Below is a chart of silver, with each candle constituting one hour. The massive blue candle all the way to the right shows the market's response to Fed Chair Ben Bernanke's statement suggesting that the Federal Reserve may issue more stimulus if the market needs it.
This is not surprising; Bernanke is left with virtually no choice but to continue with stimulus, as the alternative is a form of austerity far worse than what has taken place in Greece. While ongoing stimulus weakens the currency and threatens hyperinflation, it is more politically acceptable for all constituents: Wall Street gets to sell more Treasury bonds and blow more financial bubbles, and the one in seven U.S. households on food stamps get to continue eating.
Politically, Congress and the president do not seem to understand the severity of what is at stake. As a simple rule of thumb, until cuts to the military budget and the wars are made a priority, all talks of budget reform will be skirting the issue and will likely be done in the name of political appearance.
Gold and silver are poised to go much, much higher - and likely soon. The gold and silver market rallied strongly during QE2, and I believe another round of stimulus will bring about an even stronger rally, as more participants will see the proverbial writing on the wall regarding the impact of this stimulus on the U.S. dollar.
The situation remains the same: gold and silver remain remarkably underpriced and have much, much, much more room to the upside. I view a 100% increase in both (a doubling of price) to be a very conservative estimate. Gold and silver continue to serve as the strongest buy and hold instruments the market has to offer. Traders will surely find great opportunities in buying dips and selling rallies.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.