What Could Taper Mean For Precious Metals Longer Term?

This is an exclusive summary exclusive by Mitsui Global Precious Metals (analysis by David Jollie). The company released a note out two days ago discussing the impact of tapering on the precious metals. These notes are written for the pro market and they are not distributed as they can’t be seen to solicit retail investors.

Bron Suchecki, editor of GoldChat and strategist at the Perth Mint in Australia, was kind enough to summarize the exclusive report on his personal blog:

  • tapering could drive futher bearish sentiment but much of the tapering could already be in precious metal prices
  • gold’s decline more to do with an increase in risk tolerance from investors seeing improving economic environment (which was in play before taper talk)
  • as QE shrinks market will depend more on their own dynamics
  • tapering might result in the precious metals decoupling from each other, with PGs and silver possibly outperforming gold
  • still possible for QE to result in serious inflation in the future, driving continued gold buying
  • also possibile for deflation to occur [if QE not enough to cover debt deflation], in which case gold will be more attractive as other assets will struggle

The conclusion of report, as Bron writes, is that next year “we should expect some new ideas to start moving these markets. With tapering no longer an ongoing concern, we feel that there will now be at least a chance for bullish sentiment to develop in the precious metals complex.”

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