The Fed is Losing Control of Gold
The Fed is now in very serious trouble.
Gold continues to explode higher despite the Fed’s best efforts to contain it. As I’ve noted before, Americans see gold as a measure of inflation.
Food prices, car prices, home prices, stock prices, practically the price of anything can rise and the average American won’t think “inflation.”
It’s a different story with gold.
Once gold starts ripping higher to the point that the average American notices it… then everyone and their mother starts talking about inflation getting out of control.
With that in mind, look at what gold is doing right now. The precious metal has gone absolutely vertical, rising over $200 per ounce in a single month.
This the market telling us that it is losing confidence in the Fed. And the bad news is that the Fed likely won’t be able to stop it!
Backed into a Corner
The only way the Fed could stop gold’s rise would be to begin tightening monetary policy via interest rate hikes and reducing its quantitative easing (QE) program.
Of course, the Fed cannot do this without triggering a market crash.
As I’ve noted on these pages before, the ONLY thing that stopped the March meltdown was the Fed going nuclear with monetary easing, providing over $3 trillion in liquidity.
Indeed, today the Fed continues to spend over $125 BILLION per month in QE a full three months after the crisis. And the Fed has stated it will continue to do this until there is a full recovery, which the Fed believes will come at the end of 2021.
Put another way, the Fed is trapped. It can either tighten monetary policy and crash the markets… or it can let inflation run wild and gold will go parabolic.
Which one do you think the Fed will choose?
We believe inflation will continue to spiral out of control in the coming months. And gold will hit levels unimaginable to most people.
Editor, Money & Crisis