Gold is posting solid gains Thursday after Wednesday’s rally. Investors are still attempting to discern exactly what direction the Fed will take after Wednesday’s Federal Open Market Committee meeting. In an era where buzzword’s like “patient” dictate market fervor, the word patient was left out of yesterday’s meeting, concerning the possible raising of interest rates. Pointing to weak U.S. economic data, the Fed may not be able to raise interest rates this year giving gold a needed boost. Gold last reported a.m. Thursday is $1169.60 up $17.30 and silver is $16.19 up 59 cents.
The NY Times reports U.S. allies are determined to pursue their de-dollarization course. Ignoring pleas and warnings from the Obama administration, Europe’s largest economies have made clear their desire to become founding members of a new Chinese led Asian investment bank. The U.S. views the bank as an unwanted rival to the World Bank and other institutions controlled by the United States, set up after the second world war.
Tuesday’s announcement by France, Germany and Italy that they would be following Britain into the Chinese venture delivered a harsh rebuke to Washington. It also calls into question whether the World bank and the International Monetary Fund will find their influence diminished. These banks were established out of the 1944 Bretton Woods conference. Since inception, the Federal Reserve has directed their courses from behind the scenes. Over the next 5 to 10 years we may very well see an end to the dollar’s role as king currency.
Greece is deteriorating day by day as Greek banks saw deposit outflows of 300 million on Wednesday. This is the highest level in a single day since February where a deal with the EU moved a banking collapse further down the road. Two senior Greek bankers stated, “the uncertainty over the lack of progress in negotiations and negative news flow has affected sentiment. It’s not a huge amount but the worry is whether this is the start of a trend that could get worse. Under the current climate of Grexident, savers are unlikely to return cash to the banking system soon.”
The Greek government is now raiding the major state utility firms to lend the government cash through short term repo transactions. According to sources, the government has already resorted to dipping into cash reserve’s of pension funds. Athens Water Company has been called on to undertake repo transactions that will enable state entities to lend money to the Greek debt agency through a short term repurchase agreement. Unless Greece can convince the EU to continue spoon feeding the cash strapped nation, it’s going to blow soon.
Look for industrial silver demand to grow throughout 2015 and beyond. Silver is needed in sectors from electronics to solar power, and biocides. Silver is seeing strong sentiment in both paper ETF and growing physical markets. While silver has been forced to follow the downward price spiral of gold, physical demand for silver has created global deficits. The law of supply and demand will eventually force its way back into the scene.
How long mines will continue producing silver at a net loss is anyone’s guess but clearly it can’t go on forever.
If you are interested in acquiring silver for your investment portfolio, give Gold Goliath a call for special pricing while supplies last. We suggest the 1 oz. Silver Canadian Maple Leaf for its purity and lower premiums. The coin is available in the 500 oz. monster box. Call 1-800-577-3195
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