Silver and gold experienced a bit of an up and down week, with the end result being rather flat overall. After last week’s Fed minutes hinted at reduced or no quantitative easing in late 2013, metals started out a bit shaky, falling $0.25 and $1.60 during Monday’s trading. The downward pressure was also aided by Europe’s expanding debt crisis, including Spain’s full year of 25%+ unemployment.
Bank of Japan Boosts Prices
On Tuesday, the Bank of Japan hinted that they might further expand their own quantitative easing programs, which are similar to the United State’s in that Japan buys up assets and loans money with extremely aggressive interest rates. This monetary policy is known to boost commodity prices, as an expanded pool of currency inherently drives up the price of fixed-supply goods.
Although nothing is official yet, the BoJ will meet shortly to finalize their plans, if any. As a result of the chatter, silver and gold gained $0.33 and $13.50 on the day, ending three straight days of precious metals losses.
Metals Weaken as Equities Rise
Wednesday saw both metals give back some of their gains, as investors are slowly easing back into higher-risk asset classes like stocks and mutual funds. Investors are expecting strong fourth quarter corporate earnings, and thus are taking a bit of their money out of commodities and returning that capital into the stock market.
Many market experts see this trend as foolish, and question near record highs in the stock market. The already impending fiscal cliff, only two months away, will certainly set the direction for both metals and stocks for 2013.
ECB Speaks Out
The European Central Bank gave commodities, and especially metals, a boost when they stated they would not cut interest rates in the near future. This strengthened the Euro against the US Dollar, and a weaker dollar is typically helpful for silver and gold prices.
In addition, the Bloomberg Consumer Comfort Index was released on Thursday, which indicated reduced consumer confidence in the US market. Both of these reports pushed silver up $0.62 on the day, while gold rose $19.80.
Equities Strengthen Further
Friday saw money pour back into equities, with volatility measures indicating that investors are not scared at all to be heavily into stocks. The (temporary) aversion of the fiscal cliff seems to be all it took to get investors hot back into equities, and the flood of money moving out of metals and into stocks meant that gold and silver prices gave back most of their Thursday gains.
Overall, silver moved from $29.98 Monday morning to $30.51 at the Friday close, while gold opened at $1,650.80 Monday, and closed Friday at $1,662.90. A decent week for metals overall.
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