Wednesday April 24, 2013 08:49
A sharp drop in German business activity is raising new concerns of a further contraction in the euro zone. The German engine is showing signs of misfiring , which may force the EU central bank’s hand to lower its benchmark interest rate currently at 0.75%. China also continues to post disappointing numbers, with preliminary readings for the Purchasing Managers’ Index at 50.5, with an expectation of a 51.5 number. The world is awash in liquidity but economic numbers continue to suggest that the risks to the global economy are deflationary.
Investors are raising cash, either by choice or through forced margin liquidations. The metals will remain volatile in the short term. Breaking the momentum of the deflationary spiral will be the focus of the global central banks. It is a daunting job.
By Peter Hug
Global Trading Director
Kitco Metals Inc.