March 8, 2012 – Gold and silver have been down since last Wednesday when Federal Reserve Chairman Ben Bernanke appeared before Congress and no mention of a third round of Quantitative Easing was made in his comments. The market reacted immediately at 10 am, Washington time, and in this week, gold has been the most affordable we have seen in three months. Of course, the prior two rounds of fiscal stimulus have yet to work their way totally through the market and we urged investors to buy gold on the dip this past week presented.
Gold has been down as much as $100 during that time, providing a phenomenal buying opportunity. The gold price is literally illogical at the current low levels based on the fundamentals. Investor demand in the two biggest precious metal markets on the planet, India and China, is at all-time highs. The price of gold and silver cannot remain artificially low in American markets forever, based on that demand alone.
After a full week of market action, the Fed has apparently relented a bit in its tacit hardline. Today an announcement surfaced that the Fed may initiate what it is calling a “sterilized” round of Quantitative Easing. Call it what you will, it is an indication that the Fed cannot disengage from Quantitative Easing programs without damaging the market. Many analysts liken the market to the party and stimulus to the punch bowl. It’s difficult to separate the two.
Gold and silver immediately spiked on the announcement alone. Gold was up over $10 following the announcement and showed no signs of leveling off. Silver, too, is up proportionately. When the actual fiscal stimulus occurs, the price of precious metals will rise again and rise much more drastically, whether the Easing is “sterilized” or not.
The Fed has announced the Easing will happen and by its announcement has acknowledged that they cannot stop the fiscal stimulus. Buying gold and silver now, while the dip in price is still in effect, will realize significant short and mid-term gains as the Fed policy continues to unwind. At the very least, gold and silver will regain the territory they had lost and thus are the surest investment you can make with your money now.
Senior Staff Writer – GoldSilver.org