Tag Archives: Quantitative easing

Fed chairman gives clear signal for QE3

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English: President Barack Obama confers with F...

English: President Barack Obama confers with Federal Reserve Chairman Ben Bernanke following their meeting at the White House. (Photo credit: Wikipedia)

The much anticipated Jackson Hole, Wyo., speech took place this morning, with Federal Reserve Chairman Ben Bernanke giving indications that the Fed will soon embark on another round of bond buying, otherwise known as quantitative easing (QE). “It is important to achieve further progress, particularly in the labor market,” Bernanke said. “Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.” Bernanke cited previous rounds of easing as effective in stimulating economic development and job creation without hastening inflation.

The Gold price has had a turbulent morning. The metal fell immediately after Bernanke’s speech but quickly rebounded, leaving Gold at its highest level since April. “The main catalyst for the reversal in Gold has been that Bernanke used the words “grave concern” and the interpretation is that there’s going to be more QE if he’s using such dire projection for the economy,” said Jeffrey Sica, chief investment officer of SICA Wealth Management. Today’s rise in Gold price could be the first substantial gain in a rally that some analysts predict to breach $1,900 by year’s end.

At 1 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, 1,681.20, Up $25.60.
  • Silver, $31.23, Up $0.88.
  • Platinum, $1,535.30, Up $30.60.
  • Palladium, $627.90, Up $11.40.

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 8 p.m. (EDT)! Or call us Fridays until 6 p.m. (EDT)! If you have any questions about investing in Precious Metals or simply would prefer to place your order by telephone, we are here to help.

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Fed chairman set to speak; should eurozone look at Gold differently?

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U.S. stock futures and Precious Metals are enjoying a boost this morning in anticipation of Federal Reserve Chairman Ben Bernanke’s speech at Jackson Hole, Wyo., set to begin at 10 a.m. (EDT). Many investors are expecting Bernanke to strongly hint about a new round of quantitative easing, if not deliver an outright announcement. Peter Cardillo of Rockwell Global Capital said, “Obviously the market has discounted the fact Mr. Bernanke is not going to announce (a third round of quantitative easing), but he will acknowledge the fact there is a growing possibility that it could happen, so I think that’s what the market is looking at.”

The World Gold Council is suggesting a creative way of looking at Gold in the eurozone. Many pundits have suggested that troubled eurozone countries sell Gold to take care of their debts. This ill advised idea sounds like a simple resolution, but of course it is more complicated than that. The World Gold Council has suggested bonds and loans backed by Gold. Some groups (LCH.Clearnet, Intercontinental Exchange, and the Chicago Mercantile Exchange) have begun accepting Gold as collateral for margin requirements recently. Gillian Tett of Financial Times wrote that this “suggest(s) that a slow evolution of attitudes is under way — not so much in terms of the desirability of Gold per se, but the increasing undesirability and riskiness of other supposedly ‘safe’ assets, such as government bonds.”

At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, 1,662.90, Up $7.30.
  • Silver, $30.79, Up $0.34.
  • Platinum, $1,519.20, Up $14.50.
  • Palladium, $625.80, Up $625.80.

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 8 p.m. (EDT)! Or call us Fridays until 6 p.m. (EDT)! If you have any questions about investing in Precious Metals or simply would prefer to place your order by telephone, we are here to help.

 

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Anticipation for Friday grows, affects the markets

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The dominant news of the week will be speculation as to what will or won’t be announced during the annual Jackson Hole symposium.  Anticipation leading up to those announcements left stocks flat.  David Morrison, senior market strategist at GFT Markets in London, said “There are hopes that the Fed chairman will signal that another round of quantitative easing (QE) is imminent, although it seems more likely that he will keep investors guessing, while assuring them that the Federal Reserve stands ready to intervene further, if required.”

 

The eurozone is in a battle of its own, regardless of what Bernanke says at Jackson Hole.  Spain is being sucked into the center of the eurozone debt crisis.  Spanish consumers have pulled as much as 5 percent of their private sector deposits.  The other side of this coin is that Greek banks are seeing a boost in their deposits since their June elections.  Private sector deposits are up about 2 percent.

 

Official portrait of Federal Reserve Chairman ...

Official portrait of Federal Reserve Chairman Ben Bernanke. (Photo credit: Wikipedia)

 

Gold is riding a three month increase in price, up 3.1 percent.  This is the highest percentage increase since January.  The rising prices are fueled, in part, by expectations for what will come from the Jackson Hole meeting.  Gold’s meteoric rise in price, doubling since 2008, has been fueled by the Fed’s QE tactics.  For those that are risk adverse, gold holds a strong appeal; as currencies inflate, gold will always be a store of wealth as its value is historically independent of any one currency.

 

At 9 a.m. (EDT), the APMEX Precious Metals prices were:

 

  • Gold, $1,665.40, Down $8.70.
  • Silver, $30.90, Down $0.24.
  • Platinum, $1,524.50, Down $29.70.
  • Palladium, $640.40, Down $15.80.

 

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Jobless claims disappoint, leaving door open for QE3

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English: James Bullard, president of the Feder...

English: James Bullard, president of the Federal Reserve Bank of St. Louis (Photo credit: Wikipedia)

 

Precious Metals prices added to early gains after the release of the weekly jobless claims report. After an upward revision from last week’s numbers, the report showed increases across the board in new claims, existing claims, and the four week moving average. Jumps in the prices of Gold and Silver are most likely due to the fact that yesterday’s Federal Open Market Committee (FOMC) meeting minutes revealed that a third round of quantitative easing (QE3) was likely unless there was significant improvement in economic reports, and this report certainly does not indicate improvement.

 

In stark contrast to the minutes of the FOMC meeting released yesterday, St. Louis Federal Reserve President James Bullard said, “If we were to resume, and I think we will, 2 percent growth, maybe a bit stronger than that in the second half of the year, unemployment ticks down through the rest of the year, that’s not a great outcome but that’s a good enough outcome to keep us on hold,” regarding QE3. Bullard also said the market may be setting itself up for disappointment. He said, “Probably the best thing to talk about here is what would that action really be? I think the markets have the idea of some gigantic action. I’m not sure if the data really warrants that.”

 

The euro continues to rise against the dollar, which is supporting the Gold price’s recent moves. Chen Min of Jinrui Futures in China said, “The Fed’s tone is totally different in the minutes from previous comments, and that helped Gold break from the previous range and move into a higher price range ahead of the peak consumption season.”

 

At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:

 

  • Gold, $1,664.20, Up $24.90.
  • Silver, $30.50, Up $0.83.
  • Platinum, $1,543.80, Up $16.30.
  • Palladium, $637.90, Up $7.70.

 

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Gold at a two-month high, breaks key level

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Gold prices are at a two-month high this morning, tracking the euro upwards.  VTB Capital analyst Andrey Kryuchenkov said, “A break above $1,630 is very significant, as we breach the June-July and early August range.  Buy orders were triggered, with the dollar index also slipping below support … at early July lows.  This is on speculation that the ECB will act.”  Kryuchenkov went on to say that as normal, Gold is trading against the dollar in this case.

Today’s trading aside, the dollar has enjoyed a rally lately on risk aversion.  However, that could all be undone, and the culprit could be the Federal Reserve.  Simon Derrick of BNY Mellon said, “If you look at the dollar’s performance over the last few years when quantitative easing (QE) was introduced, the dollar was absolutely weaker… were they to reintroduce QE, would that reintroduce dollar weakness?  Absolutely.”  Investors are looking to the Jackson Hole Economic Symposium, scheduled for next week, for a sign that another round of QE is on the horizon.

Today’s rally in the euro could be things getting better for the euro before they get worse.  Jane Foley of Rabobank International said, “The market may be optimistic that the (European Central Bank) will act to subdue peripheral yields in September, but that implies that there is plenty of scope for disappointment.”  This scope for disappointment is something that is common when the market pre-prices events such as central bank interventions that don’t always see the light of day.

At 9:34 a.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,638.80, Up $17.40.
  • Silver, $29.31, Up $0.61.
  • Platinum, $1,507.00, Up $7.80.
  • Palladium, $621.80, Up $12.60.

APMEX’s Account Managers now have extended hours Mondays through Fridays and are here to serve you until 8 p.m. (EDT)! If you have any questions about investing in Precious Metals or simply would prefer to place your order by telephone, we are here to help.

 

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