GOLD FALLS ON PLANS FOR EURO BONDS

Gold prices were falling this morning after the European Commission announced plans for euro bonds.... Those are bonds that would be guaranteed by all of the euro zone’s 17 members. At the moment European nations can only borrow money by issuing bonds from their own governments. The problem is many of them already are so heavily in debt that the interest rates on new bonds are impossibly high. Germany has long opposed euro bonds but there are indications that Berlin may give the green light for them … even though they will expose the more disciplined northern countries – like Germany, Finland and the Netherlands – to the heavy deficit spending of southern countries like Greece, Portugal, Spain and Italy. --------------------------------------- Gold's decline was also due to a top Chinese official coming out in strong support of struggling European nations. That support is expected … at least by the optimists … to come in the form of China buying European bonds. --------------------------------------- According to Dow Jones … Chinese Premier Wen Jiabao said China was willing to expand its investment in Europe … but he also said European leaders must recognize China's status as a market economy. --------------------------------------- The effect of the two developments was sharply higher stocks in Europe. Germany’s DAX jumped 2.5 percent, while the FTSE 100 rose 1.4 percent and the CAC 40 gained 1.5 percent. --------------------------------------- In the U.S., stock futures were trending higher and were above fair value. NOW LET’S LOOK AT EXACTLY HOW THE MARKETS DID IN ELECTRONIC TRADING … The price of gold for December delivery …. fell$1.20 cents to $1,830 per troy ounce. Gold for immediate delivery fell $10.27to $1,827.82. The price of silver fell12 cents to $41.08 … while silver for immediate deliveryfell 22 cents to $40.91.