Monday , 1 September 2014

News Flash! The Fed Has Declared That It MUST Create Inflation! Got Gold?

In… September’s Federal Open Market Committee minutes, the Fed officially announced that … “Unless … underlying inflation moved back toward a level consistent with the Committee’s mandate, they would consider it appropriate to take action soon” and take “… possible steps to affect inflation expectations.” That’s Fed-speak for a MANDATE TO CREATE INFLATION — with lots more money printing, and many more purchases of Treasury bonds, mortgage bonds, corporate bonds, commercial paper, even possibly equities or real estate! No wonder the dollar is crashing toward new, all-time lows against ALL major currencies!… No wonder gold is soaring — again! Words: 694

So says Larry Edelson (www.moneyandmarkets.com) in an article* which Lorimer Wilson, editor of www.munKNEE.com, has reformatted into edited [...] excerpts below for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article reposting to avoid copyright infringement.) Edelson goes on to say:

For a long time I’ve been warning that Fed Chief Ben Bernanke would:
• Print money, virtually nonstop.
• Do everything in his power to keep interest rates near zero “for as far as the eye can see.”
• Worst of all, literally CREATE inflation, even if it meant going into the open markets to buy up all kinds of assets.
Now, this is precisely what the Fed says it wants to do!

Overseas investors are clearly running scared of the endless supply of dollars the Fed will be printing …so they are buying gold, hand over fist. Meanwhile, savvy domestic investors are also gobbling up gold, driving gold trading volume to record highs … piling into every conceivable gold investment under the sun — from gold coins and bars … to mutual funds … to gold ETFs … and gold futures contracts.

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The above is hardly surprising when you consider the dollar’s downside fate is now virtually sealed … that the Fed has officially admitted that it will take any measures it deems necessary to devalue the dollar and boost inflation — no matter how unorthodox those measures may be. Adding fuel to this fire …a massive tug of war is about to begin in Washington!

In my 32 years in the markets I have never seen a set of forces merge together at one time and place like we have today!
Not only is the U.S. still mired in the worst economic disaster since the Great Depression …[and] the Fed embarking on unprecedented misadventures to boost inflation … but we ALSO face one of the most historic Congressional elections, ever!

What will happen? There is no question in my mind that, in this teetering economy, we will see:
1. a monumental tug of war between a more conservative Congress and a more aggressive Fed backed by the Obama administration …
2. a sea change in the financial markets, and …
3. every stock and ETF you own directly impacted.

My Recommendations
1. You absolutely must hold a long-term core position in gold regardless of any short-term fluctuations. The most handy vehicles are gold ETFs like GLD.
2. If gold suffers a temporary correction — which would be completely normal — [you should] use it as a buying opportunity to ADD to your core gold holdings.
3. [You should] seriously consider foreign currencies. On any short-term weakness, one good choice is the Australian dollar, which you can also buy via an ETF — symbol FXA.

*http://www.moneyandmarkets.com/news-flash-fed-declares-it-must-create-inflation-dollar-collapsing-gold-soaring-40373?FIELD9=2 (Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. To view archives or subscribe, visit our site.)

Editor’s Note:
- The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
- Permission to reprint in whole or in part is gladly granted, provided full credit is given as per paragraph 2 above.
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