$GLD and $SLV Prices as of September 23 2019 @moneymetals
10:44 AM
September 23, 2019 – Gold and silver prices rallied during last week’s trading and closed back above some important psychological levels. Silver regained $18.00/oz and gold ended the week north of $1,500/oz – and all metals are up this morning.
The metals have been boosted by fear and uncertainty in the short-term funding market that provides liquidity to banks.
The FOMC cut the Fed Funds Rate for overnight lending by a quarter percent on Wednesday. However, their decision on rates didn’t assuage banks who were suddenly hesitant to lend to one another.
Capital available for overnight borrowing in the repo market dried up and rates spiked to multiples of the benchmark rate set by the FOMC.
The Fed was forced to step in and make $278 billion available in overnight operations which lasted four nights in a row.
And the central bank has announced plans to inject a lot more capital into the repo market this week.
Fed officials have predictably declared the liquidity crisis in the repo market as nothing to worry about. However, it is not normal for bankers to suddenly demand interest far in excess of the Fed Funds rate to make an overnight loan to a peer.
It appears some banks have been in desperate need of cash. Only the Fed, whose purpose includes insulating its member banks from accountability for crimes and poor decision making, was willing to provide low-cost cash.
These unusual Fed operations could be viewed as simply another bank bailout. We may find out soon if the Fed’s emergency interventions are adequate to push repo rates down and keep the troubled banks afloat, or if something more permanent like “QE4ever” will be needed.
Check out live precious metals prices here:
https://goo.gl/gy5XMA
The metals have been boosted by fear and uncertainty in the short-term funding market that provides liquidity to banks.
The FOMC cut the Fed Funds Rate for overnight lending by a quarter percent on Wednesday. However, their decision on rates didn’t assuage banks who were suddenly hesitant to lend to one another.
Capital available for overnight borrowing in the repo market dried up and rates spiked to multiples of the benchmark rate set by the FOMC.
The Fed was forced to step in and make $278 billion available in overnight operations which lasted four nights in a row.
And the central bank has announced plans to inject a lot more capital into the repo market this week.
Fed officials have predictably declared the liquidity crisis in the repo market as nothing to worry about. However, it is not normal for bankers to suddenly demand interest far in excess of the Fed Funds rate to make an overnight loan to a peer.
It appears some banks have been in desperate need of cash. Only the Fed, whose purpose includes insulating its member banks from accountability for crimes and poor decision making, was willing to provide low-cost cash.
These unusual Fed operations could be viewed as simply another bank bailout. We may find out soon if the Fed’s emergency interventions are adequate to push repo rates down and keep the troubled banks afloat, or if something more permanent like “QE4ever” will be needed.
Check out live precious metals prices here:
https://goo.gl/gy5XMA
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