Wednesday, November 23, 2011

Gold and silver prices in Europe climb even as JP Morgan downgrades them in the US

Gold and silver prices rose in Europe overnight, even as prices fell agains the US dollar, and JP Morgan downgrades of precious metals, and all commodities.

Gold is lower in all major currencies today except euros with euro gold having risen 0.25% to EUR 1,263/oz.

The euro came under pressure due to the surprise collapse in new Eurozone industrial orders which led to Germany failing to get bids for 35% of bunds offered. The German 10-year bund yield rose sharply from 1.92% to over 2.06%.

This is one of Germany's worst auctions since the launch of the Euro with the Bundesbank having to pick up nearly 40% of the 6 billion euros on offer.

The German auction in turn led to further weakness in European equity markets. Asian equity indices followed US equities lower after news of a new US bank stress test and then the poor Chinese manufacturing data.

Gold will be supported at these levels as the euro zone debt crisis continues to degenerate with the periphery increasingly affecting the core – leading to contagion. - Zerohedge

More than anything, gold will tell you the value of a fiat currency.  If the dollar gets stronger, as it has over the past month, gold will move down.  But, its indications right now of how bad the Euro and the entire Euro Zone are, should foresee much more room to grow, especially if the ECB is forced into monetization.

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