Daily Gold Update

Source: American Gold Exchange

Austin— Gold climbed to a three-month high and silver surged more than 4.5% to a five-month high as the dollar weakened against the euro and risk appetite returned to the market. After two days of profit-taking, investors shifted back into precious metals in part because of a Conference Board report that U.S. consumer confidence reached a one-year high in February. Also stoking the risk-rally was anticipation of tomorrow's second Long Term Refinancing Operation, or LTRO2, in which the ECB will pump another 500 billion euros into the banking system to increase liquidity and ameliorate the sovereign debt crisis. It was gold's highest close since mid-November and silver's since September. Palladium picked up 2.1% and platinum 0.5%.

At the close: April gold rose $13.50 to settle $1,788.40; March silver surged $1.62 to $37.14; April platinum gained $9.20 to $1,723.50; and March palladium picked up $14.45 to $719.75 an ounce.

As investors become more encouraged by improving U.S. unemployment numbers and consumer confidence, silver is catching fire. It gained 6.4% last week, 11% this month, and 33% so far this year. As we've been saying, easy money policies on both sides of the Atlantic are supporting higher gold and silver prices for two reasons. First, gold and silver serve as alternative currencies when fiat currencies lose value either through inflation or intentional dilution by monetary easing, like the LTRO2. And second, they can rise alongside risk assets like stocks and industrial metals when economies heat up. Silver is even more responsive to risk rallies because it has many more industrial applications than gold. That's what happened today. If more evidence of a U.S. economic recovery comes along, we'd expect silver to continue to outpace gold in coming months.