If you have been looking to get into gold or silver, you probably have been discouraged in the past. For all the talk of cheap money flooding equities markets boosting precious metals prices, silver and gold have simply failed to perform. Well, it looks like that picture is drastically changing with the recent EU stimulus. The European Central Bank announced that it will be pumping one trillion Euros into a stimulus package.
This latest round of quantitative easing or currency devaluation, depending on how you look at it, is putting a lot of upward pressure on silver and gold. In fact, the amount of purchases for these previous metals is looking to push them into bull market territory – no joke. You might not believe your eyes. You might be rubbing your eyes considering the fact that gold and silver have sunk in the recent past.
Well, if current trends persist, those days might be over-at least as far as gold is concerned. Just how much exchange traded products with silver and gold backing are being bought up? In the month of January alone, USD 8.94 billion worth of exchange traded funds have changed hands.
Make no mistake about it-hedge funds and other futures speculators are looking at gold as a great store of value in a sea of stimulus-derived cheap liquidity. What makes this all surprising is that commodities, on the whole, have been sinking. It is uncommon for all nine major commodities to sink together. Investors are looking for value and gold and silver are gaining their attention.
Just how much investment action, in terms of futures contracts, is there for gold? According to the U.S. Commodity Futures Trading Commission, there are 145,732 futures and options contracts for gold. This marks a 27% increase as of the week of January 20. This has been the best start of the year for gold and silver in over 30 years. Things are definitely looking bright for these precious metals. I wouldn’t be surprised if the rally extends to other precious metals like platinum and palladium.