Stock Market Strategy: Reinventing the Wheel
Precious Metals Outlook: A Gift From the Fed Leads to Higher Prices
I hope you are sitting down with a glass of water near bye, a brown paper bag and perhaps a defibrillator. I’m going to share with you a little known secret of the investment community. The idea is so ground breaking the effect on your investment decision making process will be forever altered. Your recognition of the profundity of the following words may cause medical complications such as increased heart rates leading to hyperventilation or related side effects.
Are you ready? Wait for it….
FOLLOW THE FED!!
No seriously, often times the obvious answer is the correct answer. The explanation for recent stock and commodity market strength can best be encapsulated by the following FOMC quote released on Tuesday…
“The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.”
In essence, the Fed just committed to using monetary policy to increase INFLATION. Money managers and corporate CEOs looking to retain their jobs cannot justify holding cash any longer. This explains why merger and acquisition activity has increased in the last month and why the markets are all challenging new yearly highs this week.
Of course, the natural beneficiary of a Fed committed to driving inflation is none other than Precious Metals. As Gold prices breach $1,300 and Silver $21.40 know that the fun is just beginning. Keep your arms and legs inside the cart at all times and remember… PLEASE HOLD ON TO THE BAR!
Disclosure: Long Gold & Silver assets