On Wednesday, Congress finally agreed on a government stimulus/bailout plan to battle the economic impacts of coronavirus to the tune of over $2 trillion. Meanwhile, the Federal Reserve has committed to monetize the debt with QE to infinity. Practically speaking, we’re talking about trillions of dollars being injected into the US economy – all of those dollars created out of thin air.
So, what does all of the money creation and government spending mean for gold?
We now have QE to infinity and beyond.
On March 23, the Federal Reserve announced it will purchase an “unlimited” amount of US Treasuries and mortgage-backed securities. The Washington Post called the move “unprecedented” and said that it goes “much further than what the central bank did in the 2008-2009 crisis.”
The demand for physical gold has gone through the roof in the midst of economic chaos caused by the coronavirus. We’re beginning to see shortages of some bullion products. As more people pile into the market, the number of scammers looking to take advantage of gullible investors also increases.
Recently, some guy started commenting on the SchiffGold Facebook page, claiming he could sell you “cheap gold” directly from African mines. This was certainly a scam. Why would anybody sell gold “cheap” when they can easily command a market price?
The answer to that question is they wouldn’t.
Central banks started out 2020 buying more gold, but the rate of purchases slowed somewhat.
On net, central banks added 21.5 tons of gold to their reserves in January, according to the latest data from the World Gold Council.
On Sunday evening, the Federal Reserve announced additional extraordinary emergency measures in an attempt to keep at least some of the air in the bubble economy. But in fact, the Fed has been engaged in extraordinary emergency monetary policy for over a year.
The US is heading for economic lockdown as the impact of the coronavirus grows. To cope with the crisis, President Trump has promised fiscal stimulus. The actual plan remains unclear, but the Trump administration has floated a reduction in payroll taxes, along with bailouts and loan guarantees for struggling industries. While the details are murky, one thing is certain — it will cost billions of dollars.
Meanwhile, the US government is already living far above its means. Uncle Sam recorded another massive budget deficit of $235 billion last month, according to the latest Treasury Department report.
ETF gold holdings set yet another record high in February, according to the latest data from the World Gold Council.
Global gold-backed added another 84.5 tons of gold last month, boosting holdings to an all-time high of 3,033 tons.
With the madness in the markets over the last couple of weeks that led the Federal Reserve to implement a 50-basis point interest rate cut, Peter Schiff is starting to get some love in the mainstream media.
Peter was a regular on MSNBC, Fox News and other mainstream outlets in the months leading up to the 2008 financial crisis. He was typically the lone contrarian, insisting that the economy wasn’t great. Of course, in 2008, he was proved correct.
Silver prices are expected to rise in 2020 with macroeconomic and geopolitical conditions remaining broadly supportive for precious metals, this according to a report highlighted in the latest issue of the Silver Institute’s Silver News.
Stop and pause for a moment and think about what just happened. The Federal Reserve says the US economy is strong, but it just initiated emergency monetary policy last seen during the worst financial crisis since the Great Depression.
Something doesn’t add up.
The Fed cut rates 50 basis points on Tuesday. It was the first interest rate move between regularly schedule FMOC meetings since the 2008 financial crisis. The Fed funds rate now stands between 1.0 and 1.25%.
