Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold surged 3.3% for its largest one-day rise in more than a year on improving prospects for global monetary stimulus and physical demand in China. Short-covering rallies in paper gold helped to propel prices as hedge funds and other large-scale speculators hustled to buy back their earlier bearish bets in the face of steadily rising prices.

Last week's reassurances from Fed Chair Ben Bernanke that ultra-loose monetary policies will remain in place have weakened the dollar and given new momentum to precious metals. In addition, financial chiefs of the G-20 nations committed this weekend to pursuing high-growth fiscal policies instead of austerity, implying greater stimulus on the way. Gold has now gained in eight of the past ten sessions, climbing more than 10% in two weeks. Silver jumped 5.4% today while platinum added 1.2% and palladium lagged with a 0.1% rise.

At the Comex close: August gold surged $43.10 to $1,336; September silver jumped $1.05 to $20.51; October platinum gained $16.80 to $1,448; and September palladium picked up 70 cents to $750.45 an ounce.

Gold was also supported by China's landmark decision to eliminate the artificial floor under lending rates, nudging its financial system toward freer markets and making money cheaper for consumer spending. However, China did not lift caps on bank deposit rates that limit the interest earned by savers. With roughly 30% of household income being saved, according to Bloomberg, and with little to be gained from putting it in banks, China's exploding middle class increasingly looks to gold as a store of wealth. The World Gold Council forecasts bullion imports above 1,000 ton in 2013, up from 860 tons last year. As more inexpensive liquidity floods the Chinese economy, bullion demand is expected to increase.

Japanese Prime Minister Shinzo Abe�s ruling party won landslide victories in elections over the weekend, ensuring that his economic plan to combat deflation through unprecedented amounts of quantitative easing will proceed with full force. Abe has promised to double the monetary base of Japan with American-style bond purchases. Physical gold sales tripled the second quarter, according to Japan's largest gold retailer, behind Abe's new plan. QE devalues currencies and increases the risk of long-term inflation, stimulating demand for gold as an alternative store of value.