Positive manufacturing numbers
out of China this morning have encouraged buying of growth assets, with
commodities and stocks strengthening, alongside the euro, which has moved
back above the US$1.30 mark. News that the Greek government has announced details
of a 10 billion-euro bond buyback programme –
scheduled to take place this Friday – as part of conditions set to
receive its next allotment of financial aid has also helped the euro.
Precious metals have been flat
since the start of trading today. $1,750 remains a key point of overheard
resistance for gold, with support around $1,710. Silver faces selloffs on
every run towards $35 – reemphasising the
technical significance of this price – though appears to have decent
buying support on any dips towards $33. Incremental progress (recall that not
long ago, $33 was a point of overhead resistance for silver), and setting us
up nicely for the next silver price surge.
Interestingly, as the chart
below from the US
Mint makes clear, demand
for American Eagle gold coins has surged recently. More and more Americans
are waking up to the serious fiscal imbalances affecting government at home
and all over the developed world, as well as the serious risk that the
Federal Reserve’s perpetual quantitative easing poses to the dollar.
The Fed is said to
be considering an
expansion of its current asset purchases ($40bn of mortgage-backed securities
as month, plus $45bn of “Operation Twist” purchases). The reason?
“Operation Twist relies on selling short-dated Treasuries in exchange
for long-term Treasuries, but the Fed’s stock of short-term paper is
dwindling, meaning that new purchases will have to be financed by more money
The Fed’s next policy
meeting on December 11-12 may provide some answers, and yet more support for
precious metal bulls.