Monetary Stimulus Could Lift The Gold Price?

·         Sept. 21, 2011: Federal Reserve launches “Operation Twist.” The central bank swaps $400 billion of short-term bonds for the same dollar amount in longer-dated securities. Deadline for program is slated for June 2012.

 

·         Oct. 2011: Bank of England initiates new round of quantitative easing, creating an additional 85 billion pounds in stimulus.

 

·         Nov. 2011: The Federal Reserve pledges to “leave the door open for further action” and to keep interest rates at record lows “at least through mid-2013.”

 

·         Jan. 2012: Federal Reserve pledges to “keep interest rates near zero until at least late 2014.”

 

·         Feb. 2012: Bank of England adds an additional 50 billion pounds to stimulus program

 

·         June 2012: Federal Reserve extends “Operation Twist” to the end of the year, swapping an additional $267 billion of shorter-term securities for 6-to-30-year Treasury’s.

 

·         July 2012: Bank of England adds an additional 50 billion pounds to stimulus program, bringing the total to 375 billion pounds.

 

·         September 2012: Federal Reserve pulls the trigger on a third round of quantitative easing, QE 3. The new, $40 billion per month bond purchasing program of mortgage-backed securities is open-ended, with no time limit.

Source: elliottwave.com

QE4, The Fed’s Fantastic Failure

 

The above graphic shows the decreasing effectiveness of the Fed’s quantitative easing programs over the last 3+ years. You’ll notice that 2009 saw the biggest gain in the stock market of 50%, followed by QE2 in 2010 which saw a 30% gain in the S&P 500. This was followed by Operation Twist in 2011 which ushered in an 18% gain. All of these gains were helped by the cyclical factors behind the Fed’s control.

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