As of last week, the Federal Reserve now owns 16.5% of the total amount of Treasuries outstanding and 18.5% of the total amount of mortgage-backed bonds outstanding. With out this massive amount of Fed intervention, interest rates would be significantly higher and the housing market would be in shambles.
The Fed’s balance sheet nearly doubled since March. While the stock market has rallied to all-time highs since March, there’s still well more than 20 million people receiving unemployment benefits on a weekly basis. The economic bounce-back from the shut-down of the economy in March and April appears to have peaked in July. By many measures, the economy is starting to contract in again in many sectors.
Silver Liberties and I discussed the reasons why it looks like the Fed is prepping the country for another big round of money printing, which means another big move higher in the gold, silver and mining stocks:
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What the gold market needs is real value in how it contributes to real economic growth and value. God knows the economy needs liquidity and gold provides the right kind. It’s money but only when we treat it such.
The market monetization of gold is around the corner giving the consumer a participatory stage.