Gold and Silver Investors Are Waiting on Europe

On Wednesday, gold (NYSEARCA:GLD) futures for December delivery bounced $13 to settle at $1,740.90 per ounce, while silver (NYSEARCA:SLV) futures fell 12 cents to settle at $32.56.

The European Central Bank may announce measures tomorrow to stimulate bank lending, said three officials with knowledge of policy makers’ deliberations.  Their options range from loosening collateral criteria so that financial institutions have more access to cheap ECB cash, to offering them longer-term loans to grease the flow of credit to the economy. Many economists are predicting an interest rate cut, which two officials confirmed is likely, with only the size of the reduction yet to be determined.

Investor Insights: Will Gold Help Japan Sell Debt?

The ECB is focusing on clearing obstacles to bank lending rather than increasing its government bond purchases as a means of tackling Europe’s debt crisis. The central bank’s insistence that governments take their own steps to restore investors confidence seems to be working, as Italian and Spanish yields plunged after France and Germany agreed to move the 17-nation euro area toward a fiscal union.

As traders await new developments from Europe, gold and silver were relatively quiet.  The SPDR Gold Shares (NYSEARCA:GLD) edged .73% higher, while the iShares Silver Trust (NYSEARCA:SLV) fell .91% in afternoon trading.  Gold miners (NYSEARCA:GDX) Barrick Gold (NYSE:ABX) and Yamana Gold (NYSE:AUY) declined by .63% and .86%, respectively.  Silver miners (NYSEARCA:SIL) such as Silver Wheaton Corp. (NYSE:SLW) and Silvercorp Metals Inc. (NYSE:SVM) declined around 1%, while Endeavour Silver (NYSE:EXK) fell 2.86%.

In order to increase demand for government debt, Japanese Finance Minister Jun Azumi will be offering a special incentive for investors that purchase more than 10 million yen ($129,000) in reconstruction bonds.  Bloomberg reports, “Individual investors who hold the bonds for three years will be eligible for a gold commemorative coin valued at 10,000 yen. At 15.6 grams, (0.55 ounces), it would be worth about $948 based on prices for the precious metal. Only a limited number of coins will be issued, the Finance Ministry said in a statement.  Silver coins weighing 31.1 grams valued at 1,000 yen will be distributed to those who own more than 1 million yen of the bonds, the government said. The coins will be offered for debt going on sale in March.”

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