The Federal Reserve shocked the markets with a dramatic new plan of action to try and end this deep recession and possibly depression. The Federal Reserves action guarantees that gold has much further to rise in the year ahead. The Fed announced they'll be buying more than $1 trillion in U.S. Treasury bonds and mortgage backed securities guaranteed by Fannie Mae and Freddie Mac in an attempt to drive down mortgage rates and unlock the locked up credit markets.

This means the Fed will be creating even more money to buy this debt, and that immediately affected all of the markets. The U.S. dollar plunged, falling the most against the euro in nearly nine years. This was due to concerns about how these actions will fuel inflation and devalue the dollar. As a result, gold rose strongly. Stocks surged too, continuing the rise that started last week, as interest rates fell.

Overall, this looks like the trigger that my help extend the current rebound move we've been seeing in the markets. Indeed, if there was ever a doubt that gold's bull market had seen its high at $1000 an ounce, I think that idea has been put to rest. Gold was due for a correction which it has gone through in March.

The Federal Reserves action guarantees that gold has much further to rise in the year ahead and beyond. So far, gold's now four week intermediate decline has been moderate, but it's still underway as long as June gold stays below $950. On the upside I think gold will stay firm above $880 an ounce. Keep in mind, gold has been much stronger than most markets over the last several months which mean the other markets are poised to outperform gold for the short run.

Silver, like gold, has been correcting but it is firm above $12. Silver is under pressure by staying below $13.60 but if $12 holds and $13.60 is broken on the upside, the next upside target would be $14.55. I move through $14.55 would show a lot of strength in Silver.

Every balanced portfolio should hold some precious metal exposure. Gold will act as a hedge for your portfolio against inflation and a falling dollar.  A way to add that exposure to your portfolio would be to use ETFs such as GLD (streetTRACKS Gold Trust Shares) or IAU (iShares COMEX Gold Trust). Another ETF which will provide precious metal exposure indirectly is the ETF XME (SPDR S&P Metals & Mining Index) it is down over 70% from its 2008 high. I new leg up in gold prices should get metal and mining stocks moving higher.

Note: I do not own GLD, IAU or XME