The U.S. economy needs to grow more quickly to bring the unemployment rate down further.
This is what Federal Reserve Chairman Ben Bernanke told the National Association for Business Economics (NABE) today as he defended the central bank’s policy of very low interest rates and gave what some experts gathered was a precursor to yet another round of quantitative easing.
While Bernanke offered no specific indication the Fed was going to embark on another round of money printing, Bernanke did make it clear the central bank is in no rush to reverse course after responding aggressively to a deep recession.
“Further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies,” said Bernanke.
“Reading between the lines, it sounds like he’s pushing the ball forward toward having a discussion about doing more,” said Chris Rupkey, economist at Bank of Tokyo-Mitsubishi, on the sidelines of the NABE conference.
Rupkey was not the only expert with this opinion as Dennis Gartman, author of The Gartman Letter, sees further action by the Fed as a high probability and something that will send gold skyocketing.
“If you’d ask people last week you’d think QE3 was off the table and broken on the floor,” Gartman said.
Bernanke’s comments and the thought of QE3 helped send gold higher but even before Bernanke spoke, Gartman said “it was apparent to me the trend was still up” for gold.
In fact, gold has been on an upward trend for over 10 years, as shown in the chart below.
Another round of quantitative easing would mean increased inflation, the devaluation of the dollar, and likely, gold prices above those seen in August of 2011.
Regardless of what may or may not be announced by Bernanke and the Fed at future conferences, we like to keep with the motto here at GoldWatch that you don’t wait to buy gold, you buy gold and wait. Be prepared readers and be proactive in the protection of your savings with physical gold!