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Morning Snapshotby Peter A. Grant
Sep 25, AM 
Gold is higher today and has recouped more than half of the corrective losses seen since Friday's high. Mildly positive housing data and a big surge in consumer confidence have heightened inflation worries in light of the Fed's recent decision to embark on a third round of quantitative easing.This leaves gold well positioned, as encouraging data like we saw today will stoke inflation expectations, while bad data will increase expectations that the Fed will spool up the printing press. Now I certainly wouldn't go so far as to say that gold is on a one way street. Gold remains confined to its broad range and there will undoubtedly be corrections within the 5-month uptrend, but I continue to like both the technical and fundamental picture for the yellow metal. One of things we've been following rather closely in recent years has been the shift in central banks from net sellers to net buyers of gold. IMF data released yesterday revealed that South Korea and Paraguay were big buyers of gold in July. According to Reuters: So far this year, central banks have added a net 262.1 tonnes to their reserves, compared with 203.39 tonnes in the first eight months of 2011. As central banks continue to diversify their reserve holdings, out of fiat currency and into hard assets, gold will continue to be a primary beneficiary. Such buying interest, which is undoubtedly being driven in part by western currency debasement, is likely to limit corrections in the gold market; making them brief and shallow. • US Richmond Fed Index jumped to 4 in Sep, vs -9 in Aug. • US Consumer Confidence surged to 70.3 in Sep, well above expectations of 63.0, vs positive revised 61.3 in Aug. • US FHFA Home Price Index +0.2% to 190.1 in Jul, vs positive revised 189.7 in Jun. • US S&P/Case-Shiller home price index for 20-cities +0.4% (sa) in Jul. • Germany GfK Consumer Confidence steady at 5.9 for Oct, in-line with expectations. • France Business Confidence steady at 90 in Sep. • France Production Outlook fell to -52 in Sep, vs -44 in Aug. • Italy Consumer Confidence (sa) ticked higher in Sep to 86.2, vs upward revised 86.1 in Aug. • South Korea Consumer Sentiment Index (nsa) unchanged at 99 in Sep. • Japan Corporate Service Prices -0.3% y/y in Aug, vs negative revised -0.3% y/y in Jul. • China Leading Indicators rebounded to +1.7% in Aug, vs positive revised 0.6% in Jul. • Taiwan M2 +3.7% y/y in Aug, vs +3.8% y/y in Jul. Peter Grant is USAGOLD's resident economist and a well-known analyst globally in the forex and precious metals markets. NEWSLETTER SIGN-UP Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.
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Tuesday September 25
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