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August 13th Early Week Silver Market Update

Gold and silver are seeing mixed results in the early part of Tuesday after both metals posted solid gains during the first part of the week. A corrective pullback is the most obvious culprit for precious metals' tumble back down, though more positive news out of the US and European economies likely also helped. A US retail sales report as well as some more European economic data was released in the early parts of Tuesday and though both reports were positive for their respective economies, they were not so well-received by precious metals investors.

The rest of this week is expected to be mostly quiet as far as major economic reports are concerned, though at this point even the smallest of readings or reports stands the chance to alter the spot price of both gold and silver.

US Retail Sales Alters Monetary Policy Outlook For Some

The only real economic news being released out of the United States today came in the form of the most recent retail sales report. This report indicated that retail sales were up by about .2% in July; this news also marks the fourth consecutive month where retail sales made positive gains in the US. This upbeat economic data only grows the confidence of those who are of the school of thought that Quantitative Easing should be tapered out and/or completely done away with by the end of 2013. Even though Ben Bernanke made statements indicating QE is by no means on a predetermined course to be done away with by the end of  the year, Dennis Lockhart, president of the Atlanta Federal Reserve bank, recently made a statement that is in direct opposition to Bernanke's.

QE, for those who are unaware, is a monetary policy whose main goal is to pump paper money into the economy in an effort to devalue the US Dollar and spur economic growth. A major influx of paper money into a given economy devalues the money and by devaluing a given currency the hope is that the nation in question's exports will become more attractive to foreign buyers. This increased export interest will (hopefully) translate into economic growth. Up to this point, QE has done its job almost to a T and with the US economy doing as well as it has been lately there are a lot of people who think QE is no longer a necessary monetary policy for the Federal Reserve to pursue. Only time will tell if QE will be done away with, though positive economic reports which are released will only grow the confidence people have that QE will be abandoned sometime relatively soon.

More Positive Economic Reports From Europe

2013, thus far, has been a turbulent year for the European economy to say the least. That particular truth persisted up until about last week where, for the first time in a long time, a slew of positive economic reports were released. Tuesday brought with it more positive news for the European Union as industrial output for the region rose by .7% from May to June while second-quarter industrial output bested the first quarter's by 1.1%.

The German ZEW economic expectations index also produced a higher reading in August than was recorded in July. July's reading was 36.3 while August's came back an impressive 42.0. We understand that a reading of this type may be a bit confusing, though the only piece of information you really need to be aware of is the fact that any reading in the 40s indicates an upswing in economic activity while any reading in the 30s leads people to believe that the economy in question is struggling.

Physical demand for gold and silver from both online and brick and mortar retails is being reported as on the rise as more and more people are looking to precious metals as a safe-haven asset going forward.

Posted in Market Updates

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