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Precious Metals Month in Review: December 2013, by Steven Cochran
Welcome to SurvivalBlog’s Precious Metals Month in Review, by Steven Cochran of Gainesville Coins. Every month, we’ll take a look at the “month that was” in precious metals, covering everything from price action, to the information that’s driving the numbers.
December in Precious Metals
December is traditionally a slow month for precious metals, and the second-best month for stocks. This trend was amplified this year, as we saw lots of good economic reports from Europe, China, and the U.S. The stock markets, already hitting highs fueled by central bank money printing, sucked cash out of bonds and the precious metals market as everyone tried to get a piece of the action. This had gold around the $1,250 level to start the month.
The second week of December saw the U.S. Mint ship out the last of the 2013 Silver Eagle bullion coins (nine days earlier than last year) to cap the best year ever in sales; and the U.S. Congress actually come to a budget deal of sorts. It didn’t touch Social Security or other hot button issues, but everyone proclaimed it was proof that Congress could actually get something done. Precious metals shot to their high point of the month on the news, even as the dollar also advanced (usually a drag on commodity prices.) Stocks took this as pretty much clinching the chances of the Fed deciding to give Chairman Ben Bernanke a taper as his retirement gift.
The Fed followed through on the 18th, and reduced the $85 billion a month in “money printing” by $10 billion. That’s only a 12% reduction, but as the Congressman once said, “a few billion here, a few billion there, and pretty soon you’re talking about real money.” Precious metals hung tough in wildly oscillating trading immediately after the announcement, but was later sucker punched to the $1,200 level, where it spent the rest of the month.
Stocks worldwide went berserk, setting new records, because the Fed promised over and over to keep benchmark interest rates at or near zero at least through 2014, even if unemployment dropped under 6.5%. It was about this time that rumors started swirling over Stanley Fischer being named to the #2 position at the Fed, when Yellen moves into the chairmanship. Fischer was Bernanke’s doctoral thesis adviser, and also taught ECB Chairman Mario Draghi and many other central bankers.
Most recently the head of the Bank of Israel, Fischer has also held top positions at the IMF and the World Bank. He is noted as an expert on hyperinflation, which may be one reason Obama offered him the copilot’s seat at the Fed.
Market Buzz
Rumors are increasing that the Indian government will ease import restrictions on gold, even as the 10% import tax remains in effect. The domestic jewelry industry has almost been wiped out, and smuggling is bringing in hundreds of tons of gold that the government is not collecting taxes on. National elections are in May, and the ruling party is now about as popular as Congress is in the U.S., so this would be a logical action to take to improve their chances of staying in power.
Source: http://www.survivalblog.com/2013/12/precious-metals-month-in-review-december-2013-by-steven-cochran.html
