Morning Gold & Silver Market Report – 11/23/2011

GOLD’S BULLISH FACTORS REMAIN; FRANCE, GERMANY CLASH

Gold prices are dipping this morning along with the euro as a result of the latest developments in the European debt crisis. The U.S. dollar’s rise has limited the effect of the safe-haven buying of gold, which is still very much intact. Gold prices are down just 1% in November after last week’s heavy selling. Credit Agricole analyst Robin Bhar said, “We’re seeing some post-options expiry selling coming through. The turmoil still going on in financial markets and the euro-dollar swap rates are still fairly high. … Gold may still be a casualty of that. The bullish factors for gold haven’t really disappeared.”

Leaders from Germany and France are clashing over the European Central Bank’s (ECB) involvement in the debt crisis. German Chancellor Angela Merkel said, “The European currency union is based -- and this was a precondition for the creation of the union -- on a central bank that has sole responsibility for monetary policy. This is its mandate. It is pursuing this. And we all need to be very careful about criticizing the European Central Bank. I am firmly convinced that the mandate of the ECB cannot, absolutely cannot, be changed.” In contrast, French Finance Minister Francois Baroin said, “The best response to avoid contagion in countries like Spain and Italy is, from the French viewpoint, an intervention or the possibility of intervention or announcement of intervention by a lender of last resort, which would be the ECB.”

The contagion stems most recently from the situation in Greece. Today, the Bank of Greece said Greece is currently seeing “the most critical period” of its history since World War II, adding that the country possibly could be thrust from the eurozone. The bank called on Greece to meet all targets set in the latest bailout agreement, otherwise, the country may see “an uncontrolled downward trajectory that would undermine many of the achievements that have been attained in recent decades, drive the country out of the euro area and set Greece’s economy, standard of living, society, and international standing back many decades.”

At 8 a.m. (CST), the APMEX precious metals spot prices were:

• Gold - $1,693.70 – Down $10.70.
• Silver - $31.60 – Down $1.40.
• Platinum - $1,554.90 – Down $16.10.
• Palladium - $588.90 – Down $14.30.