Wednesday , 13 December 2017


Deutsche Bank: Further QE Might Actually Be BAD for Gold Prices! Here's Why

 

Gold bulls often argue that the yellow metal will only go up as long as central banks continue to employ easy monetary policy however this thesis has been around so long that it might not even work anymore. That’s the gist of what Deutsche Bank suggests in their most recent outlook for precious metals prices. In a note to clients, they write:

So says Matthew Boesler (www.businessinsider.com) in edited excerpts from his original post*.

Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.

Boesler goes on to say, in part:

In a note to clients, Deutsche Bank writes:

Gold trading volumes have tumbled recently as investors supposedly wait for more clarity on central bank policy. This does not mean they are not optimistic. In the latest Bloomberg survey, bulls still outnumbered bears two-to-one, and QE by the ECB and the Fed is currently held up as the next catalyst for rising prices.

Evidence of falling inflation in the global economy, for instance the ebbing price pressures in China, is seen as positive for gold as it removes a barrier to easier monetary policy. [As such,] gold bulls must be mildly frustrated at policymakers’ reluctance to move so far.

A very few, however, dwell on the reasons for this caution, namely the fear QE might do more harm than good for the economy. Might it not do more harm than good for gold prices too?

For instance, due to the still diminished risk appetite, QE (in the way it has been conducted up to now) simply adds to the tightness in the safe-haven bond markets.  Some money market investors are already facing negative yields and are being made poorer as a result of QE. [QE, or quantitative easing, is when a central bank buys bonds in an effort to lower interest rates.]

It is difficult to see how this could be good for gold prices.

*http://www.businessinsider.com/deutsche-bank-qe3-gold-prices-2012-8#ixzz23RaQaUBz (To access the above article please copy the URL and paste it into your browser.)

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Editor’s Note: The above post may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

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