Make Kitco Your Homepage

Fed tolls the bell for gold US$2,000

Commentaries & Views

Fed's new QE to Push US$ down and Gold up.

If it looks like a duck, walks like a duck and quacks like a duck it is probably a duck. Thus despite the protestations to the contrary by Chairman Powell, last week's announcement that the Fed that it intends to buy $60 billion of bills per month until mid-2020 certainly is QE on a massive scale. As such, the total monetary base should rise by almost half a trillion dollars to $3.76 trillion by June 30, 2020.

This is a brief but very important update to my previous post of July 18, 2019, "U.S. Dollar Stronger For Longer":

https://www.tonyhayesblog.com/post/u-s-dollar-stronger-for-longer

Chart by the Author from Federal Reserve Data.

The consequence of this should be a decline in the U.S. dollar which should please Mr Trump and U.S. exports. However, it could also result in a rise in imported inflation.

This should push the price of gold back to its equilibrium level with the AWMB which stands at US$ 1,900 per ounce but should be higher at possibly US2,000 per ounce by mid-2020 as excess reserves continue to move out into the real economy.

Chart by the Author from Federal Reserve Data.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Precious Metal Charts

Follow Kitco News