Gold And Silver: Little Action

What a boring week it’s been – gold and silver haven’t done very much, all the central bankers and politicians are on holiday or still considering options and the markets have shown they don’t want to play when the technocrats aren’t there to throw a ball.

Yesterday, gold did have a little bit of a boost, it was really no big deal, but everything’s so dull at the moment that some of us feel the need to mention it.

Gold’s small climb (still within its narrow range) was thanks to weak data from the Philly Fed and the increase in the US’s jobless claims. Some investors were under the impression the US was doing ok, got a nasty shock which put pressure on the US dollar index and helped gold and silver out.

Blowing hot air

It’s possible the markets are getting wise to the ‘we may consider…in the future’ comments from central bankers. Yesterday, reports that Chinese leader Wen Jiabao stated his country may have to ease monetary policy soon, did little to the markets.

This is interesting considering that the markets did react last week when China’s CPI was lower than expected, further monetary easing was predicted and yet none came. Perhaps markets won’t be falling for the central banks’ hot air anymore…hey are they getting smarter? No, if they were they would be choosing to buy gold…

What happens when the gold runs out?

Meanwhile, those who aren’t buying gold are the ‘cash for gold’ shops in Portugal. Bloomberg reported yesterday that Lisbon has run out of gold. In an unfortunate example of how desperate times call for desperate measures, in 2011 the number of cash-for-gold shops increased by 29%, today they are closing down.

‘Portugal’s gold exports increased by more than five times to 519.4 million euros last year from 102.1 million euros in 2009,’ as citizens, who are victims to 15% unemployment sold their gold to pay basic living costs. However, most people have no more gold to sell. With a government that is prevented from using official gold reserves to pay for its budget, many are wondering who will now pay for their basic living.

Why wait for QE?

All this waiting around on the gold price and news of QE has got us a little wound up. This is mainly because for about 9 years before QE was even a twinkle in a central bankers’ eye there were other factors, believe it or not, which were driving the to historical highs.

Here’s news – they still exist and you can read about them here.

And I’m afraid unless Draghi is waiting in the wings with some big announcement (who knows, he may be) then today is likely to be just as quiet as the rest of the week. PPI data from Germany is due, expect to see a small improvement MoM, but YoY won’t be anything to smile about. Canada’s CPI is expected to have seen an increase both YoY and MoM but Merkel won’t be feeling too smug in front of her recent host considering Germany’s PPI results are expected to show a decline YoY.

The Daily Nugget is taking a small break next week but will be back on Thursday, in terms of data releases it will be fairly quiet. We wonder if Draghi will use the quiet time to make an another amateur dramatics appearance?