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Gold Regains $1600by Peter A. Grant
Feb 26, AM 
Gold has pushed decisively back above the $1600 level, buoyed by renewed political uncertainty in Europe and a clarification by Fed chairman Bernanke on The Hill today about Fed policy. Additionally, BoE Deputy Governor Paul Tucker indicated that he was open to additional quantitative measures as well.Much of the sell-off in gold last week was attributable to the minutes of the January FOMC meeting, which once again revealed some concern about the cost and effectiveness of the Fed's QE program. At the time I wrote that "some FOMC members will continue to feign consternation about the Fed's exploding balance sheet, but in reality the die is cast." Today before the Senate Banking Committee, Bernanke testified unequivocally that the benefits of QE continue to outweigh the costs. Those costs are now in excess of $3 trillion, and still growing. Bernanke went on to reiterate the guidance established by the FOMC back in December. "The FOMC has indicated that it will continue purchases until it observes a substantial improvement in the outlook for the labor market in a context of price stability," Bernanke said in his prepared statement. That means, foot on the monetary pedal until the unemployment rate drops to 6.5%, unless PCE rises above 2.5%. So what we're seeing today is an unwinding of the Fed tightening concerns that emerged last week. The realization that the Fed remains committed to QE provides further evidence that while gold remains within the range that has dominated for more than a year, the underlying trend remains bullish. NEWSLETTER SIGN-UP Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here. |
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Wednesday February 27
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