5 billion, which is a new record. Much of the increase came from investors but Central banks are also expanding their bullion reserves, adding 439.7 tons last year, the most in almost five decades. They're expected buy a similar amount in 2012, with China leading the way. And billionaire hedge-fund manager John Paulson told his investors that it's time to buy gold to hedge against inflation and runaway government spending. �By the time inflation becomes evident, gold will probably have moved, which implies that now is the time to build a position in gold,� he said in a newsletter obtained by Bloomsberg. Gold has risen 9.9% this year.