Posted on September 18, 2013
Gold Spot Price Open: $1,318
Gold Spot Price Close: $1,366
Change in Gold Spot Price: +$48
Silver Spot Price Open: $22.03
Silver Spot Price Close: $23.01
Change in Silver Spot Price:+$0.98
Gold and silver both received a much needed boost on Wednesday as the Fed announced no major changes to their current monetary policy. When all was said and done, gold picked up about 48 dollars while silver gained just a few pennies shy of a whole dollar.
Wednesday’s events were among the most highly anticipated of the past month or so. During the last 4 weeks many events took place, but none reoccurred as often as speculation about the future of US monetary policy. One day we were confident that the Fed would do away with their Quantitative Easing program, while the next day others were confident of the exact opposite. No one really knew what was going to happen to QE, or if anything would happen at all. Today, it was announced that the Fed continues to question the actual strength of the US economy.
While a majority of recent economic data in regards to the US economy has been positive, the Fed is still wary of whether or not the US economy will be able to fruitfully survive without the assistance of Quantitative Easing. QE, as many are aware up to this point, is the Fed’s monthly buying of about $80 billion worth of bonds. When the Fed purchases this many bonds every month, money is pumped into the economic stream. This extra money is meant to bring down the value of the US Dollar while simultaneously lowering the prices of our exports. In theory, lower export prices will mean more buyers and thus more economic activity. Up to this point, QE has worked fairly effectively and it is this reason the Fed is citing for their inaction after today’s meeting.
While an abandonment or reduction in QE’s strength would have undoubtedly boosted the value of the US Dollar and stocks, it would have put heavy selling pressure on both gold and silver.
While a majority of the world’s investors were anxiously awaiting news from the Fed, they may have missed this next story. Today, it was reported that the Indian government raised taxes on imported gold jewelry from 10% to 15%. This is an increase to high tariffs which were just recently put into place. India, being one of the world’s largest consumers of gold, has seen the supply of gold to their country decreased dramatically due to the greed/desperation of their government.