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Bernanke Play-Book



September 21, 2011 – Comments (0) | RELATED TICKERS: AGQ , SLV , GLD

This afternoon, the FOMC will announce there interest rate policy and make a statement about the economy. Most traders and investors are eagerly awaiting the for the central banks action. At this time, many trader and investors are expecting the Federal Reserve to implement its Operation Twist program. Other investors are expecting the Fed to announce another quantitative easing program. While it is unlikely that the central bank will announce another quantitative easing program traders can never rule anything out when it comes to Chairman Ben Bernanke. The Federal Reserve just ended its last $600 billion QE-2 program on June 30, 2011, therefore, if the central bank were to initiate another quantitative easing program so soon it would really signal to the markets that the global economy is extremely weak. We just have to wait and see what the central bank says this afternoon.

Traders should look to buy gold and silver on any announcement of another quantitative easing program. The last time the Federal Reserve announced its last quantitative easing program back in late August 2010 the precious metals soared higher. The SPDR Gold Shares climbed by more than $60.00 a share in less than a year. The iShares Silver Trust (NYSE:SLV) climbed by $30.00 in less than eight months. Gold and silver should be on everyones radar if the Federal Reserve announces a QE-3 program. If the Federal Reserve simply announces its Operation Twist program then the markets will have a lot of this already baked into the cake. It's the Bernank's move, we can only try and trade it.

Nicholas Santiago

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