Gold and Silver Climb Higher on More Central Bank Intervention Plans

Wall St. Cheat Sheet

On Tuesday, gold (NYSEARCA:GLD) futures for February delivery, the most active contract, increased $15.90 to settle at $1,662.20 per ounce, while silver (NYSEARCA:SLV) futures for March gained 38 cents to close at $30.47.

Both precious metals showed strength as central banks around the world continue to show monetary desperation. Japan’s Finance Minister, Taro Aso, said the nation plans to use foreign-exchange reserves to purchase bonds from the European Stability Mechanism fund.

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The move is an effort to weaken the yen. Aso claims, “The financial stability of Europe will help the stability of foreign-exchange rates, including the yen. From this perspective, Japan plans to buy ESM bonds.” The amount of bond purchasing is still undetermined.

New Prime Minister Shinzo Abe, has been calling on the Bank of Japan to take more powerful monetary actions. In addition to the ESM purchases, Japan may sign a policy accord that will set inflation and job growth goals, according to Reuters.

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) and iShares Silver Trust (NYSEARCA:SLV) both increased 0.80 percent. Gold miners (NYSEARCA:GDX) such as Yamana Gold (NYSE:AUY) and Newmont Mining (NYSE:NEM) jumped about 1 percent. However, silver names such as First Majestic Silver (NYSE:AG) and Pan American Silver (NASDAQ:PAAS) traded in the red.

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Disclosure: Long EXK, AG, HL, PHYS