Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold surged 2.7% for its biggest one-day gain since last June on a combination of growing physical demand, central bank buying, and expectations of deeper global monetary easing. The ECB is widely expected to cut interest rates in response to a spate of recent economic reports showing the eurozone slipping further into recession. Slower growth in the U.S. and China has increased the likelihood that neither nation will tighten monetary policies for quite a while. And Japan has already committed to doubling its monetary base with $1.4 trillion in additional quantitative easing, or money printing, over the next two years. Soci�t� G�n�rale's global strategist Albert Edwards, in a new report, predicts gold will reach $10,000 an ounce because of central bank policies. The euro, yen, and dollar all fell today as traders sought alternative stores of value. Silver did even better than gold, jumping 5.7%, while platinum and palladium added 2.3% and 2.1%, respectively. Gold has now regained roughly half of last week's losses.

At the Comex close: June gold surged $38.30 to settle at $1,462; May silver jumped $1.31 to $24.14; July platinum gained $33.30 to $1,464.10; and June palladium rose $13.75 to $681.40 an ounce

Exploding physical demand is helping to fuel gold's impressive rally. Daily volume on the Shanghai Gold Exchange has been four times last year's daily average since April 16, according to Bloomberg. Physical gold flows into India, the world's largest gold consumer, are the highest since 2008, with last week's shipments 20% above the previous record. Coin sales by The U.S. Mint and Britain's Royal Mint have both tripled last month's totals.

Russia, Turkey, and Kazakhstan added to their gold hordes for the sixth straight month, according to IMF data. Seeking to diversify currency reserves with long-term investments in gold bullion, central banks bought 535 tons last year, the most since 1964, and the trend is expected to continue for years to come. Morgan Stanley projects central banks will buy another 655 tons through 2018, while the World Gold Council forecasts 450 tons in additional purchases this year alone.