Tuesday, December 16, 2008
Well, just about every market liked the new swagger from Fed chief Ben Bernanke earlier today when he made clear he's planning to "whip deflation" but good over the next year. Precious metals markets seemed to like it the most, particularly silver.
News that short-term interest rates have been "parked" at zero for the foreseeable future while the central bank turns its attention to growing its balance sheet seemed to spur all sorts of buying in the "poor man's gold" which rose about six percent on the day, back up over $11 an ounce for the first time in months.
"Regular" gold only rose a couple percent today but has fared much better than silver in 2008, pushing further into positive territory after today's move as the dollar tumbled. With only about ten trading days left in the year, they are both pretty close to even - my bet's on the metal, not the paper.
That's the PowerShares DB Dollar Index Bullish ETF (AMEX:UUP) that you see there above next to the SPDR Gold Shares ETF (NYSEArca:GLD) which added a few more tonnes again today, coming up just shy of its all-time record high inventory set a few months back.
After the clear signal today from Ben Bernanke and Company, it's hard to imagine that the trend of the last few weeks is going to reverse anytime soon. In fact, it may well strengthen between now and the first of the year.