The precious metal complex is probably the most frustrating asset class in the marketplace today. Both the bulls and the bears would make the case that the price action of these metals seems to defy all logic. The bulls would argue that Zero Interest Rate Policy (ZIRP) pursued by virtually every central bank policy should be bullish for gold and silver. The ECB and the Fed have stated outright that their goal was to reliquify the banking system and generate price inflation. When ZIRP did not work, they went one step further and pursued aggressive money printing. When the supply of money and credit grows faster than the economy, monetary theory tells us the prices should rise as there is more money chasing the same number of goods. So the bulls bought the precious metals as protection against higher prices of consumer goods and services. To the surprise of the investors expecting higher prices across the board, that inflation did not manifest frustrating the bulls.
