May 23rd Weekly Silver Market Update

Gold and silver are doing surprisingly well this week considering the odds are stacked up against them pretty heavily. Gold, as of now, has posted gains on the week while silver’s losses are verging on a negligible amount. We have seen the Japanese stock market climb to new heights lately while the Yen has declined dramatically. This was the case until this morning when the Japanese stock market took a dive and the Yen was able to gain some value back after US stock markets posted disappointing numbers on Wednesday. Perhaps the most exciting day of the week was yesterday because of both the latest FOMC notes being released as well as Fed chairman Ben Bernanke’s address to Congress about the future of monetary policy as well as the current state of the economy in the United States.

Japan Steps Aside

Over the past two weeks we have seen two things happen, Japanese stocks reach values that they have not seen in years, and the Japanese Yen fall to historic lows. This may sound surprising, but the Bank of Japan has instituted easy monetary policies that make the devaluing of the Yen a direct side-effect. Going hand in hand with this is the fact that whenever the Yen declines in value, especially as dramatically as it has lately, the stock markets in Japan soar.

Thursday saw a reversal in what we have been witnessing lately in that the Yen gained in value while stock markets declined. These results during the early morning hours of Thursday can be directly attributed to the fact that US stock markets finished in disappointing fashion on Wednesday. European stocks suffered a bit on Thursday as well which is part of the reason why gold was able to make positive gains during the morning.

Chinese Manufacturing Data

Besides awaiting Bernanke’s speech to Congress, the other major news story that caught the eyes and ears of investors this week was the fact that Chinese manufacturing data was to be released today. The data lived up to expectation in that it was disappointing and even showed that manufacturing has contracted in the country. This is yet another reason to lead investors to believe that the Chinese economy is simply not what it was only a few years ago.

With more and more disappointing economic reports stemming from China, it is unlikely that we will consider the country to be the world’s second strongest economy for too much longer. Rumors have surfaced that the Chinese central bank is going to be forced to implement stricter monetary policy in the country in order to fight off inflation that, at this point, seems impossible to avoid. All of today’s news stories did their part in boosting gold.

Closing Out the Week

As we bring this week to a close, I am happy to report that up to this point gold has posted minor gains instead of losses like we have seen all too much recently. It is hard to say whether these gains will improve or even be able to last up until the end of the day on Friday as Japan’s stock markets will not remain downtrodden for too long, or so you wouldn’t think.


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