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December 17th Early Week Silver Market Update

Gold and silver have fallen a good bit in the early parts of Tuesday as the anxiously awaited FOMC policy meeting has finally gotten underway. While there will be some economic data from around the world trickling in this week, the focus of the worldwide market is fixated solely on the FOMC meeting. As investors are becoming more and more eager to take on risk, precious metals have suffered considerably, and will likely continue to suffer. Even though the market seems to be expecting a tapering announcement to come as a result of this week's meeting, the once prevalent belief that it would cause gold and silver to completely drop off is dwindling.

Policy Meeting Finally Here

Since last month, one of the only thing on investors' minds was when the Fed is going to taper Quantitative Easing. As the month of November progressed and eventually turned into December, the economic data being produced by the United States had caught the attention of investors everywhere. In addition to an increased amount of positive economic data in the United States the geopolitical atmosphere calmed down considerably thanks to an official budget agreement being reached by US lawmakers last week. With one less piece of political drama to worry about and a constant flow of positive economic data, the belief that the Fed would taper QE at their December policy meeting began to spread like wildfire.

Now, the investing marketplace is more or less expecting to hear a Quantitative Easing reduction announcement sometime tomorrow afternoon. For this reason, the thought that a QE tapering announcement would translate into a sharp dive by the spot values of gold and silver is not as widely held as it once was. Because the market is expecting to hear a tapering announcement, whether it be tomorrow or next month, those that would have sold their precious metals holdings in the wake of such an announcement have jumped ahead and done so already. The gradual, and sometimes sharp declines by both gold and silver spot values that we have witnessed over the past few weeks can be interpreted as the market already adjusting itself to a world with less Quantitative Easing.

Regardless of what they believe will happen or what they hope will happen, investors will still be keeping their eyes and ears posted for the conclusion of the meeting and the statement made afterwards.

Posted in Market Updates

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