-- Posted Wednesday, 9 May 2007 | Digg This Article
Today and tomorrow are all about the interpretation of the nuances of language. The FOMC releases their statement and interest rate decision at 2 pm EST followed by the ECB & Bank of England's rate decisions tomorrow.
All expectations are that the Fed will continue to remain on hold, but any slight tweak in language from the previous statements will move markets violently in one direction or the other. This is the curse of maintaining a data dependent outlook on the market in the Bernanke Fed versus an authoritative approach that had been the hallmark of the Greenspan Fed. When the market is forced to be reactive rather than proactive, the volatility will be just that much greater. All that being said, in the grand scheme of things, the US isn't in a position to raise rates while the rest of the globe is either considering rate increases or putting them into place. With the dollar sitting just above a decade low level, this is a precarious spot for the currency which is positive for precious metals.
We believe this statement won't have much new information or any language change, but will end up being more important just to get it out of the way. The markets are not in a position for unexpected language or changes, so expect Bernanke and Co. to hold the line.
US energy inventory data is due out at 10:30 AM EST and could be one set of information that could move markets in front of the Fed release if numbers continue coming in at unexpected levels. The US gasoline stocks have seen 8 straight weeks of unexpected draws that is pushing up fuel prices and will eventually begin flowing through the supply chain to put a serious inflationary squeeze on the economy.
Per usual, keep an eye on the London close at 11:30 AM EST. The last week has seen considerable snap backs in prices post-London close as the physical metal sales complete and funds take positions in the COMEX.
Peru's Energy and Mines Ministry reported this morning that gold production in the country was down 14% in March compared to the same period last year. We've seen Peruvian production falling 20%, 16% and 14% in the last several months. These are huge figures for the fifth largest global gold producer. These are the types of trends our long term investors need to be looking at to understand the underlying strength of the gold market. Prices have nearly tripled in five years and producing countries are pulling out mining statistics like this??
Blanchard and Company, Inc. is the largest and most respected retailer of American rare coins and precious metals in the United States, serving more than 450,000 people with expert consultation and assistance in the acquisition of American numismatic rarities and gold, silver and platinum bullion. The Blanchard Economic Research Unit is a key source of precious metals market analysis and continues to be an important resource for financial and consumer media throughout the United States. Blanchard and its predecessor companies have called the New Orleans area home for more than 30 years. For more information about the company, visit BlanchardGold.com or call the company toll free at 1-800-880-4653.
-- Posted Wednesday, 9 May 2007 | Digg This Article
