From experience, we know that when the Fed increases its balance sheet during these programs, the US gold price increases very closely with it. If the balance sheet increases 20%, the gold price also increases around 20% too according to Dr Alex Cowle.
In fact if you statistically calculate the relationship between them, says Dr Cowle the correlation is around 95%, which is about as certain as anything gets in finance.
If this relationship holds true, you can plug in the projected numbers for the Fed's balance sheet over the next few years -- to make a pretty fair forecast of where gold will go next.
Assuming the Fed keeps adding $40 billion a month for two years, Bank of America has already projected a gold price target of US$2400 per ounce in two years time. That's a 40% gain from today's price. ...
After getting a bit ahead of itself in September on the initial excitement, gold has cooled from nearly $1800 to closer to $1700 during October.
Looking at the chart today, I suspect that we're now looking at a good entry to the start of a long steady rally. This could make the coming weeks one of the best opportunities to buy gold -- and also gold stocks.
It's a good proposition as it stands, but already it looks as though the Fed could be about to turn the heat up. It looks like the Fed will now INCREASE its asset purchases from December.
Goldman Sach's chief economist, Jan Hatzius, reckons the Fed will step up its purchases from $40 billion a month -- to $85 billion a month. ...
So if Goldman Sachs is right, and it normally is when it is talking about the Fed, the result could be a more than doubling of the already rapid pace of gold price appreciation.
IF this happens, then I calculate we could see $US gold in the region of $3150 / ounce in just over two years. That would be an 85% increase from today's price!
In fact if you statistically calculate the relationship between them, says Dr Cowle the correlation is around 95%, which is about as certain as anything gets in finance.
If this relationship holds true, you can plug in the projected numbers for the Fed's balance sheet over the next few years -- to make a pretty fair forecast of where gold will go next.
Assuming the Fed keeps adding $40 billion a month for two years, Bank of America has already projected a gold price target of US$2400 per ounce in two years time. That's a 40% gain from today's price. ...
After getting a bit ahead of itself in September on the initial excitement, gold has cooled from nearly $1800 to closer to $1700 during October.
Looking at the chart today, I suspect that we're now looking at a good entry to the start of a long steady rally. This could make the coming weeks one of the best opportunities to buy gold -- and also gold stocks.
It's a good proposition as it stands, but already it looks as though the Fed could be about to turn the heat up. It looks like the Fed will now INCREASE its asset purchases from December.
Goldman Sach's chief economist, Jan Hatzius, reckons the Fed will step up its purchases from $40 billion a month -- to $85 billion a month. ...
So if Goldman Sachs is right, and it normally is when it is talking about the Fed, the result could be a more than doubling of the already rapid pace of gold price appreciation.
IF this happens, then I calculate we could see $US gold in the region of $3150 / ounce in just over two years. That would be an 85% increase from today's price!
More information can be found online at http://www.goldbullionadvisors.com
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