Even if Ben Bernanke’s speech in Jackson Hole provided little information about the timing and scope for Quantitative easing (QE), the word got around this weekend that four Federal Reserve presidents are calling for an open-ended Fed commitment to QE.
Previously, the Fed would commit a dedicated sum to such operations. This development, if it occurs would send the message about the unlimited nature of the Fed's balance sheet. This is a powerful message. This environment of “super” QE is good for bullion. As today’s Hot Chart shows, speculative positions on the USD turned negative for the first time since July 2010 last week.
If you believe that such a situation endures, then gold will do well. In the three previous instances where speculative positions turned short USD, the bullion gained more than 30% in the following year (see chart). We believe that bullion is en route to retest its cyclical highs.
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World: Another Central Bank Induced Gold Rush?
Published 09/05/2012, 08:31 AM
Updated 05/14/2017, 06:45 AM
World: Another Central Bank Induced Gold Rush?
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