Gold and Silver Add to Recent Losses

On Wednesday, gold (NYSEARCA:GLD) futures for December delivery fell $6.50 to settle at $1,695.90 per ounce, while silver (NYSEARCA:SLV) futures declined $1.07 to settle at $31.88.

European stocks sank to a 7 week low after a very poor German (NYSEARCA:EWG) bond sale on Wednesday.  The Bundesbank was forced to keep almost half of a sale of 6 billion euros due to a lack of bids by investors.  This pushed the cost of borrowing over 10 years for the bloc’s paymaster above those for the United States for the first time since October.  “It is a complete and utter disaster,” said Marc Ostwald, strategist at Monument Securities in London.

Investor Insights: Liquidity Crunch Brings Down Precious Metals.

In the meantime, Germany and France (NYSEARCA:EWQ) continue to argue on whether or not the ECB should take bigger actions to ease the pressure on debt markets in Italy (NYSE:EWI), Spain (NYSE:EWP), and other pigs.

The euro fell to a new six-week low, which pushed the US dollar (NYSE:UUP) higher.  As a result, the SPDR Gold Trust (NYSEARCA:GLD) declined .60%, while the iShares Silver Trust (NYSEARCA:SLV) fell about 3% in afternoon trading.  Gold miners (NYSEARCA:GDX) such as Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM) declined nearly 2%.  Silver miner (NYSEARCA:SIL) First Majestic (NYSE:AG) fell 5%, while Silver Wheaton (NYSE:SLW) declined more than 3%.  Revett Minerals (RVM), a miner with silver and copper (NYSE:JJC) properties in Montana, bucked the downward trend by edging .20% higher.

Further adding to the weakness in gold and silver, was a note from JP Morgan’s (NYSE:JPM) Colun Fenton.  According to the note, JP Morgan has downgraded the entire commodity complex to underweight.  Although commodities (NYSEARCA:RJI) across the board pulled back on Wednesday, Jim Rogers does not believe it is a long-term decline.  “With MF Global going bankrupt – which was a gigantic commodities firm – there was a lot of artificial forced liquidation of commodities. People have to sell whether they like it or not. It’s artificial selling right now,” explained Rogers.

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