Gold and Silver Explode on Jackson Hole Remarks

It took a couple of minutes for the humans of the world to process the 4500+ word speech by Ben Bernanke on Friday but once they did they realized that he gave the intellectual argument for more Quantitative Easing.  Once that occurred the hedge fund word-cloud momentum-monkey moronic algorithms lost a titanic battle with rationality.  Gold (AMEX:GLD)  was pushing up towards $1663 per ounce when Bernanke began speaking and dropped as low as $1642 before exploding to the upside.  It paused briefly at $1670 and powered on through to $1680 and finally closing in on $1692 by 4 pm EST.

Silver (AMEX:SLV) went through a similar set of gyrations, getting rejected at the $31 level before Bernanke’s speech before getting taken down to $30.30. Like Gold, Silver then exploded through $31 and advanced steadily all day to close near $31.70 per ounce.

Both of these moves constitute major breakouts.

  • Gold finally closed up 2 weeks in a row.  this will bring momentum players who were waiting for that type of 2-bar signal.
  • Gold’s close above $1680 is the highest weekly close since the Leap Day Massacre on Feb. 29th.
  • Gold closing above last month’s high confirms a monthly reversal and breakout from consolidation.
  • Silver closed above the 50 week MA, an important level for many medium-term investors
  • Silver also confirmed a 2 bar breakout from range from a monthly perspective.

This being both the end of the week and the end of the month puts an exclamation point on the recent bullish action in both metals and means that the consolidation is over and the next leg of the bull market has commenced.

 

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Tom Luongo

About Tom Luongo

Tom Luongo is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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