Earlier in the year, if I was asked, I would have said that this year would be the year for gold and silver to start shining again; only, I would have said that this is likely to happen toward the end of the year. However, I've got to say, my views have changed. Now, don't get me wrong, I do still believe that gold and silver are going to end the year strong; the only difference is that I think they're going to get a kick start before the fourth quarter. So today, we'll talk about the kick start the precious metals market is likely to get, what's happening in the end of the year that's likely to push precious metals higher, and how binary options traders can profit from the movement.
Greece Is Likely To Kick Start Precious Metals Into Action
Earlier in the year, my predictions into the precious metals market were based on market conditions and hints from the Federal Reserve. However, I think that things are going to start early thanks to the debt turmoil in Greece. If you haven't heard of the Greek debt crisis, this may be a bit of a shocker. Nonetheless, Greece has to figure out a way to pay nearly $2 billion by the end of the day on June 30th. The country was banking on bailout funding from the EU and International Monetary Fund. However, negotiations with EU leaders have led nowhere; and it doesn't look like Greece will be bailed out.
This all dials into worldwide financial markets. The reality is that the Euro is one of the largest currencies in the world; and if Greece defaults, they'll have no choice but to leave the Euro. This will affect trade, investments, and more; leading to declines in worldwide markets and causing investors to look for safe havens. As a matter of fact, that's exactly what we saw today. Markets around the world saw declines while silver skyrocketed. Of a solution isn't found by the end of the day Tuesday, this type of activity is likely to continue for some time.
Precious Metals Will Get Another Push Toward The End Of The Year
As if the Greek debt crisis wasn't enough stress on financial markets, there's another big event that's set to happen soon which will likely cause more turmoil in the market. Years ago, during the depths of the worldwide financial crisis of 2008 and 2009, the United States Federal Reserve reduced interest rates to an all time record low in an attempt to spur economic growth. However, when the rates were reduced, investors and consumers alike knew that the low rates couldn't last forever. As soon as the US economy built enough strength to stand on its own two feet, the interest rates would be increased and business would be back to normal. Well, that increase isn't far off. As a matter of fact, the Federal Reserve is expected to raise its rate by the end of the year.
Higher interest rates mean that consumers and businesses will be required to pay more money in order to borrow money; leaving less money available for spending and economic growth. History tells us that when interest rate hikes happen, the stock market declines and investors look to gold and silver as a way to hold value in their investing dollars. So, keep an eye out for this event as it's likely to cause big movements.
How Binary Options Traders Can Gain From This Knowledge
Short Term – In the short term, traders should watch as the story of the Greek debt crisis unfolds. If a solution isn't found by the end of the day Tuesday, we're likely to see declines in financial markets and big increases in the value of gold and silver. With that said, if things keep going the way their going, it's time for gold and silver calls and put options on major indices.
Long Term – In the long term, it's going to be important to watch the moves of the Federal Reserve. When interest rates are raised, we should see declines in all major indices as well as increases in the value of silver and gold. So, like in the short term, when this event happens, it will be time to purchase gold and silver calls while keeping puts on major indices.
What Do You Think?
What do you think of the state of the worldwide economy and how it will affect financial markets? Let us know in the comments below!