Gold and silver got legs when Bernanke confirmed that the FOMC was just talking about ending QE. And I think we knew that.
But apparently the metals market didn't right? I think this rally has everything to do with the end to this brazenly artificial paper selling into the options expiration yesterday.
So what next?
Gold is approaching a 50 percent retracement of this big waterfall decline that was driven by the funds. While I feel comfortable in buying long term straight up bullion in moments of such extreme oversold weakness, I am not quite confident yet in taking more longs into a trade just yet.
The sequester is dead ahead, and with the markets this wild and loosely regulatred, it is hard to have conviction using any kind of leverage.
The long term prospects for precious metals remain unchanged, perhaps slightly better given the lack of serious reform in the real economy and the broken financial system.
