Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold slid 0.8% as renewed concerns about Greece prompted profit-taking from the recent rally. The German news magazine Der Speigel reported that Greece's budgetary shortfall will be around $26 billion, more than twice as much as expected. Because aid from the EU is contingent upon greater fiscal austerity, the surprise shortfall may disqualify Greece from another round of EU bailout money, increasing the odds of default and exit from the euro. The dollar and U.S Treasuries rallied on safe-haven inflows, pressuring gold, while risk-assets like stocks and commodities fell across the board. After gaining for five straight weeks, gold was ripe for some profit-taking and remains up around 11% for the quarter. The other metals fell harder today, with silver dropping 1.9%, platinum down 1%, and palladium tumbling a whopping 3.9%.

At the close: December gold slid $13.40 to $1,764.60; December silver dropped 65 cents to $33.98; October platinum fell $15.60 to $1,622; and December palladium tumbled $26.05 to $645.50 an ounce.

Morgan Stanley and Goldman Sachs just published their 12-month projections for commodities. Both investment giants are highly bullish on the asset class, predicting that even modest global growth will drive prices much higher. Morgan Stanley called gold "the best commodity to own right now," and expects an average price of $1,816 next year. Goldman expects commodities to rise by 18.2%, with gold at $1,840 by year-end.

We've long said that one of the most attractive aspects of gold in a portfolio is its unique ability to trade as a commodity or a currency. According the Business Insider, Deutsche Bank just published a new report arguing that gold will rise above $2,000 by the mid-2013 purely because of its role as currency of last resort. "Gold is not really a commodity at all," Deutsche Bank says, but "an officially recognized form of money�widely held by most of the world's central banks as a component of reserves." Not only that, gold is better than other currencies: "We would go further�and argue that gold could be characterized as 'good' money as opposed to 'bad' money, which would be represented by many of today�s fiat currencies." As currencies around the global are debased through quantitative easing, gold will become increasingly important as a store of value. Good to see at least one investment bank is finally realizing gold's curency role, something we gold investors have understood for a long time.