Bernanke Rambles, Gold and Silver Markets Soar

Bernanke said the Fed may expand the balance sheet, may let inflation return, and it could – potentially – instigate a stimulus reform, while a mortgage principal forgiveness “could be helpful”…

Sounds like what we’ve been hearing for months from the Chairman: “maybe we’ll do X, Y, or Z, if things get worse.”

Overall, the Fed blamed the poor housing market for the lack of strength in the economic rebound.

In yesterday’s meeting, Ben Bernanke stated:

"If the situation continues with inflation below target and unemployment declining at a rate which is very, very slow, then our framework, the logic of our framework says, we should be looking for ways to do more. ... We need to adopt policies that will both achieve our inflation objectives and help the economy recover as quickly as feasible. I would say that your question, actually and the earlier question, shows the benefit of explaining this framework, because the framework makes very clear that we need to be thinking about ways to provide further stimulus if we don't get improvement in the pace of recovery and a normalization of inflation."

This is one of the first big meetings after Fed agreed to publish their minutes and forecasts in order to steer the markets…

Consequently, markets responded in a predictable fashion after Wednesday’s Fed meeting.

The dollar plummeted and stocks erased early losses. 

Least surprisingly of all, data firmly suggests that investors are flooding the precious metals market.

Experts suggest you sprint towards junior miners with full force while you still can…

From Dollar Collapse:

The carrying cost of gold and silver bullion will remain more or less zero, while all manner of “risk-on” strategies and carry trades will generate virtually guaranteed returns. Think back a decade or so and ask your younger, more naive self what the result of open-ended zero interest rates would be. You’d have probably said “that will never happen, but if it did, gold and silver would go parabolic”. You’d be half right. Grab those junior miners with both hands.

Already, we’ve seen the expensive cost of the depleting silver supply…

Considering the direction the economy has taken, it’s plausible that the supply situation will become more severe as days pass.

Here’s an overview of recent market activity within the precious metals realm: 

GOLD
 

SILVER
 
*Images courtesy of Kitco.com.