Precious Metals Rally on Bernanke’s Continuing Dovish Stance

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Inconclusive Italian Elections Propel Silver Rebound, Great Britain Suffers from Long Dreaded Credit Downgrade and Silver Reacts to Latest Sovereign Deterioration, Gold Stockpiling in Several Nations Helps Gold and Silver Rebound, Precious Metals Rally on Bernanke’s Continuing Dovish Stance, Sequester Actually Takes Effect and Promotes Safe Haven Bid for Silver.

Precious Metals Rally on Bernanke's Continuing Dovish StanceThe three week long slide in silver almost broke down in the week that ended March 1st. After gapping up on the spot market open to $29.01, silver traded up and down throughout the week until it finally closed out the spot market week on Friday afternoon at $28.59.

Silver saw its fortunes rise and fall with fundamental news like inconclusive Italian elections raising the specter of the European Sovereign Debt Crisis once again, British sovereign debt losing its long coveted triple A credit rating, gold stockpiling continuing in a number of countries, Bernanke’s dovish testimony before Congress, and fears of the sequester finally rearing its ugly head.

Inconclusive Italian Elections Propel Silver Rebound

Most everyone had lived under the mistaken impression that Italians would do the right thing for the good of the common EU cause and elect a left of center moderate who could be counted on to continue Mario Monti’s technocratic government reforms with the Italian election. The worst possible outcome materialized instead. Neither of the three major contender parties won a clear cut victory.

On the contrary, Italy is now saddled with a potentially unstable new coalition government, or perhaps another short lived technocratic regime, until a new election can be called in the fall or early next year.  The EZ and ECB tag team efforts had just begun to stabilize their long running sovereign debt crisis, and now Italy has once again emerged as the new weak link in the financial chain in EuroZone land. This has boosted safe haven demand for gold and silver as you might expect.

Great Britain Suffers from Long Dreaded Credit Downgrade and Silver Reacts to Latest Sovereign Deterioration

Over the weekend before the markets opened on 2/25, Moody’s Credit Ratings service struck again. Faster than a bolt of lightning falling from the heavens, this time they hammered the British government’s much beloved Triple A credit rating with a quick rebuke downgrade to Double A status.

This action roiled currency markets and crushed the British Pound Sterling. It provided yet another boost to beleaguered gold and silver that were both in need of a rebound this week after the past week’s sharp selling.

For gold, it was enough to turn the yellow metal back off its prior week’s dangerous level lows. For silver, it at least arrested the steep declines that had plagued the white metal for three weeks in a row. And so the war on sovereign G-7 currencies continues unabated.

Gold Stockpiling in Several Nations Helps Gold and Silver Rebound

The IMF released an impressive report for gold bugs this week. They announced that the central banks of the former Soviet Union and neighboring countries, including Russia, Turkey, Kazakhstan, and Azerbaijan, all increased their gold reserves for the month of January. Russia alone boosted their yellow metal reserves by almost 400,000 troy ounces in the first month of the year. This supports both gold and silver in the short, medium, and long term time frames.

Precious Metals Rally on Bernanke’s Continuing Dovish Stance

Perhaps the biggest precious metals market story of the week revolved around Big Ben Bernanke’s much anticipated testimony before the U.S. Senate and Congress. Helicopter Ben, the current era’s most famous money printer, told congress that he remains dovish on U.S. monetary policy.

He opined that his accommodative monetary policy has benefited the U.S. and even world economies tremendously, much more so that any potential inflationary risks which have yet to materialize. He even went so far as to brag that his inflation record is among the best.

It became clear by the end of his two days of testimony that he is far more worried about the status of the so called economic recovery than he is about presumptively ending his easy money printing stance. He even went so far as to say that he would probably allow his over $3 trillion in asset purchases to slowly mature rather than attempt to sell them and crush the bond market.

There are many legitimate fears out there that if he sells multiple trillions in such securities, it will sink many markets around the globe. His prescriptions for printing money to infinity were just what silver and gold markets wanted to hear. At least you can always count on Big Ben Bernanke to keep the fictitious and illusory economic good times going.

Sequester Actually Takes Effect and Promotes Safe Haven Bid for Silver

The latest MOAB (Mother of All Bombs) from Washington DC was just dropped on the staggering U.S. economy in the form of mandatory Sequestration. This latest self inflicted, gaping wound, brought to you courtesy of the misbegotten and misguided cronies in the nation’s capital, is more than just a worrisome media catch phrase.

It means that the U.S. government will now cut $85 billion in spending EACH YEAR for the next ten years, equally from military and domestic budgets. This year alone, it will enforce a punishing 13% cut in the military’s budget. Potentially hundreds of thousands of federal employees will now lose up to 20% of their weekly take home pay as they are furloughed one day a week, while tens of thousands of others will simply lose their jobs altogether.

Welcome to the worlds of Greece, Portugal, and Ireland. This is as bullish for silver’s safe haven demand as any news item these days. One economist gloomily pronounced that no one can say exactly what and how bad the effects of the Sequester will be, as austerity is uncharted waters for the economically mighty U.S. Uncertainty remains the mother of this precious metals bull market run.

Take Away On Silver Market Prices

The red headed step child beating of silver has nearly come to an end this past week that ended March 1st. Silver did decline an additional one percent plus when it closed spot markets on Friday at $28.59, but the pace of the decline has greatly slowed from the previous three weeks, several of which turned out to be eye watering, blood bath type declines.

The important psychological barrier of $28 per silver ounce has held up nicely. With silver-supporting news firing off most every day, and continued precious metals purchases from wary central banks around the world emerging on practically every sustained dip, you can be sure that the white metal has been merely knocked down for the count, and is certainly not out yet.

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