Closing Gold & Silver Market Report – 1/19/2012
IS QE3 A LOOMING POSSIBILITY?
There is a growing consensus of economists who believe that a $1 trillion QE3 announcement from the Federal Reserve could be coming as soon as this month. These economists believe that the recent uptick in the economy is not sustainable, and today’s dismal report on housing starts only adds to speculation about a possible third round of quantitative easing. The Fed’s Open Market Committee is set to meet next week, and it likely will have the central bank buy up mortgage-backed securities as a tactic to assist the housing market. The goal of these purchases will be to force interest rates even lower and to inspire confidence that the Fed still has a few arrows left in its quiver.
A Reuters poll of about 600 economists indicates that although the world economy will lose steam in 2012, at least it will move in the right direction. The Asian economies will lead the way, and the U.S. is expected to show modest growth. But Europe will continue to lag and drag down global growth. Although not a particularly upbeat forecast, the poll is projecting global growth at 3.3%, which is higher than the 2.5% projected by the World Bank.
China is expected to overtake India as the world’s top Gold consumer in the next couple of years. China and India together already consume almost half of the global Gold demand. Not only is it expected that the Chinese central bank will increase its Gold purchases, consumer demand for Gold in China is growing. One of the reasons is that Chinese banks are making it easier than ever for smaller investors to invest in Gold on a regular basis. Investors can set up accounts where they can buy as little as one gram of Gold every month. The Chinese have a culture of saving, and Gold is seen as a preferred savings vehicle, especially when China currently is experiencing close to 10% inflation.
At 4 p.m., the APMEX precious metals spot prices were:
- Gold - $1,659.00 – Down $2.40.
- Silver - $30.68 – Up $0.06.
- Platinum - $1,524.50 – Down $1.80.
- Palladium - $678.90 – Up $9.40.