Over the past few months, precious metals have taken the cake and attracted an influx of assets, pushing the price of silver and its exchange traded funds (ETFs) up. As for the future of the metal, it appears to remain bright and investors have a slew of choices to gain both direct and indirect exposure.
This recent rally in silver has been driven primarily by macroeconomic forces. Increases in money supply and a record budget deficit have many concerned about the overall strength of the dollar and a reduction in the purchasing power of the nation. Read More…
As deflationary concerns continue to make headlines among investors, dividend paying investments, interest-bearing investments and cash become more appealing.
Weak economic figures, a decline in money supply and fiscal tightening around the world are a few reasons why falling prices could be in the near future. Other factors that could lead to a drop in prices include tight credit markets, declines in consumer spending and high unemployment – all of which lead to a reduction in the demand for goods. Declines in the demand for goods eventually result in excess supply, which further leads to a decline in prices to bring supply and demand in equilibrium.
A fall in prices can be detrimental to an economic recovery if businesses and consumers become reluctant to spend and decide to hold on to any disposable cash. This decrease in money supply is most devastating to economies that are highly dependent on consumer spending, such as the United States. Other results of deflation include erosion of consumer confidence and amplification of the burden of both household and public-sector debt. Read More…
An unexpected increase in initial claims for jobless benefits as well as a plunge in the Philadelphia Federal Reserve’s index of regional manufacturing enhanced fear in the overall strength of the U.S. economic rebound causing investor’s to turn to precious metals.
According to the Labor Department, the number of people filing new claims for jobless benefits rose by 12,000 to a seasonally adjusted 472,000, raising significant concern that hiring is lackluster and slow economic growth is in the near future. This increase in new filings raises concerns that June may snap a five month streak of increased employment in the private-sector. To make things even more challenging, the Labor Department also reported that the economy generated a mere 41,000 private-sector jobs in May as compared to 218,000 in April. As for relief in the labor markets, it isn’t expected to prevail until sometime in 2011. Read More…
As George Soros says:
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