Monday, January 2, 2012

Key Precious Metal Economic Events for January

The precious metal market received a key bounce off support at the $26 level during the illiquid holiday trading sessions.  This week will inform us precious metal bugs of how legitimate the technical bounce was when trading resumes on January 3rd.  In addition, January holds quite a few "key dates" you should mark on your calendar which may have a profound impact on gold and silver prices.

1/11/12 U.S. Fed Release of the Beige Book  

From Investopedia
Made public in 1983, the Summary of Commentary on Current Economic Conditions by Federal Reserve District, or Beige Book, as it is known, has a different style and tone than many other indicators. Rather than being filled with raw data, the Beige Book takes a more conversational approach. The book has 13 sections in total; 12 regional reports from each of the member Fed district banks, preceded by one national summary drawn from the individual reports that follow it. This is the first chance investors have to see how the Fed draws logical and intuitive conclusions from the raw data presented in other indicator releases.

The Beige Book is published eight times per year, just before each of the Federal Open Market Committee (FOMC) meetings. While it is used by committee members during the meeting itself, it does not carry more clout than other data values and indicators. There is a lot of real-time data that the Fed has at its disposal and, unfortunately, notes from the FOMC meetings themselves are currently not public information.

The Beige Book aims to give to give a broad overview of the economy, bringing many variables and indicators into the mix. Discussion will be about things such as labor markets, wage and price pressures, retail and ecommerce activity and manufacturing output. Investors can see comments that are forward-looking; the Beige Book will contain comments that look to predict trends and anticipate changes over the next few months or quarters.

1/12/12 ECB Interest Rate Decision
Perhaps the biggest event of the month will come on January 12, 2012 when the European Central Bank meets to discuss interest rates.  In December, the ECB cut interest rates by 1/4 of a percent to a record low 1%.  The decision was not unanimous by board members.  You may remember that some banks seemed to have disagreed on the cuts, vowing not to pass on the cut to consumers.  The disagreement left government officials scrambling to somehow mandate the banks pass on the interest rate reduction.  Eamon Gilmore, Irish Labour Party Politician, was quoted as saying the government would act "forcefully" to make sure the cuts were passed on by the banks.

ECB forecast for 2012 may include additional rate cuts.

 Dec. 29 (Bloomberg) -- The European Central Bank has more room to cut interest rates to a record low early next year after reports showed the sovereign debt crisis is damping inflation pressures.

The rate of growth in M3 money supply, which the ECB uses as a gauge of future inflation, fell to 2 percent in November from 2.6 percent in October, the Frankfurt-based central bank said today. Growth in loans to households and companies across the 17-nation euro area also slowed, while inflation in Germany, the region’s largest economy, decelerated in December.  Read More>>

1/17/2012 BoC Interest Rate Decision (Canada)

The Bank of Canada will meet on January 17, 2012 and is widely believed to leave overnight lending rates at 1%.

1/24/2012 BoJ Interest Rate Decision (Japan)

Last meeting the BoJ left its key interest rate virtually unchanged at 0% and the forecasts point to the rate remaining at this level for quite some time.

1/25/2012 FED FOMC Interest Rate Decision

January is capped off with the U.S. Federal Reserve making a decision on interest rates on January 25, 2012.   Obviously through a Big Ben guarantee, we anticipate there to be no change throughout 2012 with the Federal funds rate remaining close to 0%.  The Fed statements surrounding the FOMC meetings will be the key market movers for 2012.  Any additional asset purchases or QE3 lingo will be a sure rocket launch for precious metals.