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May 20, 2023

1st Quarter — QE Boosts Commodities and Stocks

The first quarter of 2021 has been a period of significant growth for both commodities and stocks, thanks in large part to the continued implementation of quantitative easing (QE) measures by central banks around the world. QE is a monetary policy tool used by central banks to stimulate economic growth by increasing the money supply and lowering interest rates. This, in turn, makes it easier for businesses and individuals to borrow money, which can lead to increased spending and investment. One of the key effects of QE is that it tends to boost the prices of commodities such as gold, silver, and oil. This is because when interest rates are low, investors are more likely to put their money into assets that offer higher returns, such as commodities. As a result, the prices of these assets tend to rise. In the first quarter of 2021, we have seen this effect play out in real time. Gold, for example, has risen by more than 10% since the start of the year, while silver has increased by more than 30%. Oil prices have also rebounded strongly, with Brent crude rising by more than 20% in the first quarter. At the same time, QE has also had a positive impact on the stock market. When interest rates are low, companies are able to borrow money more easily and at lower rates, which can help to boost their profits. This, in turn, can lead to higher stock prices. In the first quarter of 2021, we have seen this effect play out in the form of strong gains in the stock market. The S&P 500, for example, has risen by more than 6% since the start of the year, while the Nasdaq has increased by more than 3%. Of course, there are other factors at play in the current market environment as well. The rollout of COVID-19 vaccines has helped to boost investor confidence, while the prospect of further fiscal stimulus measures from governments around the world has also contributed to the positive sentiment. Nevertheless, it is clear that QE has played a significant role in driving the growth we have seen in both commodities and stocks in the first quarter of 2021. As central banks continue to implement these measures, it will be interesting to see how these markets continue to evolve in the months ahead.