NEW YORK (TheStreet) -- As Wall Street and Main Street await what I hope is surprisingly good news from the lips of Federal Reserve Chairman Ben Bernanke, the precious metals sector is quietly poised for an explosive upside rally.
If Bernanke disappoints at Jackson Hole that rally will probably be put on hold.
We've seen this scenario play out before, and it reminds me of the summer of 2010. After Bernanke applied his version of "the golden rule" (He who has the gold makes the rules), the gold and silver producers had one heck of a rally.
You can plainly see that at the beginning of 2010 a bottom was established for both gold and silver producers, and that in the summer a base was established from which to launch an impressive skyward rally. The chart also shows similar base-building that led to the current uptrend beginning in August 2012. Caveat: The Man with the Golden Rule (Bernanke) may play cat-and-mouse with us for a while longer, causing the current rally to stall or retrace some its gains. But don't be fooled. At some point between now and Sept. 13 when the Federal Open Market Committee gives its quarterly assessment of the U.S. economy and Dr. Ben gives the FOMC monetary policy statement, we're likely to experience "lift-off" in the precious metals sector. There are two stocks I believe will do especially well in the gold sector and one in the silver-producing business. Let's begin with Yamana Gold (AUY), which has a revealing three-month chart that not only show its trajectory but also how flat the 200-day moving average has been. This stock has become a favorite of the better analysts like our own Jim Cramer for good reason. Yamana is fully committed to the exploration, development and production of its mineral properties and it primarily focuses on gold.
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