January 28th Midweek Silver Market Update

Gold and silver are starting of the middle day of the week in less than impressive fashion, having conceded some of the gains that were made on Tuesday. This week, despite being filled with activity, is shaping up to be quieter than the last few. For precious metals, we have not seen prices move too far in any one direction. On Monday, gold and silver opened up with losses, but by Tuesday those losses were reverted and small gains were posted. Hopefully, with volatility present in global equity markets, precious metals will derive a bit more support from safe-haven demand.

In case you missed it, last week saw the European Central Bank finally announce their plans to institute quantitative easing to the region. While this announcement did not come as a surprise, the fact that the EU’s QE plans include 60 billion euros worth of purchases each month did catch some investors off guard. Of course, QE measures will not be introduced until sometime in early 2016. Between then and now, however, it will be interesting to see how the EU fares from economic and financial standpoints.

Corporate Earnings Mostly Disappoint

Because the 4th quarter of any year includes the busy holiday season, investors from around the world expect that 4th-quarter earnings reports will be some of the best. Unfortunately, however, yesterday’s batch of corporate earnings reports disappointed those who mulled over them.

Caterpillar posted some particularly poor earnings and blamed a slowdown in the mining industry as a major reason behind why orders for construction equipment have dropped off significantly. Proctor & Gamble also reported poor earnings for 2014’s fourth-quarter. P&G cited a stronger US Dollar as reason why overseas earnings were far weaker than expected. These poor earnings reports ended up taking a toll on US equities as the Dow posted its biggest single day losses since October. In recent weeks, stocks in the US and elsewhere around the world have experienced a lot of volatility and this is causing investors to become particularly nervous.

For that reason, interest in safe-haven precious metals has spiked recently and has seen spot values increase dramatically after the last two or three weeks. As we move forward into the month of February, it will be interesting to see if gold and silver are able to retain their lofty positions or if spot values will be brought back downward.

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