ECB’s firm commitment may be more beneficial for cyclical Precious Metals

UNITED STATES January 29 2015 10:35 AM

NEW YORK (Scrap Register): Most assets, including precious metals, were supported by last weeks’ quantitative easing (QE) announcement by the European Central Bank, as per ETF Securities.

 

The greater-than-expected QE size and open-ended determination from the ECB, until inflation is firmly in place, helped to boost asset prices. 

 

Precious metals received another layer of underlying support via lower real yields and in a growing number of countries, negative real yields. 

 

Silver was again the best performer, gaining 2.7% on the week and remains the best performing precious metal year-to-date and the best performer among all major commodities so far in 2015. But gold has run into good initial resistance near the widely watched US$1,300/oz. level, becoming relatively rich compared too many, more industrial commodities, like silver and crude oil. 

 

The gold divided by crude oil ratio ended the week at 28.5, which is the highest since 1988. On a historic basis compared to gold, the world’s most significant industrial commodity, crude oil, is attractively valued.

 

ETF Securities remains bullish on all the precious metals but the impressive commitment from the ECB may be more beneficial to the more cyclically orientated precious metals.