20 December 2013

Tapering now gives a chance for bullish sentiment

David Jollie from Mitsui Global Precious Metals had a note out yesterday discussing the impact of tapering on gold and silver. David's notes are written for the pro market and they are not distributed as they can't be seen to solicit retail investors. My cliff notes summary is:
  • tapering could drive futher bearish sentiment but much of the tapering could already be in precious metal prices
  • gold's decline more to do with an increase in risk tolerance from investors seeing improving economic environment (which was in play before taper talk)
  • as QE shrinks market will depend more on their own dynamics
  • tapering might result in the precious metals decoupling from each other, with PGs and silver possibly outperforming gold
  • still possible for QE to result in serious inflation in the future, driving continued gold buying
  • also possibile for deflation to occur [if QE not enough to cover debt deflation], in which case gold will be more attractive as other assets will struggle
David sums up by saying that next year "we should expect some new ideas to start moving these markets. With tapering no longer an ongoing concern, we feel that there will now be at least a chance for bullish sentiment to develop in the precious metals complex." Lets hope so.


  1. Could, might, possible. He doesn't know, nobody knows. I once thought that the rising price of gold signified something.

    Now I don't know, nobody knows. Rationalising the irrational is impossible.

  2. I bet there are a few miners with their fingers crossed ;-)

  3. And also their shareholders Obakesan !...like me.