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January 20th Early Week Silver Market Update

For yet another day, both gold and silver have been adding value since the time markets opened. Over the last two or so weeks, the overall outlook on gold and silver as alternative investments has shifted, and a lot more investors are playing it safe with precious metals investments. With energy prices slumping, stock markets struggling, and currency markets in flux, it shouldn't come as too much of a surprise that investors are playing things safe.

The big news story of the week will come Thursday in the form of the next European Central Bank meeting. While every ECB meeting is important, this one is of particular importance to investors due to the simple fact that a major shift in policy is expected to be announced. In addition to the ECB meeting, investors will also be paying close attention to some economic data from the US and elsewhere around the globe.

ECB Meeting Takes Center Stage

Even before this week got started, it was clear to see that investors in the US and elsewhere were going to be paying close attention to the European Central Bank meeting. For a while now, it has been widely believed that the ECB was going to soon make a shift in policy. In the minds of many, that shift in policy would entail the ECB putting into action a bond-buying (quantitative easing) program similar to the one we saw in the United States for the past 5 or more years. Up until last week, this was all speculation, but a surprise ruling on the part of the European Court of Justice convinced the world that this week was definitely going to play host to a shift in ECB policy.

The ECJ's ruling established that the European Central Bank is allowed to explore experimental plans of action in an effort to spur economic growth. In response to this ruling, the Euro currency's value fell dramatically. Now, only days away from the ECB meeting, the Euro is still in a subdued positions and expected to remain right there.

Though the world is excited to see European monetary policy change, not everyone is convinced that quantitative easing is what the EU needs to pull itself from the verge of recession. Market experts cite things like a difference in the US and EU economic and financial systems as two major reasons why QE may not be the perfect answer. In addition, it was also made very clear that just because a certain policy worked for the United States does not mean that it will also definitely work for the European Union. All in all, the next few weeks and months will be interesting as global monetary policies continue to change and take shape.

Posted in Market Updates

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