Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold rallied 1.5% to close at a seven-month high over $1,780 after China injected nearly $60 billion into its banking system and Spain announced a budget plan that should open the door for bailouts from the EU and ECB. Global equities and commodities rose on the news while the dollar and U.S. Treasuries rolled back. Gold enjoyed its largest daily gain in two weeks, receiving additional support from strikes in South African gold mines that halted nearly 40% of production. The other precious metals also rallied, with silver gaining 2.1%, platinum 0.7%, and palladium 1.5%

At the close: December gold rallied $26.90 to $1,780.50; December silver jumped 73 cents to $34.67; January platinum rose $11.90 to $1,651.10; and December palladium gained $9.55 to $635.40 an ounce.

Gold is now is on track for an 11% increase this quarter, its best in two years. And it's even stronger overseas, hitting new all-time highs in the euro and Swiss franc today as Europeans grow increasingly fearful of currency debasement, inflation, civil unrest, and the uncertain fate of the euro. In response to exploding demand, Barclays in London opened the first British bank-owned storage vault, serving large investors, pension funds, central banks, and sovereign funds that have been buying precious metals in record quantities since 2008.

Hedge funds are becoming extremely bullish on silver, speculating that it will outperform gold as monetary easing increases. Wagers on higher silver prices have increased by 10-fold since June, according to Bloomberg. Investors have bought more than 717 tons this quarter, valued at nearly $800 million, through exchange-traded products (ETPs) alone, the most in a year. Morgan Stanley also predicts silver will rise more than gold on a percentage basis over the next several quarters, gaining as a monetary hedge and an industrial commodity.