Daily Market Report 04/04/12

Today’s news that affected the financial Markets
When the minutes of the Federal Reserve’s March meeting were released at 2:30pm EDT yesterday it was clear that it is highly unlikely that we will see another round of monetary stimulus (Quantitative Easing, QE3) from the U.S. Federal Reserve any time soon. The world’s stock markets and precious metals overreacted to this news release, which normally happens, and dropped quickly, while the bond market and U.S. Dollar rallied. Many Investors have bought gold in recent years as a hedge against the prediction of high inflation as a result of the Fed’s stimulus programs, and this announcement was a temporary setback.

What does this mean? It means the Federal Reserve basically said if the U.S. economy continues to improve QE3 will not be needed, however should the United States economic indicators start looking negative, QE3 continues to be an option.

Well, since between the Federal Reserve’s past stimulus programs and the massive U.S. Government budget deficits, there have been trillions of new dollars added to the balance sheets. The handwriting of future inflation is on the wall, just as I stated in my March 26th Weekly Market Report, the velocity of the money supply going through our financial system (Banks making new commercial and residential loans) will increase dramatically by early next year, starting the inflation cycle. At that point, Gold and Silver at current prices will look like the bargains of the century. Take advantage of this opportunity, add some gold, silver and Platinum to your holdings, NOW.
 
GOLD
At 11am PDT, Gold is trading at $1,617.80, down $53.80 per ounce, on very heavy volume of trading. Gold did reach $1,611 per ounce earlier this morning before we saw sizeable bargain buying.

SILVER
At 11am PDT, Silver is down $1.99 per ounce, trading at $31.23 per ounce on the highest volume I have seen in the past few weeks.  At one point this morning Silver did break the $31.00 price support level and trade down to $30.91 before major buying appeared.