Like right now I'd like to predict silver will close up by at least $0.60 Tuesday. Stupid prediction....right?
Right now silver is up 25 cents so I have a leg up. But why will silver climb even more by tomorrow's close? Something tells me the market will start anticipating that Bernanke will make his last hurrah Thursday by convincing the rest of his fellow Fed Reserve members to do something stupid .....by agreeing to announce a really big assist to the market (and help those poor unemployed souls) by revealing unlimited QE plans. Yeah, most of the market has priced in a QE announcement on Thursday but up until tonight, I believe the PM markets are more skeptical than the wall street mavens regarding QE plans. That may change tomorrow for PM's. Bernanke certainly has more to gain by attempting to jumpstart the economy for Obama's reelection effort since Romney has hinted of Bernanke's demise. If Bernanke is going to have any real impact on pushing the economy up by election time, then he needs to move by Thursday. PM's should start pricing in this inevitable event.....or...they can just and let it happen down the road....and my prediction will be wrong for now.
Just before the meeting starts you'll get an opportunity to add--it will be the cringe before the binge. After Bernookie announces on Thursday, you'll get a huge double digit market follow through if they're happy with remarks. If tepid or expectations are already built in by then, the market will exit with a double digit downdraft on Thursday evening, taking everything with it except shorts--commodity prices will take a huge hit even in legitimate substantive arenas, like corn futures.
YDM, if Bernanke had the good sense to read the tea leaves as well as you, he would realize that he should definitely squelch any and all ideas about prospects any any further QE either now or in the foreseeable future. Commodity prices, as you say, will take a huge hit, and the middle class will be well served by stifling the coming inflation in food prices. Even the price of oil might decline. But, Bernanke is locked in a political box! If he disappoints the equity market by rejecting QE at this time, then stock markets will obviously tank. Consumer "confidence" now marches in lock step with the stock market. And if consumer confidence plummets below 50 before the election (which it will with a plummeting stock market), our encumbent president will have NO CHANCE of getting reelected.
I firmly believe Bernanke has tossed his lot in with his stock market friends, banker friends, and his current buddy in the White House. He can rationalize any concerns about food commodity inflation with the simplistic idea that "a change in the weather" can address those crop commodity price concerns. But we know food prices are destined to rise regardless of weather patterns. Cattle herds have been drastically culled, future supply of meat products is rapidly dwindling, and worldwide demand for all food sources continues to rise.
No...Bernanke is going to take the leap on Thursday. Stock markets are already discounting this event by pricing equities higher on the basis of some huge injection of liquidity by the Fed. The currency markets today are beginning to seriously discount the inevitable QE3 on Thursday as the dollar is plummeting and diving below 80 in the currency markets. Post QE3, the U.S. dollar will begin a devastating descent. But the commodity markets, especially the PM markets, are more sanguine regarding the prospect of a QE3 announcement (IMO) and will wait to make their moves post announcement.
So what kind of QE announcement will Ben make? It will have to be really big for positive effect, and probably on the scale of the recent Mario Draghi announcement suggesting "unlimited" backing (buying government debt instruments) by the central banks. Bernanke has the benefit of other Fed Governors publicly floating the idea of unlimited bond purchases to secure employment goals formulated by the FED. The closer the U.S. gets to the next "debt ceiling" and the ensuing congressional debates, the Fed will have less maneuverability in announcing a massive QE3 (unlimited bond purchases) because it will be viewed for what it is....naked financing of government debt by Federal Reserve printing presses. No! The time is ripe for the Fed Reserve to ACT NOW. Additionally, postponing the QE3 announcement until the Fed's next meeting will be too close to the election to have any impact on consumer confidence numbers.
I should deploy all my remaining dry powder in the PM arena right now. But there is a small greedy voice whispering between my ears that I should save a little dry powder in case the Fed fails to do what it has to do on Thursday. Because if the red shooting flag does not go up on the QE firing range, then once again you will be correct, PM prices will suffer a short term (perhaps violent) decline where I can more silver equity shares at cheaper prices. But I will hold onto all my PM investments for now! We are going to see QE3 very soon!