Some initial reactions from the FOMC meeting and press conference with Bernanke:
The FOMC-Bernanke’s words were very bullish for gold and silver investors. We have believed that money printing, aka QE 3 and beyond, will continue to support the drivers in gold and silver buying. The announcement is extremely bullish also with those who had questioned the chosen path now begin to realize they need to get back into gold. Keeping money at a negative return savings account or into very low yielding bonds just does not give much of an incentive to keep your capital as the aggregate amount of dollars increases ensuring a low or negative rate of return. That combined with other risks will drive more and more capital into silver and gold. And with the announcement, the FOMC continues to undermine the integrity of the US $ which makes it ever more appealing to have some sort of alternatives and again, gold and silver become quite appealing under such circumstances.
Gold now looks like it is ready to breakout with $2,000 increasingly likely in the coming several months, if not much sooner. There are plenty of people, investors, pensions funds, CB’s, etc -- with very little or no gold or silver holdings. Another portion of this population will realize the risk of such a low or no allocation and enter into the markets or continue their buying. There could be some big upside moves coming in the coming months.
A highly accommodative stance, even after the start of the recovery also ensures the easy printing policies will continue for many years to come. The Fed is gold and silver’s biggest supporter under such an environment.
- Peter Spina, President and Contributing Analyst