As of the writing of this post early Thursday morning, precious metals had turned early day stagnation into small gains thanks to the European Central Bank. Over the course of the past few weeks, precious metals spot values have been on the up and up and are currently hovering near 6-month highs. It will be interesting to see, after this week’s gains, if metals are able to hang on to gains through the weekend or if profit-taking will bring spot values back down.
Apart from focusing on the European Central Bank meeting, investors were also dealt a good bit of economic data from the US and parts of Asia. From China and Japan, reports indicated that both of those flailing economies will more than likely benefit from the continued depreciation of crude oil.
ECB Announces QE, Metals Gain
This week played host to one of the most poorly kept secrets that has ever been delivered to the financial world. That secret, which really hasn’t been a secret for more than a week now, was that the European Central Bank was going to be announcing the implementation of their quantitative easing program aimed at improving the strength of the EU economy.
This was not much of a secret simply because last week saw the European Court of Justice rule that the ECB’s plans on instituting QE measures were legal and within the realm of the law. As a result of this ruling, the Euro dipped, precious metals gained, and the market awaited the announcement.
As was expected, this morning saw ECB president Mario Draghi announce his plans for QE in Europe. Despite it being previously believed that the EU’s governing bank was going to purchase 50 billion euros worth of bonds each and every month, Draghi announced today that the actual plan would see the EU accrue 60 billion in bond purchases every month. The fact that QE in Europe is going to be more intense than anyone thought acted as the impetus for gold and silver to push higher for yet another day. Now, with gold sitting well above $1,300/ounce and silver just shy of $19/ounce, investors are reflecting upon the best spot values they have seen in more than a half year. Of course, all these gains beg the question of whether gold and silver can sustain currently lofty levels, or if other factors will drive spot values right back downward.