Adens assess gold & silver
"The Federal Reserve shocked the markets with dramatic new actions to end the recession," note resouce experts Mary Anne and Pamela Aden.
In their The Aden Forecast they explain the impact of these moves on precious metals, adding, "In our view, the Fed's action guarantees that gold has much further to rise in the year ahead.
"The Fed announced they'll be buying more than $1 trillion in U.S. Treasury bonds and mortgage backed securities guaranteed by Fannie Mae and Freddie Mac.
"This means the Fed will be creating even more money to buy this debt, and that immediately affected all of the markets. The U.S. dollar plunged, falling the most against the euro in nearly nine years.
"This was due to concerns that these actions will fuel inflation and devalue the dollar. As a result, gold rose strongly. Stocks surged too, continuing the rise that started last week, as interest rates fell.
"Overall, this looks like the trigger that'll drive the rebound rises we've been anticipating. Indeed, If there was ever a doubt that gold's bull market is forming an eight year low, it's gone now.
"The Fed's action guarantees that gold has much further to rise in the year ahead. So far, gold's now four week intermediate decline has been moderate, but it's still underway as long as June gold stays below $953.
"On the upside, gold will stay firm above $880. Keep in mind, gold has been much stronger than most markets over the last several months which means the other markets are poised to outperform gold for the time being.
"Silver, like gold, has been correcting but it's firm above $12. Silver is under pressure by staying below $13.60 but if $12 holds and $13.60 is broken on the upside, followed by a rise above $14.55, silver would be super strong.
"We continue to recommend that investors keep their metals positions. In addition to our core holdings in ETFs, we also suggest select mining shares, such as Eldorado Gold (ASE: EGO), Agnico Eagle (NYSE: AEM) and GoldCorp (NYSE: GG)."
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