Silver prices have been sideways this week, cooling off from a mid-June rally sparked by inflation-minded investors wary of the U.S. Federal Reserve's dovish talk.
U.S. federal reserve
- Feds Finally Put Their Scopes on the “Too Big to Jail”
- FOMC Meeting Today: How the Taper Is Affecting Markets
- 2014 State of the Union Address: Nine Ideas You'll Hear Tonight and Why They Matter
- Five Winners in the Stock Market Today
- Gold Prices: Central Banks See Shine in Yellow Metal
- Five Economic Blunders of 2011 and Five Fixes for 2012
The two-day Federal Open Market Committee meeting wrapped up today (Wednesday) with the U.S. Federal Reserve revising down its previously more optimistic economic growth forecasts, and reinforcing expectations that interest rates will climb faster than what was previously anticipated.
Gold, silver, and the FOMC meeting today: Precious metal prices were fairly steady Wednesday morning awaiting the typically market-moving statement from the Federal Open Market Committee (FOMC) meeting today. The spot gold price was last trading down $0.90 at $1,271.50. July silver prices were last quoted up $0.003 at $19.735 an ounce.
Over the last several years, investors have shown a keen interest in shiny assets as the U.S. Federal Reserve liberally printed money and distrust in dollars grew. But that interest has waned as the Fed slows its bond buying.
Late last month, depending on how you look at it, either something wonderful happened - or the feds continued their cowardly, conniving ways.
A group of federal prosecutors met in Washington and in New York with various financial regulators to discuss filing criminal charges against and coercing guilty pleas out of two giant banks. This looks to be a historic occurrence.
The Federal Reserve went forward with its taper plans yesterday, announcing it would reduce its bond-buying by $10 billion per month. But that is no guarantee the Fed will continue to taper, especially if the economy falters. And now that the Fed has a new chief in Janet Yellen,
SOTU 2014: U.S. President Barack Obama will deliver his fifth State of the Union address tonight, which means tomorrow most media outlets will graph and "wordcloud" his most used buzzwords like "jobs," "invest," and "innovate."
Instead of waiting until after the SOTU, we put together the nine phrases you're likely to hear tonight - as well as why President Obama needs to address them.
Here's your outline of State of the Union 2014:
Any optimistic sentiments from Europe's recent summit and bailouts have passed, as Germany still is not committed to measures in the agreements.
After Spanish Prime Minister Mariano Rajoy announced surprisingly harsher austerity plans for Spain, there were riots in Madrid where more than 70 people were injured.
The stock market wasn't quite as violent, but after the U.S. Federal Reserve's minutes revealed no signs of QE3, the markets took a hit before finishing the day slightly higher. Today the market is still reeling as all three major indexes opened well in the red.
Even news of the lowest number of initial unemployment claims filed since March of 2008 could not lift the market. The Labor Department announced that initial claims seasonally adjusted came in at 350,000, down 26,000 from the previous week. Analysts had expected on average between 355,000 to 395,000 claims to be filed.
Those numbers may not be reliable, as many economists say the claims are lower due to automakers choosing to keep their plants open throughout the summer.
Typically many auto plants close for two weeks in the summer and lay off workers temporarily as the plants are prepped for new models. With higher demand this year many plants have remained open through July.
"It seems like the Labor Department is pretty adamant that this is more of a wonky seasonal adjustment than something we need to put too much stock in," Michael Hanson, U.S. economist at Bank of America-Merrill Lynch told Reuters. "The underlying trend in claims is probably still in the 370,000 range."
Those numbers are also low due to the fact that they are gathered from the holiday-shortened 4th of July week.
Even with the markets' slide today, there are still winners to be found. Here are five of the best performing stocks today:
Merck and Co. Inc. (NYSE: MRK) announced it received favorable results for its latest experimental osteoporosis drug, odancatib, and ended trials early because it worked so well. The drug is supposed to prevent bone fractures in women with osteoporosis and has been in testing since 2007.
Merck stock is up almost 4.5% as of noon.
But the picture for gold investors just brightened again thanks to increased activity from central banks.
Central banks are buying the yellow metal in copious amounts, marking the first time since 1965 that bankers have been such steady buyers.
Central banks amplified their gold stores by 400 metric tons, the equivalent of almost 2,205 pounds, in the 12 months through March 31. That was an increase from 156 tons in the same period a year ago, according to data from the World Gold Council.
Barron's reported Saturday that the World Gold Council "is now confident that central banks will continue to buy gold and has added official sector purchases as a new element of gold demand," according to a report from London-based bullion dealer Sharps Pixley.
The fresh facts indicate that central bank purchasing will continue for the foreseeable future.
That is quite a turnaround from the heavy selling the banks made from 1966 through 2007. During that time central bankers engaged in substantial selling, with only short periods of meager buying.
Unfortunately - but not surprisingly - many of the things that happened in Washington this year did the U.S. economy more harm than good.
More than two years after the official end to the recession, the U.S. economy is still suffering through sluggish growth and an 8.6% unemployment rate.
"They've been wrong from the beginning, and they're still wrong," said Money Morning Chief Investment Strategist Keith Fitz-Gerald of U.S. government policymakers. "It makes you wonder if any of these people passed Economics 101."
That said, here are five of the government's worst economic blunders of 2011:
- The Debt Ceiling Crisis: While Congress did step back from the brink of plunging the nation into default, the fear and uncertainty resulting from the battle over raising the debt ceiling unnerved stock markets and was the main reason Standard & Poor's cut the U.S. credit rating from AAA to AA+ for the first time ever. The worst part of it was that the whole battle was unnecessary. Congress votes often to raise the nation's debt ceiling, a necessity to keep borrowing the 40% of the federal budget not covered by receipts.
- The Bungled Federal Budget: In mid-January, the federal government will have operated without an official budget for 1,000 days. The lack of a real budget makes it harder for government agencies to plan, as funding depends on a series of "continuing resolutions" by Congress. Failure to pass one of these stopgap measures would result in a government shutdown, which both Republicans and Democrats have used as a threat to try to force the other party's hand. Even worse, lawmakers argued about, but ultimately took no action on, reducing the crippling $15 trillion national debt or the huge annual deficits that keep driving it higher. Both are anchors on the U.S. economy.
- The U.S. Federal Reserve's Loose Money Policies: Led by Fed Chairman Ben Bernanke, the central bank has used every policy tool at its disposal to flood the U.S. economy with money in a futile effort to spur growth. Not only has it held interest rates near zero for more than two years, but it has conducted two "quantitative easing" bond-buying programs (not to mention mortgage-backed securities). Those policies have failed to implement either of the Fed's dual mandates to hold down the unemployment rate and control inflation.
- U.S. President Barack Obama's Jobs Bill: Despite a lot of dramatic rhetoric, President Obama's American Jobs Act was more of a re-election ploy than a serious attempt to deal with the high U.S. unemployment rate. The president knew Republicans would object to many of its provisions, as well as its hefty $447 billion price tag, but also knew those same provisions would appeal to his political base. Even if it had passed intact, economists said it would at best lower unemployment only by a single percentage point.
- The Payroll Tax Cut: While the House Republicans were foolish to fight the Senate and President Obama on the deal that was made to extend the payroll tax cut for two months, they were right about one thing: Any extension should have been for the full calendar year. Instead of resolving the issue, Congress merely postponed the fight over further extending the 2% cut in the Social Security tax deduction until February. Apart from that, who thought putting money into Americans' pockets by lowering payments into the already-threatened Social Security Trust fund was a good idea? Talk about mortgaging the future.