There is little evidence of clear short-term price trends in gold, silver, platinum or palladium at the moment, with the metals all hostage to violent day-to-day gyrations in hedge fund sentiment. “Risk on” buying is triggered by hints that the Federal Reserve is getting ready for “QE3,” and sees metal prices bid up along with equities and commodities. It also leads to selling of the US dollar and Treasurys.
“Risk off” occurs whenever Fed officials appear cautious about more stimulus, and sees precious metals – along with commodities generally and equities – promptly sell off again, and the dollar and Treasuries rally. Everything in the short-term is pretty much tied to what central bankers say when standing in front of a microphone. The situation is nicely summed up at Jesse’s Café Americain: “To say that these are fairly cynical traders' markets, rather than anything tied to fundamental valuations, is an understatement.”
Meanwhile, George Soros is the latest luminary to put the boot into the eurozone, the Guardian quoting him saying that the continent’s debt crisis "has entered what may be a less volatile but more lethal phase." He’s suggested that a solution should involve all countries being able to refinance at the same interest rate – though there’s little sign yet of Brussels being able to muster support for this radical an idea. Until then, we seem destined to float from mini-crisis to mini-crisis, with the European Central Bank forced to monetise – albeit indirectly – ever-greater chunks of member-states’ debts.
Euro bearish? Perhaps, but there’s no shortage of countries looking to join the “race to debase” – something which obviously strengthens the case for buying gold, silver, platinum, palladium, and other tangible assets.
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ECB Bond Buying Will Increase: April 17, 2012
Published 04/17/2012, 08:26 AM
Updated 05/14/2017, 06:45 AM
ECB Bond Buying Will Increase: April 17, 2012
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