New Year Starts With Gold, Silver Surge

Gold and silver were showing strong morning gains on the first U.S. trading day
of 2012. Positive reports by the U.S. Census Bureau and Commerce Department on
estimated November construction spending up a seasonally adjusted 1.2% from
October to $807.1 billion and by the Institute of Supply Management buoyed
precious metals and mining stocks. A widely followed measure of economic
activity and conditions in the U.S. manufacturing sector, the ISMs Purchasing
Managers Index increased for the 29th consecutive month in December, while
overall economic activity increased for the 31st consecutive month, according to
the latest Manufacturing ISM Report on Business , released today. Decembers PMI
was up 1.2 percentage points from Novembers 52.7%, indicating expansion in the
manufacturing sector for the 29th consecutive month, according to ISM chairman
Bradley J. Holcomb. New orders were up 0.9 percentage points in December, while
prices of raw materials were down 2.5 percentage points from November. Spot gold
was trading 2.36% higher at noon Tuesday, with a bid price of $1,603.30 per
ounce and an ask price of $1,604.30. Spot gold traded as high as $1,608.40 and
as low as $1,585.40. The London afternoon reference price fix came in at $1,598,
according to Kitco market data . Spot silver was surging higher, up over 6.2%,
bid at $29.59 per ounce with an ask price of $29.69. The morning high as of time
of writing was $29.86, and the low was $28.48. Tuesday's reference price was
set at $28.78 in the London a.m. Gold had recouped the 5% it had lost last week
before slipping back to $1,592 an ounce in London morning trade, according to
BullionVault s London Gold Market Report . The Tokyo and Shanghai markets were
closed for New Year holidays, though other Asian markets moved higher in Tuesday
trading based on a strong December rebound in Chinas non-manufacturing output.
Gold is a unique hedge against the debasement of all fiat currencies, Gresham
Investment Managements Douglas Hepworth told Financial Times . However, in a
period where youre not having stagflation but stagnation it will do badly.
Phillip Futures Singapores Ong Yi pointed out that gold is still trading on risk
appetite, rather than acting as a safe haven. Turning to exchange trading, gold
and silver trusts were sharply higher. The SPDR Gold Trust (NYSE: GLD ) was
showing gains of more than 2.4%. The iShares Gold Trust (NYSE: IAU ) was up over
2.5%. The iShares Silver Trust (NYSE: SLV ) was up more than 6.4%. Gold and
silver miners ETFs were showing strong gains. The Market Vectors Gold Miners ETF
(NYSE: GDX ) was around 3.6% higher. The Market Vectors Junior Gold Miners ETF
(NYSE: GDXJ ) was up some 4.75%. The Global X Silver Miners ETF (NYSE: SIL ) was
4% higher. Gold mining shares were up sharply as well, with NovaGold Resources
(AMEX: NG ) shares surging. Agnico-Eagle Mines (NYSE: AEM ) was showing gains of
around 3.6%. Barrick Gold (NYSE: ABX ) was up nearly 3.4%. Eldorado Gold (NYSE:
EGO ) was up 4%. Goldcorp (NYSE: GG ) was some 2.3% higher. Newmont Mining
(NYSE: NEM ) was up around 2.85%. NovaGold Resources was between 5.5% and 6.2%
higher. Silver mining shares were surging higher. Coeur dAlene Mines (NYSE: CDE
) was moving higher, up around 3.75%. Hecla Mining (NYSE: HL ) was up nearly
5.75%. Pan American Silver (NASDAQ: PAAS ) was nearly 2.5% higher. Silver
Wheaton (NYSE: SLW ) was showing gains of nearly 4.5%. Silver Standard Resources
(NASDAQ: SSRI ) was up more than 5.6%. As of this writing, Andrew Burger did not
hold a position in any of the aforementioned securities. Adrian Ash of
BullionVault contributed to this report.