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April in Precious Metals, by Steven Cochran of Gainesville Coins
Welcome to SurvivalBlog’s Precious Metals Month in Review, by Steven Cochran of Gainesville Coins where we take a look at “the month that was” in precious metals. Each month, we cover the price action of gold and examine the “what” and “why” behind those numbers.
What Did Gold Do in April?
Gold started the month under $1,220 an ounce and went on a roller coaster ride. Luckily, there were more ups than downs. Gold prices spent the last week of the month bumping up into the $1,290 range, a thirteen month high.
Silver woke from its slumber and got down to it this month. Silver started April barely above $15 an ounce, before blasting up more than 17% for the month.
Factors Affecting Gold This Month
Deflation Fears In Europe
A blanket of anxiety still covers Europe, as negative interest rates and expanded QE from the European Central Bank seems unable to lift the EU out of the economic sickness that has been gripping it. A good way to see how negative interest rates do the opposite of what central banks want is this graphic at the Wall Street Journal. With all the evidence that NIRP hurts economies instead of helping them, you have to wonder why so many central banks keep using it.
Austrian Bank Bail-in
A big sign that the European banking system is worse off than they pretend, is the news that the Austrian government has declared a bail-in of Heta Assets Resolution. This is the “bad bank” formed from the non-performing loans held by failed bank Hypo Alpe Adria. Senior bondholders, who are first in line for reimbursement on a bank failure, just had a 50% haircut applied to them by Austrian financial regulators. At the stroke of a pen, the value of the bonds they hold was cut in half. We explained the whole tangled mess of this “bad, bad bank” in a news article soon after the bail-in was announced. Unlike some other banks that have failed due to overexposure to risky trades, the Hypo executives were accused of all sorts of wrongdoing.
Brexit
April 15 was the official start of the campaigning over the EU referendum in the UK, otherwise known as the Brexit vote. The question for British voters is simple: does the United Kingdom remain in the European Union or leave? A vote to leave would throw global markets into turmoil.
The unofficial campaigning has been going on for months. It has split Prime Minister David Cameron’s Cabinet; Brexit has split families and friendships. The “Leave” side is accused of wearing rose-tinted glasses when declaring that there will be little economic hardship from severing ties with Britain’s largest export market. The “Remain” side is accused of scare mongering and acting as pawns of the elite and Big Banks.
The “Leave” side got a morale boost early in April when Dutch voters vetoed an EU treaty creating closer trade and defense ties between the EU and Ukraine. In a shocker for the establishment, the “No” votes outnumbered the “Yes” votes two to one.
Source: https://survivalblog.com/april-in-precious-metals-by-steven-cochran-of-gainesville-coins-2/
