|Fed Sending Mixed Messages On Rate Increase |
Los Angeles CA, (Tangible Investments) - by James O’Dell - Precious metals prices turned sharply higher on Friday, with Gold adding $13.00 or 1.09 percent to end the week near its highs of the day at $1,208.10 an ounce, on bargain hunting and short covering as the dollar eased a bit from its lofty perch. Silver jumped $0.32 or 1.98 percent to finish the week at $16.50 an ounce, while the Gold/Silver ratio, the measure of the number of Silver ounces needed to buy an ounce of Gold, fell to 73.22.
The week began with Dennis Gartman of "The Gartman Letter" saying that the latest move higher in Gold may be just the start. "I think Gold has turned for the better," said Gartman on CNBC's "Fast Money" last week. Gartman says that he bases his call less on a weaker dollar and more on the commodity itself. "Clearly Gold will do better if the dollar were to get a bit weaker in general terms," said Gartman, "but I much prefer being long of Gold in non-U.S. dollar terms."
With the light economic calendar last week, investors naturally focused on comments by Fed members like Minneapolis Fed President Narayana Kocherlakota, who said on Tuesday that "I continue to believe that it would be a mistake to raise the target range for the fed funds rate in 2015." New York Fed President William Dudley, said a day earlier that the timing of the central bank's rate increase, the first in nearly a decade, is unclear and policymakers must be vigilant in their determination that the recent weakness does not signal a more substantial slowdown in the economy.
On Wednesday, Chicago Fed President Dudley said that he thinks a June rate hike is not off the table, so policymakers are clearly divided when it comes to the lift-off of any rate increase.
In the euro zone, Alexis Tsipras, Greece’s prime minister, traveled to Moscow last week, and his visit with Putin had some European Union (EU) members fearing that Greece may ask for a quid pro quo from its largest trading partner, Russia, before its coffers run dry. It seems that Greece could use a short term loan to tide it over, while its troika of creditors holds onto its next bailout payment.
Russia, in the meantime, needs Greece to vote against the EU’s renewal of sanctions against Moscow for its aggression against Ukraine, which are set to expire in July. In order for the EU to apply sanctions, all 28 member countries must agree to them, including Greece. Russian President Putin spoke after the meeting with the Greek leader and said the prime minister did not ask for aid.
Meanwhile, as the world worries over Iran’s future nuclear ambitions, Russia, a nation which already has the capacity to harm the U.S. and its allies appears to be getting a free pass to invade Eastern Europe, once again.
According to numerous reports, one from a former NATO official, Russia appears to be resupplying forces ahead of a Spring Offensive against Ukraine, and its military has deployed sufficient forces along Ukraine’s eastern border to allow an attack in three waves, large enough, according to reports, to overwhelm Ukrainian defenses along the entire front.
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