While the markets may be breathing a sigh of relief with the Dow (NYSE:DIA) up 37 points on Monday, gold (NYSE:GLD) and silver (NYSE:SLV) are signaling more problems await the global financial system. On Monday, gold and silver continued to rally after last week’s impressive gains. Furthermore, Citigroup (NYSE:C) and Hugo Chavez continue to fuel precious metals (NYSE:DBP) higher.

Bank of America (NYSE:BAC), which has its own collapse to be concerned about, voiced concerns about the overall condition of the economy. The bank said, “Rather than a repeat of 2010, when the Fed saved the day with QE2, we think we are moving closer to a repeat of 2008, when major policy errors devastated the economy. In our view, the pressure to do something is now far more likely to result in more desperate or radical measures, even if it is bad policy.” It appears that Bank of America is expecting Ben Bernanke to deliver another hail-mary this Friday at the Jackson Hole Conference.

Check Out: Is the Debt Ceiling Raise Bullish for Gold?

With declining confidence in financial markets, Citigroup (NYSE:C) has finally decided to increase its gold price targets for 2012 and 2013. The bank said, “Increased global risk, U.S. Dollar (NYSE:UUP) weakness, growing inflationary fears, the U.S. debt downgrade, and continuing sovereign debt risks in Europe have increased investor appetite for gold, triggering recent price strength.” Citigroup now sees gold prices of $1,650 per ounce for 2012, and $1,500 per ounce for 2013. Previously, it projected gold at $1,325 for 2012, and $1,225 per ounce for 2013. Although the price targets increased, Citigroup is already in danger of missing targets as gold futures for December delivery settled at $1,891 on Monday.

Last week, Hugo Chavez announced that he is nationalizing the entire gold industry of Venezuela. Now, Bloomberg reports the central bank of Venezuela has sent a statement via email requesting its 99 tons of gold holdings from the Bank of England. Venezuela’s move to take delivery of physical gold may be the beginning of another huge rally in precious metals. As we discussed in a previous article, physical gold demand is growing among investors. However, with gold gaining 6% last week, and silver soaring 8%, investors should be cautious of a short-term pullback in the precious metals.

Investors looking to hold precious metals in their portfolio may want to consider gold plays such as AngloGold (NYSE:AU), Newmont Mining (NYSE:NEM), or Market Vectors Jr Gold Miners ETF (NYSE:GDXJ). Hot silver plays include First Majestic Silver (NYSE:AG),Endeavour Silver (AMEX:EXK), and Global X Silver Miners ETF (NYSE:SIL).

For more analysis on our support levels and ranges for gold and silver, consider a free 14-day trial to our acclaimed Gold & Silver Investment Newsletter.

Disclosure: Long AGQ.

By Eric_McWhinnie

http://wallstcheatsheet.com

Wall St. Cheat Sheet : Only days after the S&P 500 crashed to the depths of hell at 666, the Hoffman brothers launched Wall St. Cheat Sheet: one of the fastest growing financial media sites on the web. Like a samurai, our mission is to cut through the bull and bear shit with extraordinary insights, a fresh voice, and razor-sharp wit. We provide the highest quality education and information for active investors, financial professionals, and entrepreneurs.

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