As the euro makes its way towards parity, we are witnessing the sole desired outcome of the policy initiative of the European Central Bank and their member governments. It prompts the question whether this policy approach will render what Mario Draghi and his team of central bankers are attempting to achieve by following the actions of like institutions and endeavouring on a journey of quantitative easing. But as the European Union is governed by a number of sovereign governments that have autonomy over their own domestic policy, the lack of coordination narrows the scope of what targeted bond purchases will accomplish when compared to other monetary experiments like in the US or Japan.
Greece can declare a small victory. As Prime Minister Alexis Tsipras stated Friday evening, “a battle has been won, but not the war.” Since their new government was elected with a mandate to better the terms of their bailout, they have now successfully dealt themselves more time to negotiate with other member European countries and the IMF. Whether negotiations will be successful four months from now and they will actually be able to deliver on their mabndate against austerity is still to be determined. The headline "Greece Reaches Deal with EU," which sent financial markets joyously higher was not based on a solutino, but instead a deal to make a deal four months from now as we revert back to the oft to used expression of kicking the can down the road.
“The best the ECB can do is to buy time in the hope that other policy-making entities with better instruments will step in, both at the national and regional levels”
-Mohammed El-Erian, Former CEO of PIMCO
The Swiss National Bank (SNB) shocked currency markets Thursday of this week with a policy decision that crippled the Euro-Franc cross. Their announcement sent the franc soaring 30 per cent against the euro before settling lower, (still 16 per cent stronger) into the end of the week. This was as the SNB abandoned their 1.20 franc peg they’ve been defending since September of 2011, coincidently when the gold market peaked at over 1,900 USD per ounce. The decision by the SNB has far reaching implications for not only financial markets, but also for when policy becomes exhausted and policy makers themselves are rendered helpless.
Following a year where US equity markets found the ability to overcome a Russian invasion of Ukraine, a tremendous decline in oil and commodity prices, and policy uncertainty in the major economics of the European Union and Japan, investors have to question whether the same resilience can hold through 2015. Renowned bond fund manager Bill Gross asked a similar question this week in his monthly investment outlook, taking a look at the year ahead and then suggesting we are now at an inflection point where the western world's troubles of slowing economic growth can no longer be solved with dept creation and money printing. Consequently, 2015 will be a year for losses in most asset classes as capital looks for a new harbour that can produce positive returns.
Mr. Popescu is an independent investment analyst and studies the gold and silver market and their future role in the international monetary system. He has followed regularly since 1970 the gold, silver and foreign exchange markets. He has a bachelor degree in physics (1993) from Concordia University in Montreal, Canada and has completed the Canadian investment management certificate (1999) of the CSI. He is a member and was the president in 2004 of the CSTA and also was president in 2005 of the Montreal CFA Society. He is a member of the CFA Institute, the MTA, NYSSA, UKSIP, the CSTA and the Gold Standard Institute International.
The focus of financial markets has certainly stuck with the fallout in the price of crude oil, and rightly so as its impacts will be far reaching from global economic growth projections to domestic monetary policy.
With less than a month to go in 2014 investors are faced with the question, what gives?
In the wake of the Swiss referendum on whether the central bank should increase their allocation to gold, investors are tasked with the question, is the no vote yet another reason to be bearish on gold at present time.
It seems that once again the direction or trend playing out in the markets has been interrupted by geopolitical tensions heating up between Russia, Ukraine, and the Western powers.
It’s puzzling why Europe is more an issue now than it was a few months ago.
It’s a challenge to put a finger on what was the most significant event that took place in financial markets this past week.
There have been an increasing number of factors that have begun to put pressure on global financial markets.
As the markets awoke at the beginning of the week to news of a US air strike on Iraq, one aspect of the risk off trade that had been ensuing became clearer.
Who would of figured that in a week when the US economy reported initial estimates of second quarter GDP growth of 4 per cent, that the Dow Jones Industrial Average would simultaneously erase its gains for the year.
The Obama administration is becoming quite critical of US corporations acquiring foreign firms in order to relocate their tax domicile to a country with a more favorable regime.
The Financial Times reported this week that central banks around the world are in the process of repositioning their portfolios as they pare back their exposure to US treasuries.
The European Central Bank, as expected, unveiled a shotgun approach last Thursday to uplifting the Eurozone's stagnating economy.
There is a bizarre dichotomy between financial markets and the economy.
The controversial drilling method for extracting oil from underground layers of shale rock — known as “fracking” — has created a divide in public opinion, while simultaneously growing as a common practice.
An ominous rumor is circulating online: July 1 will see the complete collapse of the United States dollar, because of a bill called H.R. 2847.
A survey from Luxembourg Income Study Database (LIS) has made headlines this week from an article in the New York Times.
Friday's US payroll numbers revealed a key milestone for the US labour market.
The Federal Reserve used their policy announcement and the press conference following the announcement to alter their method of forward guidance.
Bloomberg reported on a study this past week that points to decades of manipulation in the gold market.
There is a stark difference in the financial world today than a few year’s prior.
To suggest that the Canadian Federal Government is pushing a weak dollar policy must imply than that in years past they too were opting for a stronger Canadian dollar. At the least the price of the Canadian dollar would suggest that, but unfortunately its nonsense.
A RISING DOLLAR and stronger stock markets saw the price of gold drop 1.2% Tuesday afternoon in London, taking the metal towards the brief low hit by Monday's "flash crash" after much better than expected US data.
LAST WEEK's losses of 3.6% in gold were extended Monday morning, with silver also falling again as world stock markets rose yet again.
Are Silver or Gold purchases reported to the IRS or the government?
Gold has long been considered a hedge against inflation. But some fans also think it offers protection against volatile markets.
When an asset like gold gets hammered in the marketplace, it’s only natural that investors start looking for a rebound. That’s the premise of a recent article by Jonathan Yates in Benzinga.com, a financial website that focuses on global markets.
Gold’s price has fallen sharply this year, but individual investors bought more bullion in October than they did in the past six months. Is that a bullish sign?
WHAT one trader called "very dull" trade saw gold trade unchanged from last Friday's finish of $1317 per ounce lunchtime in London.
LONDON wholesale gold was unchanged Tuesday lunchtime from yesterday or from last week's finish at $1317 per ounce, as European shares again defied a drop in Asian stock markets to tick higher.
The Greenback Is The Biggest Loser In The D.C. Default Threat
"It is perhaps a good time for the befuddled world to start considering building a de-Americanized world." That's what China's state-owned Xinhua news agency wrote Oct. 13 in expressing frustration over the U.S. government shutdown and debt-ceiling gridlock.
WHOLESALE trade in London left the price of gold sitting at last week's finish of $1317 per ounce Monday morning, as European shares rose with government bond prices but commodities slipped.
WHOLESALE prices of gold and silver extended yesterday's sharp falls in London trade Thursday morning, as world stockmarkets also fell following the US Federal Reserve's latest policy statement.
BOTH gold and silver rose Wednesday lunchtime in London, as the day's widely-expected "no change" decision from the US Federal Reserve was preceded by weak US data.
The PRICE of London settled gold bounced to $1348 per ounce Tuesday morning, halving an earlier 0.9% drop after China's most active gold contract closed below that world benchmark for the first time in 2013.
WHOLESALE London prices of gold sat tight Monday morning, holding onto Friday's 6-week closing high as European stockmarkets failed to continue a rise in Asian shares.