The Fed Just Guaranteed $6 Gas & $4000 Gold
by Damon Geller
Now that QE3 has arrived, it’s more obvious than ever that a few powerful men have hijacked our economic, financial and political structure. And here’s a news flash: They aren’t socialists or capitalists. They’re criminals. The latest round of stimulus policy by the head printer-in-chief, Ben Bernanke, and the Fed is stunning in its size (in that it has no limit), stunning in its time-frame (as there is none), and even more stunning in the lie behind what it’s designed to accomplish. The bottom line? The Fed has just guaranteed $6 gas and $4000 gold.
Let me explain. In this latest round of “monetary stimulus,” the Fed will be buying $40 BILLION a month in MBS (Mortgage Backed Securities) until the “labor market improves.” That is on top of the already large treasury purchases they make. That means, assuming the labor market doesn’t improve, the Fed will expand its balance from an already insane $2.8 trillion to an inconceivable $4 trillion by the end of 2013.
Bank of America analysts are saying the Fed’s balance sheet may pass $5 trillion by the end of 2014 sending gold to $3550 and oil $190 a barrel. While that may sound insane, the simple math behind the US treasury’s debt projections also place gold at over $3800 as debt swells to over $28 trillion by 2018, so BofA’s projection of $3500/oz. at that time is right in the ballpark.