Guest post by GoldSilverWorld.
What a day for gold and silver … September 13th 2012 could become a historic day for the precious metals.
At the center of the stage today was the US Fed meeting and the announcement of their decisions by Mr Bernanke at 14h15 EST. Here is what came out of it in a nuthsell:
- A new round of quantitative easing was decided, with a key objective to decrease the unemployment rate in the US. Mr Bernanke said that “We’re looking for ongoing, sustained improvement in the labor market”. He calls the current unemployment rate of approximately 8% a “grave concern.”
- The monetary stimulus includes 40 billion US dollar per month of bond buying; that amount could be extended by an additional 40 billion per month if required to meet the objectives.
- Zero interest rate policy will be extended till 2015.
It seems like “QE to infinity”, a term that was introduced by the much respected Jim Sinclair, is for real. Jim Sinclair whose nickname is “Mr Gold”, has been forecasting for a long long time that $ 1764 was a key pivot point in the long term bull market, marking the start of the third and final phase. In the last phase of a bull market, prices tend to accelerate to the upside. That’s where incredible gold prices of $5000 or $10000, forecasted by several experts quite some time ago already, could eventually be reached.
Now we have seen gold touching the magic $ 1764 a couple of times before. But here is what Jim Sinclair had to say on his website today. It’s maybe the shortest but potentially the most powerful blog post ever: “It looks like Gold hit $1764 for the 3rd time. Gold is usually 3 hits and out.”
Guest post by Azizonomics.
The Keynesians and Monetarists who have so berated the Federal Reserve and demanded more asset purchases and a nominal GDP target to get GDP level up to the long-term growth trend have essentially got their wish.
This is a radical departure:
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.