Ahead of the annual monetary policy gabfest at Jackson Hole retreat in Wyoming, members of the Board of Governors of the Federal Reserve have been quietly hinting that another round of stimulus or “quantitative easing” (inflationary money printing) may be on the horizon.
Speculation that the Fed will again act and questions about its continued near-zero interest rate policy and what long-term effects a new round of quantitative easing will have on the U.S. economy have created some volatility in markets. But one area where volatility has been remarkably low (not surprisingly given historical evidence) is precious metals.
Over the next 18 months, most analysts expect gold prices to fluctuate little between $1,750 and $1,800 with a high side of $2,000. As the European Union continues to falter and talk of the U.S. economic cliff becomes louder and more constant, precious metal prices can only improve. Silver should stick it out in the mid $30s per ounce range over the 18-month period, but economic uncertainty has the potential to push the lesser precious metal to unchartered highs, according to some market watchers.
While investing in physical gold and silver is a good idea in the eyes of most well-prepared investors, it is also a good time to reap benefits from investments in precious metal-mining operations.
Over the past four weeks, gold and silver shares have outperformed Standard & Poor’s 500 index with gold up by about 3.3 percent and silver 9.1 percent. Analysts expect further upward mobility.