Gold and silver started Tuesday in negative form as a slew of world happenings have caused metals to be seen as less of a safe-haven asset. In addition to this, the fact that a large majority of Asia is sporting declining physical demand for gold means for more downward pressure for gold and silver. To add to the culminating perfect storm for gold’s decline, European bond yields are coming in higher than expected which is throwing an already confused marketplace into a deeper confusion. Europe on the whole seems to have no idea what they are doing. Stock markets are under performing, debt is rising, and unemployment rates have been high. There is no end in sight for a large part of the EU’s economies, and this should scare more than those interested in Europe.
World Monetary Policies
The Bank of Japan, in their latest meeting, announced no major policy changes as far as monetary policy is concerned. Though this is the case, many market experts believe that easy money in Japan and a variety of other countries will soon be coming to an end. This is especially true in the United States where the economy is flourishing with an increase in jobs, decrease in unemployment, and a strong outlook on both the US currency and stock market.
Despite the fact that James Bullard, president of the St. Louis Federal Reserve, spoke yesterday in favor of keeping monetary policy around, the popular thought is that it will be phased out by the end of the summer. He is a voting member of the Federal Open Market Committee, so his words do carry some weight. In reality, however, the US economy does not need the massive pumping of cash into it, which is the major reason why people think QE should be done away with or at least toned down.
A Healthy Helping of Europe
Greek bond yields have been climbing since the start of the day on Tuesday, and have now eclipsed a 10% increase. This has caused stocks in withering countries like Spain and Italy to suffer as well as cause safe-haven German bonds to rise, even if only slightly.
As if that wasn’t enough of a mess to deal with for investors, attention will be fixated on Germany as the nation goes to court to challenge the legality of the EU’s latest bailout plan. This firestorm of issues is the last thing Europe needs to be stacked on top of their already mountainous heap of debt and economic concerns. If the leaders of the EU and other European countries do not come together and draft a solution more inclusive than “throw billions of dollars into the economy”, Europe could be in for some trouble.
Rest of the Week Roundup
As we take a look at the rest of the week, there are not too many big stories that jump out at us. While it will be as important as it always is to keep our attention focused on both the US stock market and the US dollar, we should be giving Europe some of our attention as well. Even though there are no big, official news stories to look forward to, this week could end up being interesting nonetheless.