The Federal Reserve announced a controversial stimulus program Thursday, aimed at lowering U.S unemployment rates and spurring economic growth.
This third round of bond purchases, dubbed QE3, means the Fed will begin buying $40 billion of new mortgage securities each month.
And they plan to use an open-ended approach – until 2015 at least – in the hopes job growth finally comes around.
“If the outlook for the labor market does not improve substantially, the committee will continue its purchase 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,” the Fed said in a recent statement.
Yet despite the Fed’s previous stimulus programs – QE1 and QE2 – the unemployment rate has hovered just above 8% since early 2009, and roughly 12.5 million workers remain unemployed.
And last month, an abysmal 96,000 jobs were created.
So it’s natural the Fed’s latest announcement has been met with more raised eyebrows than outright jubilee.
Yet in the precious metals market, the new stimulus program seems to come with – and pardon the awful pun – a bit of a silver lining.
Indeed, gold reached a six-month high, up 2.2% to $1773.20 per troy ounce since the QE3 announcement. Silver is up 3%.
We would assert – along with a host of analysts – that the Fed’s new stimulus program, bleak job growth and uncertainty surrounding the upcoming presidential election are the key factors responsible for the latest uptick in gold and silver prices.
Do you agree? When it comes to QE3, what are the implications in terms of precious metals prices?
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To paraphrase Charles Dickens:
I think what’s coming is going to be the best of times and the worst of times. An age of wisdom, an age of foolishness.
Thoughts of Opportunity and Fear are driving the price of precious metals up. Hysteria and Greed will bring their purchasing power to orbit. An interesting thought, the purchasing power of gold and silver will go orbit, yet these 2 metals will soon return as the center of our financial universe.
When governments and central banks decide to devalue every currency on the planet at the same time you have to ask yourself…who or what benefits from this decision. Let history be your guide…and history says:
The who is YOU and the what is Gold and Silver…that is if you have them in your possession.