ECB Buy Gold Bullion? Japan’s Monetary Policy Dubbed “Ponzi Scheme”

Tuesday, November 18, 2014
By Paul Martin

By: GoldCore
GoldSeek.com
Tuesday, 18 November 2014

Concerns about deflation, recession and a return to the Eurozone debt crisis, may see the ECB follow Japan and print money to buy assets including shares, exchange traded funds and physical gold.

Counter intuitively, gold prices fell on the quite bullish news. In marked contrast to the sharp falls gold saw on the mere rumour of small Cyprus selling their miniscule gold reserves. Such odd trading leads to continuing concerns that the precious metals markets are still being manipulated.

Over the last couple of months, the ECB has launched several measures to revive the lacklustre euro zone economy. Mersch said the bank should let these steps take effect first before considering more action.

If more action was needed, the ECB’s hands wouldn’t be tied as it could theoretically purchase government bonds or other assets such as gold, shares, or exchange traded funds (ETFs).

But he said the bank was not determined to buy up assets come what may and should consider its actions carefully. He warned about the negative side effects were the central bank to start buying up government debt, urging political leaders instead to reform their economies to boost growth.

“Easing of monetary policy cannot work effectively when the European economy is structurally not in good shape,” Mersch said in a speech at an annual banking conference in Frankfurt.

There appears to be an ongoing tussle between the ultra dovish such as ECB President, Mario Draghi and the slightly less dovish members of the ECB.

Mario Draghi has explicitly cited government bond buying as a policy tool officials could use to further stimulate the economy should the outlook worsen again.

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