Silver has had an incredible start to the new year. Recently, the gains in the price of the precious metal were exacerbated as a result of comments made by the Governor of the Bank of England. Today, we'll talk about the comments made, why the comments had such a positive affect on silver, and how binary options traders can take advantage of the trends. So, let's get right to it…
BOE Governor Makes Troubling Statements
Recently, the Governor of the Bank of England, Mark Carney, made an announcement. In his announcement, he explained that the effects of the Brexit on the U.K. economy have proven to be larger than planned, at least for him. While Carney said that he is not speaking for other members of the Bank of England, he believes that further stimulus will likely be necessary.
This was something that many experts, including myself saw coming. The truth is that the Brexit is a move that is overwhelmingly bad for all economies involved. As a result of the move, the UK will soon be forced to renegotiate global trade agreements. This is going to be difficult as the vast majority of the country's global trade is done with EU members.
At the end of the day, the comments made by Carney were overwhelmingly negative. After all, he believes that a cut to the already record low interest rates in the UK might be in order. In his statement, Carney had the following to offer…
“In my view, and I am not pre-judging the views of the other independent Monetary Policy Committeee members, the economic outlook has deteriorated and some monetary policy easing will likely be required over the summer… Monetary policy cannot immediately or fully offset the economic implications of a large, negative shock… The future potential of this economy and its implications for jobs, real wages and wealth are not the gifts from monetary policy makers. This will be driven by much bigger decisions; by bigger plans that are being formulated by others.”
Why These Comments Had Such A Positive Affect On Silver
While it may seem as though opinions of the Bank of England and the price of silver are two completely different topics, that's not exactly the case. The truth is that both topics are very closely related to each other.
Silver, like gold is considered to be a safe haven investment by many. This means that when economic and or market conditions are called into question, investors look to silver as a way to protect their financial assets. This causes increases in the demand for the precious metal, and ultimately leads to increases in price.
The comments made by Mark Carney paint an incredibly grim picture for the UK economy. Because the UK is one of the top 5 economies in the world, the implications of economic struggles in the region will likely reach world-wide markets. As a result, safe haven investors are moving toward silver; sending the price of the commodity skyrocketing.
How Binary Options Traders Can Take Advantage Of The Trends
As binary options traders, our job is relatively simple. All we need to do is find trends surrounding publicly traded financial assets, and exploit those trends for a profit. When it comes to silver, we've seen quite a bit of upward movement, and based on global economic and market conditions, we've only seen the beginning. So, binary options traders should be watching for strong call option opportunities in order to ride the upward trends to the profits.
What Do You Think?
Where do you think silver is headed moving forward and why? Join the discussion in the comments below!