The Federal Reserve said it would purchase $40 billion per month in mortgage-backed securities indefinitely. In addition, the Fed will continue Operation Twist – the buying of longer-dated US Treasury notes and bonds. When all is totaled, the market is looking at about $85 billion a month in government bond purchases for an unlimited period of time.
Even ignoring Operation Twist, the Fed will add $40 billion a month, or $480 billion a year, to its balance sheet.
That is exactly what happened in the last five years too...the Fed's assets doubled. And in what should not be a surprise to gold investors, the price of gold also doubled! For the past decade or so, gold has tracked the increase in Federal Reserve's assets. Do not be shocked if that pattern continues over the next five or 10 years, too.
Even ignoring Operation Twist, the Fed will add $40 billion a month, or $480 billion a year, to its balance sheet.
That is exactly what happened in the last five years too...the Fed's assets doubled. And in what should not be a surprise to gold investors, the price of gold also doubled! For the past decade or so, gold has tracked the increase in Federal Reserve's assets. Do not be shocked if that pattern continues over the next five or 10 years, too.
