On Thursday, gold (NYSEARCA:GLD) futures for February delivery jumped $26.60 to settle at $1,726.70 per ounce, while silver (NYSEARCA:SLV) futures surged 62 cents to close at $33.74.  It was the highest settlement for gold and silver since the beginning of December.

Precious metals (NYSEARCA:DBP) continue to climb higher after the Federal Reserve announced yesterday it would keep record low interest rates until at least late 2014.  Furthermore, America officially has a new debt ceiling target.

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In a 52-44 vote, the Senate has failed to stop another increase in the debt ceiling limit.  As of tomorrow, the U.S. will have a $16.4 trillion debt capacity, representing a more than $1 trillion increase from the previous $15.2 trillion limit.  The new increase was the last of three requests approved the August debt agreement.  While it is difficult to say how quickly the new debt ceiling limit will be reached, many hope it will be after the elections later this year.  David Chalian, Washington Bureau Chief explained, “If there is another big debt ceiling showdown before the election it is going to have a big impact.  I will predict that a lot of people on both sides of the aisle are trying to figure out the accounting in such a way that perhaps that discussion and vote doesn’t take place until after the election.”

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) increased .83 percent, while the iShares Silver Trust (NYSEARCA:SLV) gained .96 percent.  Gold miners (NYSEARCA:GDX) such as Yamana Gold (NYSE:AUY), Barrick Gold (NYSE:ABX) and Freeport-McMoRan Copper & Gold (NYSE:FCX) all jumped about 1.15 percent.  Meanwhile, silver miners (NYSEARCA:SIL) such as First Majestic (NYSE:AG) and Silver Wheaton Corp. (NYSE:SLW) gained 1.5 percent and .26 percent, respectively.

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First Majestic outperformed many silver miners, as GARP Research initiated coverage on the company with a buy rating.  GARP analyst says, “The company’s production is poised to grow 90 percent over the next three years to over 13 million ounces, in our view. Based on our $45 silver price target, we anticipate sales rising from ~$270 million in 2011 to $655 million by 2014. At $18, the shares trade at 6x our 2014 EPS estimate of $3.25, which we find attractive given our outlook for 40 percent earnings growth, with upside to higher silver prices.”

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To contact the reporter on this story: Eric McWhinnie at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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