December 18th Midweek Silver Market Update

The Federal Open Market Committee is putting the finishing touches on their meeting that is set to conclude this afternoon. Though the meeting was a major event for investors to pay attention to, what the public is really interested in is the post-meeting statement, likely to be made by Ben Bernanke. In this statement, the speaker usually outlines what was discussed during the two-day meeting and what, if any, changes were made. In a lot of instances, the speaker also takes questions from the audience, but such is not always the case.

As gold and silver continue to decline, it seems as though the market is expecting nothing else than a tapering announcement to be made as a result of this week’s policy meeting.

FOMC Policy Meeting for the Ages

Whenever the FOMC meets the worldwide marketplace pays attention simply because US monetary policy influences world markets unlike any other nation’s. While the typical FOMC policy meeting receives a lot of attention, this month’s meeting has caught investor interest unlike any other meeting so far this year.

With recent economic data in the US being as strong as it has been, and the US political atmosphere at its most docile level in years, there has never been a better time for the Fed to consider reducing its bond-buying monetary policy. Quantitative Easing, which has now been around for quite some time, may finally be reduced as a result of this week’s meeting, or so many investors think.

Regardless of whether the monetary policy is reduced or not, the gold and silver markets seem to have already factored in such a reduction. In the past, the thought of QE being reduced spooked so many investors that it seemed like once the announcement was actually made the spot values of gold and silver would drop off completely. Now, however, the market is expecting QE to be reduced and when it does happen, whether it be this afternoon or sometime in 2014, the market will not be caught off guard at all. Also because the market is expecting QE to be tapered sometime soon, those who would have sold their gold and silver as a result of QE being tapered have already done so. This means that spot values will not react with as much volatility as they would have if a tapering announcement was made when the market wasn’t expecting it to be.

Posted in Market News

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