Gold and Silver OUTPERFORM After Bernanke’s Speech

Wall St. Cheat Sheet

On Friday, gold (NYSEARCA:GLD) futures for December delivery jumped $30.50 to settle at $1,687.60 per ounce, while silver (NYSEARCA:SLV) futures surged $1 to close at $31.44. It was gold’s highest close since March, and silver’s best level since April.

Both precious metals finished August on a high note as Ben Bernanke delivered his highly anticipated speech at the Federal Reserve Bank of Kansas City’s meeting in Jackson Hole, Wyoming. Although the Fed Chairman did not specifically name another quantitative easing program, he reiterated that the central bank “will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”

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Furthermore, Bernanke heavily defended the Fed’s prior monetary actions, signaling to some that more easing may be on the way. He said, “And despite periodic concerns about deflation risks, on the one hand, and repeated warnings that excessive policy accommodation would ignite inflation, on the other hand, inflation (except for temporary deviations caused primarily by swings in commodity prices) has remained near the Committee’s 2 percent objective and inflation expectations have remained stable.”

As the chart below from FINVIZ shows, it was a very impressive month for precious metals. The price of silver led all other investments with a 12.5 percent gain, while gold logged a 4.4 percent.

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) increased 1.95 percent, while the iShares Silver Trust (NYSEARCA:SLV) surged 3.75 percent. Gold miners (NYSEARCA:GDX) such as Barrick Gold (NYSE:ABX) and Goldcorp (NYSE:GG) both jumped more than 4 percent. Meanwhile, Endeavour Silver (NYSE:EXK) and First Majestic Silver (NYSE:AG) popped 8.40 percent and 5.85 percent, respectively.

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Disclosure: Long EXK, AG, HL, PHYS