The gold express pulled into the station back in December, merely a pause to consolidate its 9.3% gain for 2011. It let some passengers off and let others get on board before it rolled again.
Now it’s about to leave the station again.
It’s new destination? $2,500? Or higher?
Let’s take a look at some of the powerful engines driving the price of gold.
Catalyst #1: Spend & Print
The new year got off to a reckless start for both U.S. monetary and fiscal policy. If you recall, on Jan. 25, the Federal Reserve committed to three more years of its zero interest rate policy. The Fed intends to maintain its Fed Funds Rate target of 0%-0.25% until late 2014.
You and I both know this deserves a moment of attention.
The Fed cannot maintain low interest rates by simply closing its eyes and clicking its heels together. For the Fed to maintain these rock-bottom rates, it will have to buy more U.S. Treasury bonds. That’s more debt monetization. That’s more money printing.
If you’re looking to grab a few easy bucks on your savings, forget about it. This policy means there will be little interest rate return to be found for your money for years to come.
Simply put, the Fed is driving Americans to spend, not save.
And spending is already out of control here in the U.S. Look no further than the burgeoning U.S. debt. Senate action in late January quietly let the national debt ceiling climb by another $1.2 trillion, up now to $16.4 trillion.
More Federal debt means a cheaper dollar.
But what’s even worse for you and me is that the Fed’s ultra-low interest rate policies don’t just equal no return on our savings … it also means more inflation … it means you and I are will pay a lot more for everything we buy in the months ahead.
Are you prepared for $9 milk, $13 bread and $10 gas?
Runaway inflation is by far one of the biggest threats to your family and finances in the months ahead. But you can prepare today. Join me for a FREE online seminar to discuss how to protect yourself from runaway inflation and an economic meltdown. Click here for more details.
Catalyst #2: Global Printing Presses
The central banks of the world have all loaded up on new inkjet cartridges.
The Bank of England and Japan have fired up the money printing presses. China’s money printing has been massive. And even Switzerland began printing money to lower the value of the Swiss franc against the euro.
But here’s the one you really need to worry about …
The European Central Bank is orchestrating huge increases in the euro money supply to bailout sovereign European debt. It has shoveled the money out to hundreds of banks at 1% interest for three years. Altogether, it’s a $660 billion European money printing operation.
Do you understand what this means for Americans like you and me? For our answer, we need to look no further than the Fed’s massive debt buying operation, QE2, which was similar in size to the ECB’s current operation?
It helped drive gold to new highs in 2011.
This race to the bottom, as central banks rush to destroy the value of their currencies, could make 2012 history’s first year of worldwide inflation.
Runaway inflation and the impending Eurozone collapse are just two of the biggest threats we face in the months ahead. You must act now to prepare and protect yourself from the fallout. Learn how.