The Daily Nugget: Gold Holding Still For Bernanke

Yesterday looked as though it was going to be a pretty good day as the gold price started climbing in the morning after responding to the German constitutional court’s ruling in favour of the European Stability bailout fund.

Gold and silver bullion weren’t the only ones to experience gains during the day thanks to the German lawmakers, European stocks were at a 14-month high.

The spot gold price traded as high as $1,749.50 and went to a daily low of $1,734 an ounce finishing slightly lower at the end of day, silver also did not disappoint with silver prices for December delivery up 15 cents. This morning, both are holding steady ahead of Bernanke’s announcement.

As we said on Tuesday, both gold and silver are likely to be hanging on for today’s announcement from the FOMC and Bernanke, due at 5.30pm BST.

It seems gold has already priced in QE, so it will be interesting how it will react to an announcement from Bernanke. If an open-ended, non-sterilised purchase plan is announced gold is expected to rally to around $1,800 whereas if the announcement disappoints it is expected to fall to $1,700. However, remember what we said before, these central bankers may well turn out to be the gold investors’ best friend.

Data from China has also fuelled expectations of further easing from the government who hinted on Tuesday that they may use the remaining 100bn yuan in the government’s fiscal stability fund to try and boost growth. Yes, that’s just what the country needs, more government spending as the last one got them to such a great financial place.

But those who live in glass houses, especially those such as delicate as the US and Eurozone should not throw stones. Whilst China may be a experiencing a "growth recession" they are preparing themselves for the long game – stocking up on gold.

EU antics
Meanwhile over in the UK, our banking system is looking pretty good compared to many in the EU, so Mr Barroso would like to change all that by proposing an EU banking union. Whilst UK banks wouldn’t be covered by the union analysts fear it may affect banks’ decisions when it comes to deciding where to base headquarters. New research shows the UK banking system has built up resilience as a result of the financial crisis, how resilient can they be to an EU banking union?

The EU banking system isn’t the only example of further measures to remove dignity and sovereignty away from single currency member states. Yesterday’s decision by the German court has brought the Spanish bailout closer to fruition. The dive for the money trough by the Spanish is another step down the road to further unemployment and civil upset. Elsewhere, Greece has identified 40 islands which it may lease as part of a privatisation drive to encourage developers into the country in an attempt to reduce its debts.

Take a break
Sometimes on The Real Asset Company Research Desk we like to take a few moments to watch the latest YouTube offering from Nigel Farage. He seems to be becoming a specialist at wiping the floor with everyone in the European Parliament. This week’s, which was posted over on ZeroHedge, was no exception.