Gold and silver continued on their over half a year decline this week as both metals posted fairly large losses. While these losses have completely sucked the life out of any progress gold and silver might have made last week or the week before, they are not too surprising. There are a number of different worldwide economic factors giving gold and silver no choice but to decline in value. Unlike the huge, one-day loss we witnessed over a month ago, these losses are not due to one traumatic event, but rather a storm of events all going on at one time.
World Currencies Crashing, USD Rising
The Japanese Yen and Australian Dollar highlight what has been a weak of currencies declining in value relative to the dollar. The Yen has hit multi-year lows against the dollar all week while the Aussie dollar is hitting its lowest point in almost a full year.
These and other currencies crashing in value mean that the US Dollar has nowhere to go but up, and this could not be any more detrimental to gold and silver. In addition to this, stock markets are doing better in places like Japan and the United States than they have in years. A better outlook on world stock means that investors do not need to be so concerned with allocating their funds into safe-haven assets such as gold and silver. Lately, investors have completely shied away from the metals in search of what they hope to be more profitable investments elsewhere. So far it seems to be paying off but who knows if stock markets can maintain this impressive run for any extended period of time.
QE Up In the Air
At the end of last week it was reported that the US Federal Reserve’s Quantitative Easing initiative would be brought to an end sometime in the near future. While these were just rumors when they were first discovered, they were enough to bring down the spot value of gold and silver.
This week it seems as though those rumors had a bit of truth to them because we have heard very many reputable sources talk about possible time tables and reasons for why QE might be shut down. This all makes sense because the US economy, especially as of late, has been recovering from the 2008 recession with alarming success. Such success has caused market and money experts to agree with the fact that QE should be brought to an end soon.
Despite mounting evidence, gold and silver investors are hoping that the announcement of the end of QE will never be made. This is because an announcement of the end of QE will surely put even more downward pressure on both gold and silver.
The Week Ahead
As we move into the next week and the latter part of May, there will be only two things that precious investors will be keeping their eyes on. The first of which is the value of the USD. If the USD keeps gaining in value it is unlikely that gold will be able to.
The second thing investors will be watching out for is an announcement on the future of QE. There is no set date for said announcement, but if it comes and the rumors are true, precious metals may dip even further.
Weekly Shift
Gold started the week at $1,448 and when all was said and done it was at $1,360 . This was a loss of $88. Silver started the week at $23.87 and at the end of the week was at $22.26 . A loss of $1.61.