BNP Paribas Expects Fed to Announce QE3 End of August

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Silver Holdings in Exchange Traded Products Hit Record Highs, BNP Paribas Expects Fed to Announce QE3 at End of August Meeting, Low German Inflation Gives Credibility to More QE from the ECB.

BNP Paribas Expects Fed to Announce QE3 End of AugustThe big challenge for silver this week that ended Friday, August 17 was to hold the level over the old $27.80 to $27.83 price support.

Silver bears and detractors are always skeptical of the white metal’s ability to hold onto these crucial incremental milestones it closes over, and when silver opened Monday at $27.83, silver’s enemies were all ready with their mocking smiles and cudgels. Yet silver continued to outfox its opponents for yet another consecutive week.

Silver had closed the August 10th week at $28.12, and despite the usual ups and downs for the week, it managed to close at almost the same price of the previous Friday, only very slightly down at $28.09.

Despite several weeks of solid, consistent gains for the white metal, the silver detractors and many of the technical chart gurus still claim that silver is in a bearish range until it breaks convincingly above $28.45 and closes there. With all the factors that are impacting silver these days, this next week could be the one that pushes it there.

Silver Holdings in Exchange Traded Products Hit Record Highs

This week the media, which is normally pessimistic on silver prices, came out and grudgingly admitted to a new silver achievement. Silver exchange traded products that you can buy and sell on stock market exchanges are backed by physical silver holdings. This silver contained in these funds recently reached record high amounts.

This bullish signal is a convincing sign that retail and institutional investors alike are buying into the silver rally in expectation of higher prices in the future. David Morgan of Silver-Investor.com rightly pointed out that this is a significant development in silver that has not been promoted enough by the mainstream media, even as they did quietly acknowledge it.

BNP Paribas Expects Fed to Announce QE3 at End of August Meeting

You have read here for several weeks now that anticipation of some form of additional significant Quantitative Easing from the Federal Reserve, which would be QE3, is in the cards and already priced into silver and gold. Another major analyst came out and added its voice to this chorus that grows louder by the week.

French investment banking giant BNP Paribas now believes that this new program announcement will come at the Fed’s annual conference at the conclusion of August in Jackson Hole. They affirm that this will continue to support silver and the precious metals prices, as it will encourage both risk appetite and increase the prices of real assets like the precious metals. The downside to their prediction is that if such an announcement and program do not materialize at this meeting, then they predict that the precious metals prices outlook will deteriorate significantly.

Low German Inflation Gives Credibility to More QE from the ECB

The other pillar that has supported silver prices is the European Central Bank. Investors are increasingly hoping for additional QE from them as well. This week, German inflation readings supported additional easing from the ECB, as the numbers came out lower than many feared at a mere .9% on an annualized basis in July.

Low inflation in this the largest economy of the EU makes it more believable that the Germans and their conservative central bank will finally agree to such another round of QE from the ECB institution. On the heels of this German inflation number, Chancellor Angela Merkel again promised her continued support for the Euro currency when she offered remarks.

These comments helped to support silver, the other precious metals, and European stock markets in general. It also did not hurt silver that reports emerged Friday that Spanish banks’ bad debts reached a record high mark in June.

Take Away On Silver Market Prices

Silver is technically still range bound until it breaks convincingly above $28. 45. Despite this price hurdle that draws increasingly near, the metal continues to make higher weekly closings. So long as there is a real near term hope that both the Fed and the European Central Bank will engage in further quantitative easing where they print more money to buy additional bonds, silver can grind steadily higher.

This means that near and medium term inflation numbers out of the U.S. and major European economies remain critically important. Even more than this though, silver market watchers should pay special attention to the rise in the silver exchange traded products holdings.

So long as more and more individuals and groups buy into the relentless rise and advance of silver, it will continue to reward its proponents and astonish its critics.

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