As we make our way through the hot months of summer, the gold market is sizzling with news of instability in Europe and rumors of another round of quantitative easing by the U.S. Federal Reserve.
Just in the last two days, gold has shot up around $30 per ounce and broke a new record in fact.
Minutes from the Fed’s June policy meeting is credited with today’s late day surge in gold. Some members of the central bank indicated they may be open to further monetary stimulus.
Excerpts from the minutes said “a few members…” of the central bank’s Open Market Committee “might have to consider providing additional monetary stimulus, especially if economic growth remained too slow to meaningfully reduce the unemployment rate in the medium run.”
This is the first time the Fed has made any direct mention of a third round of what it dubs as ‘quantitative easing.’ The latest round ended in June but with lackluster employment numbers, the Fed may once again consider buying U.S. Treasuries (…in effect, printing money) to try and stimulate the economy.
Following the news, the U.S. dollar fell in value against the Japanese Yen and other currencies. Commodities traded in dollars rose in price, with oil gaining 2%. Silver also rose by 2% in late day trading.
While Tuesday’s price is a new all-time high, it’s nowhere near its inflation adjusted high of $2223 according to the Fed’s branch in Minneapolis. Back in 1980, the last big gold run, the yellow metal peaked at around $850 per ounce. In today’s dollars, that equals roughly $2200.
That’s why many of us believe gold has a long way to go. Considering the issues that led to the last bull-run in the ‘70s are much more entrenched, it’s quite possible gold will go well beyond its 1980 high.
Moves like this by the Fed, along with continuing economic troubles in Europe and the U.S, is why we think now is the time to own gold and silver. Having these metals in your portfolio will help preserve the value of your wealth from the ravages of monetary and price inflation.
To learn more, visit our gold investors’ knowledge center today or visit the main site for current prices on gold and silver coins.
