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QE3 - Is the gold price about to rise?

Wednesday, September 12, 2012

Will they, won't they? As the US Federal Reserve meet on Thursday to discuss options to stimulate the US economy, the signals suggest that top of the to-do list will be a third round of quantitative easing - Historically, QE means a surge for the gold price!

Barclays, UBS and JP Morgan have all this week indicated they expect the Federal Reserve to announce more financial stimulus for US economy and are keeping ears open to the Washington meeting this Thursday. Head of the US Fed, Ben Bernanke AKA Helicopter Ben is expected to take what many consider a 'none satisfactory option' to attempt to alleviate the struggling US economy from the continued barrage of less than impressive economic data. Analysts and commentators suggest QE3 is already a 'done deal' following clear signs from Ben Bernanke during a speech in Wyoming last month. 

So how much of an impact could a third round of quantitative easing have on the gold price? The first round of QE, announced late November 2008 came as the global economic crisis began to take hold. The second round, in November 2010 arrived as a reaction to the US Fed's concern over deflation. Following the announcement of the second round of QE in November 2010 the Gold Price rallied more than $45 per ounce in one day, to put that in perspective, back in 1971 you could buy a whole ounce for $45!

We believe a new announcement tomorrow will push the gold price north, just how far will be seen in the coming weeks. We've stocked and prepared in anticipation of a strong surge in demand throughout September. We have good stock of all gold bullion bar and coin products with a range of new items arriving in the next few days.