Silver Surges 9% in 24 Hours as Dollar Falls

Gold is trading at $1,592.14/oz, EUR1,122.17/oz and lb987.62/oz.

Gold has risen to new record nominal highs at $1,594.45 per ounce and silver has surged another 3% to over $39 per ounce after yesterday's 6% rise. Today's London AM Fix gold fix was $1,592.50, lb987.54 and EUR1,119.04 - all of which are new record nominal highs.

European stock markets are lower after Asian equity markets were mixed overnight with the Nikkei falling 0.27%.

European debt markets are under pressure this morning with Spanish and Italian bond yields rising towards 6% again.

Cross Currency Rates

Ireland's 10-year and two-year yields spiked to new record highs at 14.13% and 20.9% prior to sharp falls which had the hallmarks of sovereign intervention - possibly the ECB or China.

The US had its Aaa bond rating placed on review for possible downgrade by Moody's which cited the "rising possibility" that the debt limit won't be raised on a timely basis.

US treasuries have also been sold this morning. Concerns that QE3 and the printing and electronic creation of hundreds of billions of dollars and Obama's reported walkout from debt ceiling negotiations is not helping dollar and bond market jitters and has led to the record dollar gold price.

Ron Paul and Ben Bernanke: Is Gold Money?

Gold's new record highs may also have been contributed to by the debate between Federal Reserve Chairman, Ben Bernanke and Presidential candidate Ron Paul at the US House Banking Committee (see video here).

Dr. Paul asked about the collapse in the value of the dollar by almost 50% in the past three years to less than a 1,580th of an ounce of gold.

"When you wake up in the morning, do you care about the price of gold?" he asked Mr. Bernanke.

"Well," Bernanke replied. "I pay attention to the price of gold. But I think it reflects a lot of things. It reflects global uncertainties. I think the reason people hold gold is as protection against of what we call tail risks, really, really bad outcomes. And to the extent that the last few years have made people more worried about the potential of a major crisis then they have gold as a protection."

Paul: "Do you think gold is money?"

Bernanke: "No. It's a precious metal."

Paul: "Even if it's been money for 6,000 years? Somebody reversed that and eliminated that economic law?"

Bernanke: "Well, you know, it's an asset. Would you say treasury bills are money? I don't think they're money either, but they're a financial asset."

Paul: "Why do central banks hold it if it's not money?"

Bernanke: "Well, it's a form of reserves."

Paul: "Why don't they hold diamonds?"

Bernanke: "Well, it's tradition. Long-term tradition."

Paul: "Some people still think it's money."

The Federal Reserve Chairman's admission that gold is "protection" against "tail risks" and "really, really bad outcomes" is important and marks another step towards gold's movement from being a fringe asset to being a core part of a properly diversified portfolio.

Gold is increasingly being seen as an important safe haven asset and indeed currency (despite Bernanke's feeble denial of this) and this interview may be seen as another landmark in gold's move from fringe "barbaric relic" to mainstream investment and savings vehicle.

Silver

Silver is trading at $39.25/oz, EUR27.66/oz and lb24.35/oz.

Platinum Group Metals

Platinum is trading at $1,766.50/oz, palladium at $783/oz and rhodium at $1,925/oz.

News

(The Telegraph) - Gold price hits all-time high on European debt crisis and US QE

(The Independent) - Gold price hits record high as eurozone woes spread across Atlantic

(Reuters) - Gold hits record, extends gains to 9th day

(Bloomberg) - Gold Climbs to Record on Concern About Fed Stimulus, Europe's Debt Crisis

(The Street) - Ron Paul Attacks Bernanke on Gold

Commentary

(You Tube) - Ron Paul vs Bernanke: Is Gold Money? - July 13, 2011

(MarketWatch) - A great day for gold - and the bugs (mostly) think more are to come

(ZeroHedge) - Moody's Puts US AAA Rating On Downgrade Review

(The Telegraph) - The countries with the largest gold reserves

(The Telegraph) - How to invest in gold

(The Telegraph) - Italy money supply plunge flashes red warning signals

Mark O'Byrne is executive director of Ireland-based GoldCore.

About the Author
Mark O'Byrne

Mark O'Byrne is executive director of Ireland-based GoldCore.

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