The precious metals sector began to pullback in early August after a frenzied run-up in July. The technical/momentum indicators were flashing “overbought.” In the meantime, most economic indicators have been telling us the so-called “V” bounce in economic activity is over with the exception of some lingering “impulses” in certain sectors.

In the meantime, price inflation is starting to accelerate. This is reflected in the move toward 1% by the 10-yr Treasury despite the Fed’s efforts to keep interest rates suppressed. Furthermore, the Government is getting ready to issue another avalanche of debt and, notwithstanding bank CEO propaganda expressing exuberance, bank balance sheets are starting to melt-down again.

Over the last couple of weeks several Fed officials on a daily basis have been delivering speeches which appear to be prepping the public for a lot more money printing.

In short, both the technical and fundamental indicators are now in place to support another big move higher in the precious metals sector. Chris Marcus (Arcadia Economics) and I discuss the reasons by the precious metals sector is set-up for the next leg higher: