Fed Slashes to 0% and QE of $700 Billion Coming; Gold Gains 3% Before Correcting

◆ Gold jumped 3% after the US Federal Reserve cut its benchmark interest rate by a full percentage point to near zero and announced they would again engage in QE and massive bond buying worth $700 billion.

◆ Gold subsequently pared gains despite the US central bank engaging in another panic move to protect stock and bond markets from collapsing due to the fallout of the coronavirus on economies and company and government balance sheets.

◆ U.S. and Asian stock indices fell sharply; the S&P 500 Index opened the Asian session down 4.77% to the daily trading limit and the Nikkei collapsed another 7%.

◆ Gold may close lower today but it is vitally important to turn down the short term noise and focus on the long term; Safe haven gold is the most important asset to own today due to the increasing poor outlook for bonds and the fiat currencies that they are denominated in.

◆ Other central banks are set to follow the Fed in cutting rates to zero and engaging in electronically creating trillions of dollars, euros, pounds etc in order to prop up vulnerable bond and stock markets.

◆ The negative outlook for both corporate bonds and government bonds and indeed for currencies bodes very well for gold in the coming years.

◆ In the global financial crisis from 2008 to 2012, central banks and governments had to bail-out banks; the scale of the coming economic crisis, means that they will likely move to bail-out thousands of massively indebted corporations who employ hundreds of millions of people.

◆ ‘Cash is king’ in the short term as it frequently is, but in the long term, ‘gold will be Emperor’ and protect and grow the purchasing power and wealth of those who own it.


NEWS & COMMENTARY

Gold rises after Fed rate cut, but pares gains on cash hunt

Gold Gets ‘Groove Back’ as Central Banks Seek to Prevent Economic Collapse

Federal Reserve cuts rates to zero and launches massive $700 billion quantitative easing program

Stock futures drop — hit ‘limit down’ — even as Fed slashes rates; Dow futures off 1,000 points

Trump applauds Fed’s move to slash interest rates and says investors ‘should be very thrilled’

Powell says the Fed doesn’t see negative rates as ‘appropriate’ policy for the United States

The Fed also cut reserve requirement ratios for thousands of banks to ZERO

Goldman Sachs downgrades U.S. Q1 GDP to -0.5% and upgrades Q2 to +3%; Warns of SPX may hit 2,000


GOLD PRICES (USD, GBP & EUR – AM/ PM LBMA Fix)

12-Mar-20 1636.65 1570.70, 1284.28 1246.35 & 1457.11 1410.96
11-Mar-20 1662.50 1653.75, 1284.78 1279.01 & 1468.65 1462.25
10-Mar-20 1657.40 1655.70, 1269.40 1273.23 & 1460.00 1455.86
09-Mar-20 1676.60 1672.50, 1280.75 1272.94 & 1469.04 1462.10
06-Mar-20 1687.00 1683.65, 1296.80 1290.85 & 1490.13 1484.31
05-Mar-20 1647.45 1659.60, 1274.47 1284.70 & 1474.63 1482.69
04-Mar-20 1644.80 1641.85, 1286.73 1281.63 & 1475.06 1477.83
03-Mar-20 1599.05 1615.50, 1249.98 1260.25 & 1438.03 1446.03
02-Mar-20 1609.70 1599.65, 1258.79 1251.41 & 1451.47 1437.29
28-Feb-20 1626.35 1609.85, 1262.37 1254.88 & 1474.61 1468.18


Financial Contagion – What Are The Risks?



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Mark O'Byrne

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