The Effect Of Monetary Policy On Gold Prices [SPDR Gold Trust (ETF), iShares Silver Trust (ETF)]


Among the many factors that we can point to as being influential for precious metals, we have covered just one of them; however, this is an important week for both of them.

If on Thursday the ECB do reduce rates, then the Euro could fall exerting upward pressure on the dollar which would be negative for gold. We also have the job numbers and if they are satisfactory, then tapering will continue unabated which is having a positive effect on the dollar, so gold could have to endure a double whammy this week.

Either way it looks like being a volatile week for the markets.

A quick look at the chart and we can see that gold’s decline is accelerating so a re-test of the June lows now looks to be on the cards.

Finally we are keeping the lion’s share of our funds in cash until the investment environment for the precious metals sector improves. We know that this stance offers little in the way of excitement and many of our peers are super bullish, but acquisitions of gold, silver and mining stocks could be cheaper still given a little more time for this bear phase to exhaust itself.

Got a comment, fire it in, the more opinions that we have, the more we share, the more enlightened we become and hopefully our ‘well informed’ trades will generate some decent profits.

Disclaimer: makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents our views and replicates trades that we are making but nothing more than that. Always consult your registered adviser to assist you with your investments. We accept no liability for any loss arising from the use of the data contained on this letter. Options contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. Past performance is neither a guide nor guarantee of future success.

This article is brought to you courtesy of  Bob Kirtley from SK Options Trading.

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