President Obama Signs $858 Billion Tax Package

Los Angeles – Gold bullion prices closed higher at $1,374.00 an ounce on Friday just four percent below its recent all-time high of $1,432.50 reached on December 7. Silver rose higher closing at $29.12 an ounce as it increased the Gold-to-Silver ratio to 47, very close to its near four year low of 46 reached two weeks ago. Despite gold's recent pullback, the price of gold has gained 25.6 percent year-to-date, slightly higher than the 24 percent gain in 2009. Gold is on track to record its tenth straight yearly advance.

The week began with gold rebounding from its biggest weekly loss in a month after China decided not to raise borrowing costs, which boosted demand for the precious metal. In China, the central bank raised reserve ratio requirements for banks for the third time in a month but stopped short of raising interest rates, a move that benefits commodities. Buying by Chinese banks was behind bullion's strength, but volume was light. Heading into the Chinese New Year, the year of the Rabbit, Chinese demand for physical gold continues to climb.

European finance ministers met Thursday in Brussels to discuss a "permanent" solution for weaker governments to avoid the escalating borrowing costs and deficit crises which have overcome Greece and Ireland this year. Meeting in Brussels for the final 2010 summit, European Union leaders reached agreement replacing the region's emergency rescue fund, which is due to end in 2013, with a permanent crisis finance program. Unfortunately the crisis continues to grip the weaker governments of the euro zone and shows no signs of abating. On Thursday, Spain was forced to offer significantly higher interest rates at a debt auction than it paid just a month ago following a Moody's Investor Service warning on Wednesday that it may downgrade Spain's sovereign credit rating.

The House of Representatives in a late night session on Thursday, passed the tax cut extension bill in a true show of bipartisanship. On Friday, President Barack Obama signed the $858 billion tax package into law. The package extends unemployment benefits for millions of unemployed Americans while it also extends Bush era tax cuts for another two years. "I am absolutely convinced that this tax cut plan, while not perfect, will help grow our economy and create jobs in the private sector," said President Obama. "It will help lift up middle-class families, who will no longer need to worry about a New Year's Day tax hike. The bill's cost, $858 billion, would be added to the deficit. "I know that we are going to borrow every nickel in this bill," Steny Hoyer lamented.

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