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A Golden Opportunity With a Silver Lining

Rosengren called for "an aggressive, open-ended bond buying program that the central bank would continue until economic growth picks up and unemployment starts falling again," The Journal reported.

You know what that means? Here comes QE3 aimed at driving interest rates lower, drive up the price of stocks, and push down the value of the dollar. It means re-inflating the economy with the kind of economic stimulus that borders on the extreme.

As I've written in recent articles, if the FOMC surprises to the upside it won't just be companies like Caterpillar that will rally big time!

The better-quality large gold producers that pay a decent dividend such as Barrick Gold (ABX - Get Report) and Newmont Mining (NEM - Get Report) should react effervescently.

Once again a chart can help us notice that these two monster money-makers of the precious mining industry as well as the entire sector represented by the Market Vectors Gold Miners ETF (GDX) have been and still are in the dumpster.

ABX Chart ABX data by YCharts

The chart also shows the share prices of these potent companies are just beginning to move higher. Even the darling of the silver industry, Silver Wheaton (SLW - Get Report) as the next chart illustrates, is just beginning to rise, along with the most popular ETFs that represent the price of gold and silver.

SLW Chart SLW data by YCharts

As history has taught us over and over again, when the people with the purse strings (think FOMC) crank up their money-making, monetary-fertilization machines, the price of all sorts of metals goes higher and the equipment makers who help the metals producers also get a nice boost skyward.

As Boston Fed President Rosengren has boldly suggested, this time it might even be a bigger, better, more "aggressive" program of monetary infusions and financial stimuli.

By the way, in the past 10 years, whenever the price of gold and silver have been fairly flat for around a year, it's been followed by an impressive rally in both precious metals. My gold teeth are vibrating with anticipation that we're getting close to another one of those buoyant reactions. Place your bets soon.

At the time of publication the author was long ABX, GDX, NEM and SLW.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Most large cap stocks were once small and mid-cap stocks. Bryan Ashenberg is here to help you find the cream of the crop amongst the market chaos.
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ABX $18.38 0.00%
CAT $76.36 0.00%
GDX $24.66 0.00%
NEM $33.83 0.00%
SLW $19.48 0.00%


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