December 4th Weekly Silver Market Update

Both gold and silver finished up the first week of December trading not very far from where they began it. When it comes down to it, though we have had an eventful week the market is still stacked up against precious metals.

As for this week’s highlights, they include a good deal of economic data from both the United States and Europe, as well as the all-important monthly meeting of the European Central Bank. That was arguably the biggest happening of the week as it was widely expected that Europe’s central bank would announce the expansion of easy money policies. Apart from that, the almost undivided attention of the global marketplace is looking ahead to the 15th and 16th of December when the FOMC is expected to hold their December meeting. It is at this meeting that investors are expecting to hear of raised interest rates for the first time in nearly a decade. Whether interest rates are actually boosted or not, however, remains to be seen.

ECB Extends QE, Doesn’t Expand

Thursday of this week saw the European Central Bank convene for their monthly policy meeting. Of course, as is typically the case, investors from the world over tuned in to hopefully hear and react to any bit of monetary policy change or outlook change.

While many were expecting the ECB to boost its easy money policies, that much did not occur. Instead, ECB president Mario Draghi announced that easy money policies would simply be extended, not expanded. Up to this point, Europe’s devaluing of the Euro currency has helped the region stabilize from an economic standpoint, but it has not yet really translated into any substantial growth. Draghi maintained that the current course of monetary policy is such that it should foster growth in the upcoming months and should see inflation hit the preset target of 2%.

By day’s end on Thursday, investors reacted to the ECB’s decision by more or less ignoring altogether. There really wasn’t any noticeable reaction and markets were not turned on their head by what is seen as a middle-of-the-road decision by Draghi and Co.

Disappointing Manufacturing Data From US

There was a good bit of US economic data dealt this week, but few pieces of data were more surprising than the ISM Manufacturing Index for the month of November. Compared to an October reading of just under 60%, November’s figures came back having lost more than 3 percentage points from the month before.

For those who are not very familiar with the ISM Manufacturing Index, any reading above 50% suggests growth, while any reading below that figure suggests that that sector of the economy is experiencing contraction. Though it is still encouraging to see this figure well-above the 50% mark, the fact that it fell more than 3% in just one month is just a bit unnerving.

Having said that, Janet Yellen, in a speech delivered on Thursday, made it very clear that the Fed plans on raising interest rates before the end of the year so long as economic data does not take a drastic turn downward. Of course, as was mentioned above, the attention of the global marketplace now turns to the December meeting of the FOMC, which is expected to take place within two weeks from now. As it stands, you would be hard-pressed to find even one investor who has doubts with regard to the occurrence of a rate hike at the conclusion of that meeting. We have been expecting interest rate hikes for quite some time now, but this time around it seems as though rates may actually be given a boost. I suppose only time will tell.