We begin the post-labor day week first noting that the precious metals sector (e.g. gold, silver, platinum futures) is continuing its bull run this morning. Silver futures are once again leading the charge in the metals group, showing a +2.35% gain as of this writing. More talk of additional bond-buying by Fed Governor Williams this weekend is likely adding fuel to this precious metals rally. Further, when looking back at Bernanke's Jackson Hole speech last Friday, we see clearly that Bernanke indicates that the Fed will use ALL available tools to (try to) crash proof this market.
While gold and silver are proving to be powerful safe-haven assets during QE periods, it will be interesting to see how they hold up if another 2008-type bear market occurs. Clearly Bernanke and co. are doing more and more of everything they can to prevent another 2008 from occurring. But is more QE truly the answer our economy needs, or do we need something that addresses more deeply-rooted behavior of banks, corporations, and law-makers?
For now we take a closer look at December ‘12 Gold futures (see chart above). We notice that they have broken out of their $100 consolidation range, with the key prior resistance level of $1,650 turning into support. If Gold has a rally from this support level consistent with its consolidation range, $1,750 is the upside target. We are looking at $1,800 as the next important level on the weekly chart for gold futures.