Bernanke Miracle? Silver and Gold Charts Updated

Regarding our NEM position, earlier we wrote that "we will hold the shares if by some miracle it opens and holds to close above our $27 stop tomorrow".

In after-market news, we read: 

Bernanke stresses rates to stay low for long time

We'll stress that it's impossible for him to say that with certainty given that the Fed doesn't truly control rates, he'll be gone in a short time, and half the Fed sees QE ending this year.  At best the Fed can correlate or influence rates, but rates are truly set in debt markets and the Fed cannot distort those markets for long even with a program 10 times the size of QE.

However apparently in response to Bernanke's statements, as of 1:30 AM, the DJIA is up over 150 points, gold is up $40 to $1288 and silver is up $0.76 to $19.96 

NEM was last bid at $27.31, up over 2.5% from the close, so Chairman Bernanke's blather might be the miracle we needed to cause us to hold onto it for awhile longer.

It's a silly overreaction in the markets so far, which probably won't last long but hopefully it lasts long enough to turn our gold and silver bounce positions to big winners. 

That said, even tonight's buying in metals so far is very weak compared to the collapse of recent weeks.  If it takes such unusual and extreme statements from the head of the U.S. Federal Reserve to rally metals only this much, despite them being so "oversold", that's still not going to allow any responsible precious metals longs to rest easy.  (Please see "The 'Oversold' Myth, Using Silver As An Example" if you've not read it).

For now however, it looks like Thursday will bring the bounce we've been waiting for and that should kick-off a bigger rally. 

Below are charts of how gold and silver look to us.  Charts are current as of this writing, and as usual can be clicked to view a larger version. 

Above the green downtrend lines we can expect the bounce to perhaps morph into a more protracted rally.  Above the red lines we could even entertain some bullish discussion for the intermediate term. 

Long-term we remain firmly bearish gold and silver, as we've been since long before it became fashionable, and bullish the U.S. dollar. 





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