The Fed Just Telegraphed: Buy Silver And Gold Now

Thursday, January 26, 2012
By Paul Martin

David Alton Clark

Gold is currently climbing out of the eleventh 10% correction since 2003. Gold has always bounced back and soared higher each time. Gold has been up 10 out of the last 10 years. I was bullish on silver and gold, but with the latest Fed decision, I am extremely bullish. It’s almost a no brainier. I believe gold and silver at their current levels provide an excellent buying opportunity. Several geopolitical and macroeconomic catalysts have ignited my interest in precious metals, specifically silver and gold. The time is now to buy silver and gold.

Gold and Silver’s Recent Performance Overview

According to a recent Reuters report, Gold rallied 2% on Wednesday, rising above $1,700 an ounce for the first time since mid-December after the U.S. Federal Reserve said it will likely not raise rates for longer than previously expected due to a sluggish economic recovery. Please review the following excerpt:

Bullion sharply outperformed equities and industrial commodities after the Fed said it was unlikely to raise interest rates until at least late 2014. The central bank repeated its view that the U.S. economy faces “significant downside risks.”

“From an equity standpoint, it’s not a good story as the Fed was anticipating a much slower rate of growth than the market was,” said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC.

“Gold was reacting to the Fed’s guidance of historically low rates all the way until 2014, which suggests that there will be plenty of investment money around for an extended period of time,” he said.

Gold received a boost after the central bank appeared more upbeat on the inflation outlook, suggesting prices were now rising at a pace consistent with policymakers’ goals. Spot gold was up 1.7% at $1,693.90 an ounce, after climbing to a session high of $1,703.71, the highest since Dec. 12. U.S. February gold futures rose $35.60 to settle at $1,700.10 an ounce in decent trading volume. Gold is now up 9% for the year, after the metal briefly entered a bear market and fell 10% in December as the metal had appeared to lose its safe-haven status.

Silver rose 3.4% on the day to $33.09 an ounce. Platinum reversed earlier declines to rise 1.1% on the day to $1,561.74 an ounce, while palladium was up 1.1% at $684.72 an ounce.

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