Whether or not the Fed announces QE3 or not they will continue to ease as they have been for years now so the announcement really doesn’t matter a whole lot unless they announce a huge new program.
….Is Gold
Regardless of what the Fed announces Gold is going to go higher. It will go a lot higher eventually. There may be some bumps in the road, some pullbacks, but eventually gold will be a lot higher than it is today.
I don’t know if it will be next month, next year, or in five years, but the world’s current monetary policy will send gold to at least $3000 an ounce. It would not surprise me in the least to see $5000 gold at some point in the next ten years.
Why Gold?
There are several reasons why gold will continue to go up but the main reason is the global debt fascination.
United States
The United States is in debt up to our eyeballs. The debt is somewhere currently around sixteen trillion dollars. If you take into account the unfunded liabilities of social programs it is estimated to be anywhere from seventy to one hundred trillion dollars.
There is no political will to address the funding of future social promises. One side will never agree to raise taxes and the other will never agree to cutting benefits. We will remain at a stalemate until it is too late.
Europe
As our economy flounders for the next couple decades because of all our debt, the government will continue to print money in order to “stimulate” the economy. This is what they call monetizing the debt. We will print money to pay off our debts.
Europe is just in the beginning stages of monetizing their debt. The European Union is a disorganized mess so it is taking them a few years longer than it did the United States to all come together and agree to print their way out of their financial mess.
Portugal, Ireland, Greece, Spain, Italy, and the list goes on. It will only be a matter of time before France and Germany’s economies are affected. Some of those countries have over twenty percent unemployment. Europe will continue to go down the path of bond buying programs in order to prop up the unstable countries.
Gold Will Shine
In the end gold will be where it’s at. In order to protect your purchasing power you will need to own gold in some form or fashion whether it be through gold coins or shares in mining companies.
I’ve owned physical gold since the $800’s and don’t plan on selling it anytime soon. I also own plenty of gold and silver mining companies.
Shares in the miners have risks not associated with the gold market such as labor issues, input costs, and poor management. Right now I would say the best way to accumulate gold is through the ownership of gold coins or bars either in your physical possession or through a company with allocated storage.
Get it now before it is too late. These folks are going to print our way into a deeper mess someday.
-Ben Hoben