- Sunshine Profits: ECB is concerned about inflation, gold benefits
- Australian Mining: Silver in 2022 through the analyst's eyes
- Kitco: American investors prefer physical gold
ECB is concerned about inflation, gold benefits
The European Central Bank (ECB) is shifting its overly generous stance. The bank's president, Christine Lagarde, announced in her latest press conference that the bank will be ending its pandemic assistance in March 2022. Additionally, she acknowledged the growing risk of inflation and implied that the bank may respond by raising interest rates.Lagarde did not directly promise an increase in rates, but she also did not reiterate her previous statement that rates are unlikely to rise in 2022. Instead, she admitted that the macroeconomic situation of the global economy has changed since December 2021. This is worth noting, as Lagarde is known for her more relaxed attitude compared to other central bankers.
The ECB's tightening measures are likely part of a larger tightening movement, as the Bank of England has also raised its rates and started quantitative tightening, and the U.S. Federal Reserve is expected to end quantitative easing and raise its federal funds rate. Although the inflation situation in the eurozone is not as concerning as in the United States, it is still at its highest level in the history of the euro. And in terms of gross domestic product, Europe has recovered to pre-pandemic levels two quarters behind the United States.
The European Central Bank is unlikely to make significant one-time increases in interest rates, but the situation is still very favorable for gold. Although the bank is lagging behind the U.S. Federal Reserve, German bond yields are on the rise. The narrowing of the gap between U.S. and German rates strengthens the euro against the dollar, which is beneficial for gold. On the other hand, if the gap widens, gold will also suffer from it.
Source: Sunshine Profits 10.2.2022
Hope in the year 2022 through the eyes of an analyst
Global silver demand is expected to grow to 1.112 billion ounces in 2022, if the Silver Institute's estimates hold true. This is primarily due to the increasing demand from both traditional and green industries as governments begin to implement their carbon neutrality goals.The Perth Mint also reported record sales in January: 2,387,165 ounces of various minted products. The increased demand is welcome news for the mining industry as well. For example, Alien Metals recently discovered new silver deposits of 36 kg/t at its closed mine in Western Australia.
Industrial production is expected to grow by 5%, and sales of both jewelry and silver items could increase by as much as 11% and 21%, respectively. The Silver Institute predicts that global silver reserves will grow by 7% in 2022 to 1.092 billion ounces, the highest level in six years.
Source: Australian Mining 14.2.2022
American investors prefer physical gold
The Bank of England announced that the demand for gold bars has reached a record high, particularly among American buyers. Their sales increased by 14.4% during Q4 2021 compared to the previous year. Americans have also purchased one-ounce bars and coins 96% more than before. Sales of silver bars have also grown by 34% during Q4 2021.The mint's bar sales director, Nick Bowkett, believes that the international buying frenzy is a sign of investors' concerns about the recovery of the global economy, as the pandemic situation shows no signs of ending. Adding precious metals to one's investment portfolio is considered a good way to protect against inflation.
Germany's gold demand has risen to the largest in Europe: the country's bar sales grew by 6% in 2021 to 264 tons. Global demand for gold increased by 31% last year, totaling 1,180 tons purchased. According to analysts, in addition to the pandemic, the strained relations between the United States and Russia have also increased the demand for gold bars.
Source: Kitco 14.2.2022
