Gold - The New Rock Star
|FOMC Gold Rally|
So what does "quantitative easing" really mean and why should you even care?
A central bank implements QE by first crediting its own account with money it has created ex nihilo ("out of nothing"). It then purchases financial assets, including government bonds, mortgage-backed securities and corporate bonds, from banks and other financial institutions in a process referred to as open market operations. The purchases, by way of account deposits, give banks the excess reserves required for them to create new money, and thus a hopeful stimulation of the economy, by the process of deposit multiplication from increased lending in the fractional reserve banking system.
In plain speak it simply means "Fire up the printing press, we need more money". This my friend, is why Gold investors love Bernanke and why it probably won't end well for the U.S. economy.
Our old friend Alan Greenspan had this to say last week as he addressed the Council on Foreign Relations (CFR).
'Fiat money has no place to go but gold."
Weekly Trading Zones / Daily Review
|S&P 500 Emini Futures / ES|
|Dow Emini Futures / YM|
|Euro FX / 6E|