Metals Ignoring Japanese QE and Not Considering Future U.K. QE

Gold had hit yet a new six-month high of $1,779.10 per ounce in early bird trading today after the Bank of Japan decided to ease via an expanded asset purchase plan. The theory is that gold bugs will swarm into a frenzy any time that monetary easing comes up as it devalues the currencies against hard assets. Apparently the news was not enough to stoke inflation and devaluation fears.

The Japanese asset purchasing came to about $125 billion and may have been more targeted at the strong yen rather than at true stimulus. After all, Japan’s economy has been in a two-decade slide. It may not be anywhere close enough to move the needle.

To add to the mix, the Bank of England’s latest minutes showed that while it kept rates and its quantitative easing unchanged, some members saw a need for further stimulus in the near future as business investment and labor conditions are expected to remain weak ahead. The Federal Open Market Committee’s QE3 in the United States is a half-trillion or so in dollar terms, but it is open-ended and can be increased as the FOMC lengthened out its incredibly low rate stance out to at least mid-2015.

China has started its own $175 billion infrastructure stimulus and has been trying to stimulate its banks. Europe is now going to embark on a round of bond buying, which was said to not be limited yet still sterilized (sure!).

The problem we are seeing today is that the metals are just not following the trend. Maybe Japan is just the last QE announcement that the markets can expect for a while. Gold is still up, but its price is up only 0.2% and less than $1,773 per ounce. It is important to recall that gold was less than $1,600 as recently as mid-August, before Jackson Hole and before the market became certain that QE3 was coming.

The SPDR Gold Shares (NYSEMKT: GLD) is up $0.08 at $171.80 and ETFS Physical Swiss Gold Shares (NYSEMKT: SGOL) is up marginally. The Market Vectors Gold Miners ETF (NYSEMKT: GDX) is indicated up $0.06 at $54.38.

iShares Silver Trust (NYSEMKT: SLV) is down almost 0.5% at $33.55. What is interesting is that the shares of silver miners are higher, with Hecla Mining Co. (NYSE: HL) up almost 0.8% at $6.59 and Pan American Silver Corp. (NASDAQ: PAAS) is up 0.3% at $21.55. Silver Wheaton Corp. (NYSE: SLW) may not be up that much but a ratio of its share price to the price of silver is getting elevated.

ETFS Physical Platinum Shares (NYSEMKT: PPLT) is up marginally as another platinum mine has erupted with more violent labor strikes. This was an Anglo Platinum mine in South Africa.

JON C. OGG