Gold and silver had a fairly uneventful week in that they finished on Friday very near to where they started on Monday. We had plenty of economic news to talk about as Asia and other parts of the world had some terrible runs. On top of that, we saw investor fear of the end of monetary policy jump up by a lot. With few major news stories to talk about, we focused our attention, for the large part of the week, on world economic activity.
Easy Money Speculation
The large-scale pumping of money into economies around the world is one of the definitions of easy monetary policy. Currently, a number of countries are employing such tactics in order to help spur some economic activity that seems to be so hard to come by lately. So long as money is plentiful and easy to come by, gold and silver investors are content because the more money there is the more people will put their faith in gold and silver.
This may all change in the near future, however, as easy money policies may be brought to an end in countries across the globe. This is particularly true in the United States where, a few weeks ago, it was announced that their easy money policy, Quantitative Easing, may be wound down by the end of the summer. Since that announcement we have heard little about the future of monetary policy in the US, but with a Federal Open Market Committee meeting coming up this next Wednesday, investors are thinking we may be given some new news. It is not certain what the exact topic or topics of discussion will be, but what is certain is the fact that speculation will abound until the meeting actually happens.
Asian Market Happenings
Only about a month ago we saw the Japanese Nikkei Index take off and hit record highs. Investors were shocked at how quickly and ow dramatically the stock market in Japan surged forward, but few of them were complaining. Barely a month later, those highs have been lost and then some. The Nikkei Index has now lost over 20% of its value, with more than 5% of that being lost this week alone. This is obviously bad news for investors, but the fact that the Japanese Yen made some good gains against the US Dollar softens the blow of this story for some.
It isn’t only Japan that has been suffering, as China posted some disappointing stock market numbers this week as well. We will keep our eyes on Asia as we move forward just to see if the situation gets worse or begins to mend itself.
Weekly Move
Gold started the week at $1,381 and after a 5 days of ups and downs settled at the end of Friday at $1,390. Silver, on the other hand, started the week at $21.65 and made some decent gains to end at $22.09.