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Business/Finance See other Business/Finance Articles Title: Gold Stalls, Silver Surges, Currency Wars Gold Stalls, Silver Surges, Currency Wars Written by Gerardo Del Real Posted April 23, 2016 Silver was the story in the metals space this week, hitting an 11-month high of $17.69 on Thursday and a 5% gain for the week. Copper surprised and rose by approximately 6% this week amid optimism of a healthier economic outlook for China — an outlook that I feel will be short-lived. China accounts for approximately 45% of global copper demand. It’ll be interesting to see if copper can hold the gains. Gold continues to fail to breakout. After hitting a five-week high — also on Thursday — of $1,270 an ounce, it’s retreated once more to the $1,228 level. I continue to advise caution going into May and advise profit-taking on any company you can’t hold until the end of the year. Currency Wars The pullback from Thursday’s highs for silver and gold coincided with the USD firming up in afternoon trading after European Central Bank (ECB) President Mario Draghi reiterated the bank’s commitment to its monetary policy. The policy includes the main refinancing interest rate at 0.0%, the deposit rate at -0.4%, and its monthly asset purchases at 80 billion euros ($90 billion). The bond-buying program now includes corporate bonds. I don’t believe the policy will achieve its goal of sparking growth, inflation, or providing stability. Neither does German Finance Minister Wolfgang Schaeuble, who criticized the ECB plan. Schaeuble stated that the ECB's ultra-low rates were creating a "gaping hole" in savers' finances and pensioners' plans. Perhaps the most important comments from Draghi came in response to the criticism. Draghi responded by explaining that criticism of ECB policy might result in the need for an extension in loose monetary policy. Bank of Japan Governor Haruhiko Kuroda announced a negative rate strategy on Jan. 29 in an effort to fend off deflation and also reiterated this week his willingness to support looser monetary policy. Hasn’t worked for three decades but hey, maybe this time is different. Negative-yielding Japanese government notes account for about 65% of bonds globally with yields below zero. Japan Negative Interest What hasn’t worked for Europe will not work for Japan and the policies that have been adopted have led to concerns about whether pension funds and insurance companies will be able to meet their liabilities. Why does this matter to those of us who invest in the junior resource space? Because the order of how this all plays out will have a dramatic effect on the dollar and metals prices, which will of course affect companies associated in the resource space. Poster Comment: Chart and graph at source. Got silver? Post Comment Private Reply Ignore Thread
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