Mario Draghi and the E.C.B. are embarking on the purchase of E.U. Corporate debt. It is estimated that 600 billion of this debt is on the markets. It is felt that this is not enough to satisfy the demand of the E.C.B.

Inevitably, this is taking yields across strong Europe to nearly zero. Will the proceeds of this debt be used to promote E.U. growth? The markets are sceptical, thinking that it is more likely that buyback operations will attract such capital. We see the program as a risky operation, particularly as eventually interest rates must rise, creating a precipitous fall in these markets.

It is an attempt to also lower the $: € exchange rate. We see this as failing as the euro is heavily undervalued currently. In addition the U.S. does not want a higher dollar against the euro and behind the scenes is preventing it. This is positive for gold and silver.

The current rise in the gold price needs to continue if gold Technicals are to change to the positive. However, the fundamentals of the currency markets are pointing to stronger gold and silver prices in the short and long term. We do not see the precious metal Technicals as being sufficient to dominate currency Technicals and fundamentals.

To appreciate the dangers of slowing global growth and global debt, take a look at auto finance debt in the U.S. and we see the very large presence of sub-prime debtors. If the U.S. does slow down, these debtors will be mired in their debt. If rates do rise likewise they will be in trouble. Shades of 2008 are appearing!

In the global sovereign debt markets the same is true, as debt to GDP ratios are rising as economies slow. The big picture is very worrying and positive for precious metals.

In addition, Janet Yellen’s latest comments continue to be digested and greater risk factors are being factored into the future, both of the U.S. economy and the global economy. Then the World Bank came out and reduced its forecasts for global growth to 2.4% down from 2.9%, adding to the fears of greater global risks. We emphasize that it is the dollar’s exchange rate that is dictating both the future for gold and for the U.S. economy.