Bernanke speaks, and gold surges

After a summer lull, Wall Street kicks off what will be a busy fall on a positive note.

By Anthony Mirhaydari Aug 31, 2012 2:53PM

So it begins. After one of the tightest trading ranges in history, stocks are coming back to life after an eagerly anticipated speech by Federal Reserve Chairman Ben Bernanke at the Kansas City Fed's Jackson Hole symposium. There, Bernanke laid the groundwork for additional stimulus measures at the Fed's upcoming policy meeting on Sept. 13, noting that labor market weakness is a "grave concern" and that the central bank has the tools and capacity to do something about it.

 

But really, it's gold, silver and the related mining stocks that are perking up in a big way. Not only are traders reacting to the likelihood that the Fed will take action -- thereby pushing inflation higher and the dollar lower (both positives for gold) -- but the European Central Bank is also preparing to take action next Thursday.

 

Here's how investors should play it.

 

 

The simplest and plainest way to get exposure is via raw-metal ETFs like the Gold Trust (GLD) and the iShares Silver Trust (SLV), both of which I've been talking about in my columns and blog posts. While they are a little short-term extended, both are just emerging from long medium-term downtrends dating back to the beginning and middle of 2011. If inflation kicks higher, as I expect, both should have more upside progress yet to come.

 

 

At this point, I am recommending my readers and newsletter subscribers focus more on mining stocks, many of which are just now breaking out of consolidation patterns. The list of new ideas includes Newmont Mining (NEM), which is just starting to move. As a result, I'm adding NEM to my Edge Letter Sample Portfolio.

 

Existing holdings that look good for new money include Kinross Gold (KGC), Keegan Resources (KGN), and Endeavour Silver (EXK). Other highlights include the VelocityShares 3x Silver (USLV) a triple leveraged bet on silver that's up 51% since I added it on July 25.

 

Disclosure: Anthony has recommended EXK, KGN, USLV, and NEM to his newsletter subscribers.

 

I found NEM with the help of technical screens developed with Fidelity's Wealth Lab Pro back-testing tools, which you can find here. (Fidelity sponsors the Investor Pro section on MSN Money.)

 


Check out Anthony's investment advisory service The Edge. A two-week free trial has been extended to MSN Money readers. Click here to sign up. Contact Anthony at anthony@edgeletter.c​​om and follow him on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.
 

 

VIDEO ON MSN MONEY

14Comments
Aug 31, 2012 3:44PM
avatar
We need housing to go up - not gold. Bernanke & fed money is not the answer. The new house next door finally went up for sale for half the insured price. I asked the people putting the sign up how could a bank afford to do this? He said they had mortgage insurance. Got the money for the house, and repossed the house. Waited three years until owners drove prices up by cleaning up the neighborhood. Put the for sale up. Now they drive prices back down to foreclosure levels. Did these banks get stimulus money too? No wonder tiny interest rates on savings and small cd returns. The banks have too much money already. The stock market appears to be the only game in town again. Inflation coming if this happens and more borrowed money means less buying power for the dollar.
Aug 31, 2012 4:36PM
avatar
thanks ben! i own gold/keep babbling
Aug 31, 2012 3:32PM
avatar
Bernanke should have stepped down when we asked him last year. He could have avoided a lot of the current issues facing the Fed. This mortgage racket is going to end. I've seen to it personally.

Read part 3 of my firsthand account as a bank whistleblower uncovering the largest bank fraud in history here: http://thoughtforyourpenny.blogspot.com/2012/03/boy-who-cried-force-placed-insurance_02.html
Aug 31, 2012 4:29PM
avatar
 Anthony got this correct, good call man. Just wish I bought the calls back in July. Ohwell, Im sure with the Europeans and the hopes for QE it'll be enough to push them higher yet. Hope to see $34. on Slv or so by Sept. 22.  You going to warn us when we hit the top-end, and its time to sell, right?
Aug 31, 2012 9:23PM
avatar

Not that I disagree with holding coin or bullion, but many that do, tend to hoard always expecting to get more, next week,month or year...

 

Not falling in love with any investment is key...

Problem I have with physical PMs, is the problem that many have...

Expensive to buy, fees and commissions.

Safe Storage can sometimes be a problem.If large amounts.

Expensive to sell, see above..and sometimes difficult; To get your price.

If you overcome all the hurdles, more power to you...

I buy and sell miners, easier for me.

Sep 1, 2012 10:36AM
Aug 31, 2012 9:25PM
Aug 31, 2012 7:38PM
avatar
In the final analysis it is all paper unless you hold the physical metal all you hold is a promise. GLD and SLV have almost no physical holdings ,Ask for redemption in physical metal and see.
Sep 4, 2012 4:56PM
avatar
 Don't be caught holding the bag when this bubble pops.     

When the Euro goes down, the people will be giving away their gold to eat, flooding the market.
Sep 1, 2012 4:55AM
avatar
Good call on USLV.... you will need many MANY more similar calls to make-up for your disastrous record from late 2011 thru early 2012.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

MARKET UPDATE

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM]

  • June gold rose for the first time in four sessions as economic data showed that new home sales declined 14.5% in March from an upwardly revised 449K (from 440K) in Feb to 384K. The Briefing.com consensus expected home sales to increase to 455K. The yellow metal brushed a session high of $1287.70 per ounce in early morning action and settled with a 0.3% gain at $1284.80 per ounce.
  • May silver also traded in positive territory today, climbing as high as $19.49 per ... More


Currencies

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.