Summer is over, precious metals rise!

What a recent ride it has been for the precious metals!  Since last Wednesday, gold is up 5.35%, silver is up 11.80%, platinum is up 12.60%, and palladium is up nearly 15%.  The summer doldrums for the precious metals seem to have ended a few weeks early as our markets are once again exciting participants.  The precious metals are in the midst of a perfect storm from a technical, geopolitical, and fundamental perspective which has allowed them to explode higher over the last week.

Platinum and palladium caught initial bids last week on headlines of South African mining unrest.  Their moves upwards became more exaggerated once news was released of the deaths of 44 people (34 were shot dead by police) in relation to strikes at Lonmin’s Marikana mine.  Now there is fear in South Africa that the turmoil will spread to other mines.  Considering that about 80% of the world’s platinum is mined in South Africa, even temporary strikes and mine shutdowns have a very real impact on the price action of the white metal.

While platinum and palladium have influenced the overall precious metals complex over the last week, gold and silver have been given further legs by the latest FOMC meeting and renewed anticipation of quantitative easing.  At yesterday’s meeting, the FOMC made the strongest hints in quite some time at the prospects of QE3.  Given the committee’s belief that inflation is likely to remain low while unemployment higher than desired, they are more willing to consider unconventional policies to rectify the economy.  Gold has now steamrolled through the 200 day moving average of $1,642.50 and the next major target is $1,700