Precious Metals Are Going Bonkers… Here’s How You Profit!

| August 24, 2012 | 0 Comments

Like it or not, the Federal Reserve is about to drop another money bomb on the US economy.  When the Fed’s meeting notes were released on Wednesday, investors found some very interesting language…

“Participants exchanged views on the likely benefits and costs of a new large-scale asset purchase program.  Many participants expected that such a program could provide additional support for the economic recovery both by putting downward pressure on longer-term interest rates and by contributing to easier financial conditions more broadly.”

They went on to say…

“Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery.”

What’s all that gobbledygook mean in plain English?

Ben Bernanke is highly likely to fire up the printing presses again in the very near future.  Recent weakness in the US economy has the Fed worried their past efforts are being put at risk if they don’t give the economy an extra boost… and soon.

In other words, another round of quantitative easing (QE) is most likely coming our way.

And you know what that means…

Precious metals are likely on the cusp of another big bull run.  In fact, the frenzy has already started.  Take a look at the price performance of precious metals over the past week…

Metals Chart

It doesn’t take a rocket scientist to figure out what’s going on here.  Investors are piling into metals as they feel the Fed’s language is highly indicative of further monetary easing.  Even though QE3 has yet to be announced (if it ever will be), precious metals are going nuts.

Gold’s up 3.4%, platinum’s up 7%, silver’s up nearly 9%, and not to be outdone- palladium’s up over 11% in just the past week.

Why the big rush to the precious metals space?

It’s simple really.   When investors fear the US Dollar is about to lose value, they buy things that can’t be printed out of thin air… hard assets.  You know, things you can hold in the palm of your hand.

Of course, commodities in general benefit when the US Dollar falls.  But you can’t very well hold a barrel of oil in the palm of your hand, or for that matter, take it down to the local gas station and trade it in for cash.

But you can do that with precious metals…

In fact, you can buy all the silver, gold, platinum, and palladium coins you want and stuff ’em in your safe.  And if you ever feel the need to sell, just take them back to the dealer and get the cold hard cash… simple as that.

Of course, you’ll still have to deal with price fluctuations, which means there’s no guarantee you’ll come out ahead in your transactions.  But judging by precious metal’s reaction to the two previous rounds of quantitative easing, the odds are in your favor…

Metals Chart

As you can see, silver and palladium are the clear winners since QE1 began in November 2008.  Both metals are up well over 200%, while gold and platinum are up 127% and 88% respectively.

And now, with another round of QE likely on the way, it may pay quite nicely to have precious metals in your investment account.

How can you take advantage of rising metals prices?

The most convenient way is to simply purchase a metals-backed ETF.  There are a number of ETFs designed to track price fluctuations in precious metals.  The SPDR Gold Shares (GLD) and the iShares Silver Trust (SLV) are just a couple of ways investors can cash in on further price gains!

***Editor’s Note***  Yesterday, Karl Stevenson released a currency option that should do extremely well.  His last option trade on the Canadian Dollar shot up 146% in about 4 weeks time.  His trade from yesterday has the same potential.  Click here for details.

Until Next Time,

Justin Bennett

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Category: Commodities

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.

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