Gold and Silver Sink in Market Sell Off

On Thursday, gold (NYSEARCA:GLD) futures for December delivery fell $54.10 to settle at $1,720.20 per ounce, while silver (NYSEARCA:SLV) futures declined $2.33 to settle at $31.50.

The International Monetary Fund won’t release Greece’s next tranche of aid until there is broad political support for the austerity measures that are a condition of the loan, according to an IMF spokesman.  “It’s important that the unity government now shares its commitment to the implementation of the economic program” and the decisions agreed to by European leaders last month, IMF spokesman David Hawley told reporters on Thursday. “Once broad political support” for the measures “is assured, then we can proceed with completion” of the review and the release the aid.

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Europe’s debt crisis poses a serious threat to the creditworthiness of U.S. banks if it spreads beyond the five most-troubled nations, Fitch Ratings explained.  “Unless the euro zone debt crisis is resolved in a timely and orderly manner, the broad credit outlook for the U.S. banking industry could worsen,” the New York-based rating company said yesterday in a statement. Though U.S. banks have “manageable” exposure to stressed European markets, “further contagion poses a serious risk,” Fitch said.

It was a “risk off” dash for liquidity trading day for investors.  The Dow (NYSEARCA:DIA) fell more than 200 points while oil (NYSEARCA:USO) declined over $3 per barrel.  Gold and silver were not immune to the sell off.  In afternoon trading, the SPDR Gold Shares ETF (NYSEARCA:GLD) declined 2.5%, while the iShares Silver Trust (NYSEARCA:SLV) declined more than 6%.  Gold miners (NYSEARCA:GDX) such as Barrick Gold (NYSE:ABX) and Freeport-McMoRan Copper & Gold (NYSE:FCX) fell nearly 4%.  Silver miners (NYSEARCA:SIL) First Majestic (NYSE:AG) and Endeavour Silver (NYSE:EXK) dropped more than 6%, while Fortuna Silver Mines Inc. (FSM) declined 2.6%.

According to a report by the World Gold Council, Europe purchased a record $6.2 billion in gold bars and coins in the third quarter.  “Fears generated by the deepening sovereign debt crisis in Europe were manifested in a strong desire to buy gold,” the WGC said.  Compared to last year, worldwide demand for gold bars and coins increased 29%.

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