What to Look Out For Today: Silver and Gold Off-load?

Even the most novice trader knows that during periods of market volatility metals and certain currencies are considered safe havens. Recently though it seems as though hedge fund and wealth managers have been bearish regarding the safe-haven precious metals including gold, silver and platinum.

According to industry insiders, large speculators and hedge funds have been exiting their precious metals positions, on the speculation of monetary policy tightening both in the industrialized members of the EU and the US (this effect may have been compounded by Fed’s Janet Yellen statements regarding gradual interest rate increase to avoid out pacing inflation and growth).

Historic prices of gold reveal a sentiment trend also:
17th of April - $1284.26
17th of May – $1260.92
16th of June - $1253.59
17th of July (until the time of the writing of this article) - $1230.73

On the other hand healthy economic data and sluggish inflation is attracting an increasing number of investors to Eastern European bonds including local-currency Hungarian and Polish bonds. The rally is causing a 6.7% return in the second quarter, making the best return in emerging markets at the moment.

Comparatively this is four-fold more than that offered by German bonds. In fact Morgan Stanley analysts noted that currencies of these Eastern European countries are amongst their top picks – even considering that German bonds are currently experiencing a 18 mo. high.

This effect might not have the longevity or stability of German bunds, but the current 2.85% growth of these Eastern European countries seems to be piquing investors’ interest.

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This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.

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