Morning Gold & Silver Market Report – 9/19/2011

European Banks Become Net Buyers of Gold – Most of us know that central banks, as a whole, became net buyers of gold in 2010, thus reversing a 20-year pattern of net selling. Although this was true as an aggregate number, European banks were still net sellers of gold in 2010, but in 2011, they too have jumped on the bandwagon. European central banks have become net buyers of gold for the first time in decades. This is yet another indicator of how nervous central banks are with the current state of the global economy, the debt crisis and the overall turbulence in the currency markets. Jonathan Spall, a Director at Barclays Capital said, “We’re going back to a time when gold is seen very much as money.”

Gold prices are up modestly since the Asian markets opened Sunday afternoon, but equity markets have fallen overnight and the U.S. Stock futures are sharply lower. Over the weekend, European finance ministers met, but nothing new emerged to alleviate concerns about Greece or the European debt crisis in general. Greece still has not implemented the reforms required by the International Monetary Fund (IMF). A conference call with IMF inspectors is to take place Monday at 9AM CT.

President Obama is expected to lay out his deficit reduction plan today. His aides indicate that the savings would be over 3 trillion dollars over the next ten years with almost half of that coming from higher taxes. His plan has little chance of passing a “Republican controlled” Congress, but it could galvanize the Democratic Party ahead of the 2012 elections. The President is expected to include a “Buffet rule” in his plan, that would set a minimum tax on anyone making over 1 million dollars.

At 8 AM (CT) the APMEX precious metal prices were

· Gold price - $1,815.30 – up $1.80

· Silver price - $40.35 – down 51 cents

· Platinum price - $1,806.50 – down $10.40

· Palladium price - $726.00 – down $10.90