October 8th Midweek Silver Market Update

Precious metals are holding steady but moving ever so slightly downward to begin the day on Wednesday. Thus far this week we have not been dealt too much in the way of economic data, but what data we have been given has come from Europe and has been mostly poor. Today, investors are anxiously awaiting the release of the minutes from the Federal Reserve’s most recent meeting. As is always the case, investors will be watching the minutes very closely in hopes of finding out more information regarding interest rates.

In case you missed it, last week brought about the most recent employment data for the United States in September. During the lead-up to the data’s release, investors and market experts alike were expecting to see September job additions somewhere in the neighborhood of 215,000–admittedly healthy job growth. The actual figures, however, showed that just shy of 250,000 new jobs were created in September. The report almost instantaneously boosted US equities as well as the USD, but those gains were short-lived to say the least.

More Poor Data From Europe

A mainstay in the marketplace of late has been consistently poor economic data from Europe. The region, generally speaking, is doing poor from an economic standpoint and things are not getting any better. Just yesterday, it was reported that German factory output during August declined by about 4%. Experts were expecting a decline in factory output, but forecast a downward shift of about 1.5%. The overwhelmingly poor data is in line with recent EU performance and only adds fuel to the fire regarding the need for policy shifts such that deflationary pressure can be quelled. Over the course of the coming weeks and months, we, as well as the rest of the market, will keep a close eye on any and all data coming from Europe.

At present, the currently loose monetary policies instilled by the European Central Bank have not done much to spur economic growth. What they have done, however, is drive down the value of the Euro currency and allow the USD to make great strides forward. If looser policies are enacted, the US Dollar may be able to make even more strides against the EU’s currency. Unfortunately for precious metals, however, the diverging monetary policies of the US and the EU are doing more in the way of limiting buying pressure than anything else. This is a major part of the reason behind why spot values now are just a shadow of what they were 4 or 5 months ago.

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