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June 11th Early Week Silver Market Update

Gold and silver began Tuesday with some heavy downward pressure from forces in Europe, the US, and Japan. Bond yields have jumped up considerably in many parts of Europe which as caused gold to lose its safe-haven demeanor. In addition to this, easy money policies across the world are looking like their days are numbered, another bit of activity that has done nothing but hurt the outlook on precious metals. And finally, to put the icing on the cake, physical demand for gold is at a low point that was never anticipated. In places like India, where gold is bought in large quantities at all times of the year, consumer interest is dwindling and is a shadow what it usually is.

European Bond Outlook

The worldwide outlook on bonds is that now is the time to sell. In Greece, for example, bond yields are up to and over 10% which has prompted many investors to get rid of their holdings. Bond yields are rising so rapidly, in fact, that stocks in places like Spain and Italy are facing selling pressure as well. Things are becoming so topsy-turvy that yields on seemingly safe German bonds are also rising, but not nearly as rapidly as in Greece.

As all of this is going on, Germany is going to court to discuss whether the EU's proposed bailout plan is even legal within German borders. All of this news circulating at once has caused many to believe that the economic crisis in Europe is slowly reaching a point where things will become completely chaotic for the region. It has been said for a while, and it will be said again, but leaders in Europe need to come together to formulate a solution to their debt problems instead of ignoring them and letting them grow upon themselves.

Monetary Policy Around the World

The Bank of Japan, in their latest meeting, announced that no major changes will happen to monetary policy in the country, though this has caused many to interpret this message as the BOJ saying that easy money policy will be ended in the near future. It is unclear as to whether or not this is actually the case, as the situation in Japan is constantly, and drastically, changing.

A prominent credit agency in the US announced that the credit reading of the United States has moved from negative to stable. This is yet another sign that the American economy is operating at an appropriate level and gives support to those who think Quantitative Easing should be brought to an end. The new credit reading jives well with the recent employment report out of the US which indicated that the unemployment rate is falling while more non-farm jobs are being added.

Posted in Market Updates

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