January 23rd Silver Market Update

Gold and silver posted sharp gains today and have more than made back the past two days’ losses. A much weaker USD index helped gold early while an unconfirmed report out of India claims that the import duties paid on foreign gold may be lifted sometime in the near future. With speculation regarding the future of QE still abounding throughout the world marketplace, it will be interesting to see if gold and silver can hang on to today’s gains and even possibly build upon them in the coming days.

European PMI Impresses, China’s Disappoints

Two major preliminary PMI readings were due out today and while Europe saw its best reading in nearly three years China’s was the worst it’s seen in over 6 months. The EU’s preliminary Purchasing Manager’s Index for January clocked in at 53.2, up from 52.1 this past December. Any PMI reading above 50 is indicative of an economy that is doing well and perhaps even growing. Thus far, this week has emitted nothing other than positive economic news out of Europe, something that perfectly complements the past few months’ worth of data from the region.

China’s PMI dipped below 50 for January and clocked in officially at 49.6. This reading was almost a full point weaker than December’s reading of 50.5. Quite contrary to what we have witnessed out of Europe recently, economic data and performance in China has been lagging. While the Chinese economy is still one of the strongest in the world, its actual strength has continually been called into question over the past few months.

Weaker Equities Translate Into Massive Gains by Precious Metals

A weaker US Dollar aided gold and silver all day long on Thursday as technical buying dominated the marketplace. Because the USD index was solidly lower today it comes as no surprise that US equities also posted a day that they would like to soon forget. In fact, world equity markets in general had a fairly rough Thursday.

Gold’s spot value has finally broken the $1,260 threshold which means investors will be holding their breath and waiting to see if these gains can be sustained or not. With the FOMC’s next meeting scheduled to kick off early next week and the likelihood of more tapering growing, market analysts aren’t overtly confident that gold and silver will be able to retain this week’s gains. A Wall Street Journal report published earlier this week claimed that another $10 billion reduction to QE was imminent, a report that unnerved those who have a vested interest in precious metals.

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