Oct 12, 2022
VOT Research Desk
The price of gold is now fluctuating within a narrow range as investors wait for a new fundamental catalyst to launch the precious metal’s next significant rise.
The Bank of England could once again be obliged to intervene with yet other round of quantitative easing measures, if economic conditions so warrant, only two weeks after declaring a significant monetary policy U-turn.
The Bank of England went into full financial crisis mode two weeks ago, rushing out an announcement that the central bank was restarting its money-printing presses at whatever scale is necessary – officially confirming that QE To Infinity was back! This was one of the most significant changes in monetary policy ever seen.
In an effort to bring the sky-high inflation under control, the UK bank’s remarkable new round of quantitative easing measures includes stopping a program to sell gilts and switching back to buying long-dated bonds at a staggering rate equivalent to almost $5.3 billion each day. Following the Bank of England’s announcement, prices for over 27 commodities, including lumber, crude oil, natural gas, gold, silver, platinum, palladium, platinum, aluminum, and copper, soared to multi-month highs. Many of these commodities also registered impressive double-digit gains in a matter of days.
The positive trend also spread to commodities priced in British Pounds, such as Gold, Silver, and others, which caused them to soar to all-time highs.
The Bank of England also dropped a huge hint earlier this week, hinting that further quantitative easing may be on the horizon, just when I thought things couldn’t get any more interesting.
The news follows a secret, closed-door meeting on Tuesday where the UK central bank unveiled new plans to buy over £10 billion of gilts per day, of which up to £5 billion will be allocated to long-dated conventional gilts and up to £5 billion to index-linked gilts.
In this monetary cycle, the Bank of England’s measures mark the first significant emergency intervention from a G7 central bank to prevent a full-blown financial catastrophe on a global scale.
However, it might not be the last!
The Federal Reserve has started its most aggressive round of rate rises since the 1980s after receiving criticism for being sluggish to identify inflation. But in doing so, it has significantly boosted the value of the dollar, which has some top economists worried that it may become the next asset bubble to pop.
